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

Good morning, and welcome to the Lloyds Banking Group 8th Annual General Meeting. It's a great pleasure to be here with you today, and thank you to everyone who has traveled to be with us here in Edinburgh. Welcome also to those of you watching on the live stream. I'm Robin Budenberg, and this is my second AGM since becoming group chair in January 2021. Following the more virtual approach we had to take in 2021 and 2020 due to the pandemic, it really is pleasing to be here with you without constraints. I'll begin our meeting by sharing my reflections on the last year and thoughts on the future for the business. Then later, you'll hear from Charlie Nunn, our Group Chief Executive; and Amanda Mackenzie, our Chair of Responsible Business. We will then have time to answer your questions at the end, after which we will conduct the formal business of the meeting, including voting on the proposed resolutions. So to kick off, I'll start with a few words on what we achieved last year and the outlook as I see it for Lloyds Banking Group. Let me start by mentioning changes to the group's Board. Last August, we welcomed Charlie as our new Group Chief Executive. He has already made a significant impact, notably as the driving force behind the new purpose and strategy that will shape how our business operates over the next 3 to 5 years and beyond. Charlie brings an energy, enthusiasm and passion that he shares with our people every day. And I'm pleased that you'll all see and hear this firsthand when Charlie speaks in a moment. I'd also like to thank William Chalmers for so capably assuming the responsibilities of interim Group Chief Executive last year prior to Charlie's arrival. I know how grateful Charlie and the Board are to him for making the transition so seamless. There have also been some other changes to our Board in the last 12 months. We've had 2 board members, Nick Prettejohn and Stuart Sinclair stepping down as Non-Executive Directors of the group. Nick in September and Stuart after this AGM. Thank you, Stuart, for all your contribution over the last 6 years. In November, Harmeen Mehta joined the Board as an independent nonexecutive Director. Harmeen has extensive experience in leading digital, engineering, IT and transformation as well as in cybersecurity. Her expertise in these important areas is already proving of great value to the Board. Throughout 2021, all our Board members made significant contributions. So thank you. In a year in which we launched a new strategy and emerged from the dark clouds of the pandemic, their guidance and insight was hugely important. Turning now to an overview of the group's performance last year. while the COVID-19 pandemic continued to loom large in 2021, we also saw the continued resilience of society, individuals and businesses as the U.K. showed strong signs of recovery from the economic crisis caused by the onset of the pandemic. Last year’s recovery is reflected in the solid financial performance we reported for 2021, including good progress against our Strategic Review 2021 targets. In terms of financial performance, we reported net income of GBP 15.8 billion, statutory profit after tax of GBP 5.9 billion and a return on tangible equity of 13.8%, all significantly ahead of the prior year. This performance and our ability to support the economic recovery is fundamentally enabled by our clearly understood purpose of Helping Britain Prosper. In 2021 this focus was on Helping Britain Recover. Once again, I am hugely proud of how our colleagues helped to make a real difference. This included supporting over 93,000 start-ups, small businesses and charities, getting more people on the housing ladder by lending more than GBP 16 billion to over 80,000 first-time buyers and expanding the availability of affordable homes by providing more than GBP 3 billion of new funding to social housing. You will also have seen that our results included a charge of GBP 790 million for HBOS Reading, with GBP 600 million recognized in the fourth quarter to reflect the estimated future costs of the process and redress. Our focus continues to be on providing resolution and closure for those impacted as well as cooperating with Dame Linda Dobbs' ongoing review of the events. As in previous years, we've shared an updated shareholder update on matters relating to HBOS Reading on our website. We know how important capital distributions are to Lloyds Banking Group shareholders, and we were pleased to be able to increase these significantly as a result of our financial performance in 2021 and the group's exceptional capital position. In total, we've made a distribution of over GBP 3 billion. Finally, we outlined our new strategy at our full year 2021 results. Charlie will speak in more detail on this, so I'll avoid stealing his thunder, but I believe it represents a compelling plan for our purpose-led business over the coming years. Most notably, the strategy transitions the group into a more growth-centric mindset. This includes diversifying our revenue streams and capitalizing on the potential of establishing a greater digital capability across our segments. At the same time, we will not lose sight of the market leading cost discipline for which Lloyds Banking Group is known. Clearly, we're only at the start of this strategic journey, and we look forward updating you on our progress in the years ahead. Remuneration is a key topic for both our shareholders and our wider external stakeholders. We are especially conscious of this against the backdrop of inflation and the rising cost of living across the U.K. I believe it's worth highlighting that Lloyds Banking Group remains one of the largest taxpayers in the U.K., while our total bonus pool of GBP 399 million is significantly lower than many other major U.K. banks. However, we know that as we deliver the next phase of our strategy, it's vital that we're able to attract and retain talent and reward our colleagues appropriately. Our bonus awards are directly based on a percentage of our underlying profit. Last year, given the group's improved performance, we awarded an annual bonus having not done so in 2020. Our colleagues, especially at a more junior level, are impacted by the rising cost of living. And our 2022 pay budget will seek to prioritize spend towards these individuals. All awards are determined by the Board's Remuneration Committee, following extremely careful consideration against our policy's scorecard. And you can read more about our remuneration approach in the Remuneration Report section of our annual report. Shifting from Lloyds Banking Group to the environment in which we operate, I'm conscious that, once again, we're holding our AGM against the backdrop of uncertain times. All of us continue to be horrified by events in Ukraine, and our thoughts continue to be with the millions impacted and displaced. Our support includes the work done by independent charitable foundations to support refugees and asylum seekers over many years, including recently from Ukraine and elsewhere. We have also made a donation to the International Rescue Committee, which will be split to support their crisis appeal for Ukrainian refugees and also their overall support for refugees fleeing conflict across the world. As I've already mentioned a number of times, we are completely aware that the cost of living is a challenge for many of our customers, colleagues and society more widely. Lloyds Banking Group has an important role to play. Already, we have identified those customers who we believe are most vulnerable to the impacts of inflation and rising energy costs and who most need our guidance and support. This includes proactive outreach that helps them understand the tools and support available to them as part of our own customer financial assistance toolkit. While the current difficulties are different from the pandemic, we are still able to apply a huge amount of what we have learned from it, such as the empathy coaching we offer for relationship managers for the benefit of our customers. Last year, we also provided charities with working capital facilities to help them maintain liquidity during COVID, and we will continue to offer increased hands-on advice. Furthermore, we've provided over GBP 12 billion to 200-plus housing associations over the past 4 years and are taking significant steps to improve the energy efficiency of social housing, reducing energy costs for tenants. Our contribution to building a more inclusive society is just one aspect of our responsible business performance, which is intrinsic to both our purpose and to our strategy. Another central pillar of this is sustainability and how we're supporting the U.K.'s transition to a low-carbon economy. Charlie and Amanda will provide more details in a moment on this, but it would be remiss of me not to touch on this vital topic. Highlights in 2021 include the extent to which sustainability has informed our new strategy and the pledges we made at COP26. Against this backdrop, the importance of Lloyds Banking Group's purpose is clear. It fundamentally underpins what we do and how we do it. We are deeply privileged to play such an instrumental role for our customers and communities and are intensely aware of the responsibilities this imposes upon us. This clarity of purpose will continue to guide us as we look to deliver the right outcomes for all our stakeholders in the short, medium and the long term. So in conclusion, 2021 was an important year for Lloyds Banking Group. We returned to a strong financial performance, laid out what I believe is a compelling strategic vision for the group and played a central role as the U.K. began its recovery from the pandemic. Last year, I spoke of the monumental effort of our people at Lloyds Banking Group and how proud they made me to be part of such an organization. In 2021, they have once again lived up to the very best standards expected of us. Our ambitious new strategy, improved financial performance, increased capital distributions to our shareholders as well as our role in supporting the U.K. economy in bouncing back from the pandemic was all possible because of the hard work of our people. So on behalf of the Board and myself, I really would like to thank them all. We know that the current outlook is uncertain. And as with the pandemic, the cost of living crisis will be another crucial test of the banking sector and its ability to support and to protect its customers. I'm confident that our purpose and the commitment of our colleagues will enable us to meet these challenges head on and to remain by the side of our customers. I will now hand over to Charlie Nunn, our Group Chief Executive, to talk through our performance and strategy in more detail. Thank you.

Thank you, Robin, and hello, everyone. It's great to be with you here today. It is a huge privilege for me to represent Lloyds Banking Group as Group Chief Executive for the first time at our Annual General Meeting. Lloyds Banking Group is an organization that I have observed and admired from a distance for many years. Since joining, I've seen that it is not only a fantastic business, but one supporting customers in every community across the U.K. It is a business with brilliant people, a strong culture, a rich heritage and a clear purpose to help Britain prosper. Coming into the organization has let me really see the extent to which this purpose makes Lloyds Banking Group tick. It drives everything we do for our customers, our colleagues, our communities and for you, our shareholders. We gather at a time when many are grappling with uncertainty, rising inflation and financial challenges as the cost of living increases. I feel a deep sense of responsibility to lead a group that can make a difference and is committed to doing so. Our purpose of Helping Britain Prosper has been instrumental in guiding the strategic choices we've made. This is really important. We have not just created the strategy and aligned it to our purpose, the 2 are deeply intertwined. We firmly believe that if we continue to commit to our promise of Helping Britain Prosper, we will deliver the best outcomes for all of our stakeholders. I'm really pleased to have the opportunity to be able to spend time today talking about this strategy and how we intend to build on the group's distinct competitive advantages. As part of this, I will also cover what we are doing to help tackle the challenge of climate change, arguably the defining issue of our time. One that requires a collective response from all of us. Robin has spoken about our financial performance last year, so I will avoid covering the same ground. I'd reiterate that these solid foundations give us a brilliant platform from which to launch our new strategy. With this in mind, I believe it's worth picking out a few additional highlights from 2021. Mortgage lending is absolutely core to what we do. It was pleasing to see continued growth of GBP 16 billion, reflecting the strength of the U.K. housing market. In addition, we held over 80,000 customers to buy their first home. Supporting this were significant deposit inflows with retail balances up by over GBP 25 billion in the year as customers continue to save with our trusted brands. Balancing growth aspirations with efficiency will be essential to delivering on our plans. This relentless focus was on show in 2021 with a cost income ratio of 56.7%. And finally, our capital ratio of 16.3% means we have a strong balance sheet. This gives us the confidence to invest, grow and innovate. Our financial results for the first quarter of this year released at the end of April showed that this momentum has continued into 2022. Given these foundations, I'm excited to be able to spend more time talking to our new strategy that was announced on the 24th of February. At its heart, this strategy will set Lloyds Banking Group on a growth trajectory with higher and more diversified revenues and income. This focus on growth is a notable shift for our business, but it is the right one if we are to capitalize on the opportunities, our brands, scale and financial strength to present. All of this will be enabled through maximizing the potential of our dedicated people, technology and data capabilities. I believe there are huge opportunities for the group to do more and make the most of our competitive strengths. To achieve this, we have outlined a series of strategic initiatives that we expect to generate additional annual revenues of GBP 1.5 billion. This will allow us to deliver a return on tangible equity that is in excess of 12% by 2026. We will make an incremental investment of GBP 3 billion over the next 3 years, nearly 2/3 of which is around growing and diversifying sustainable revenue and income. Ahead of going into a bit more detail on these initiatives, a nuance but essential detail is that the new revenues we are targeting will be split 50-50 between products and services where we charge fees and those which are linked to interest rates. This is important because it will reduce our historic dependence on interest income. Our strategy to grow the business is designed to build off the distinctive strengths of the group. We are the sole integrated financial services provider of banking, insurance and wealth propositions in the U.K. Half of U.K. adults and around 1 million businesses turn to our trusted brands to meet their financial needs. And we know our record customer satisfaction scores that they're likely -- they like the experience we provide. In addition, we're the largest digital bank in the U.K. with over 18 million active users, which is 50% greater than our closest rival. This scale and breadth means we also have deep insights into our customers' financial needs and behaviors. And finally, all of this is underpinned by the expertise and skills of our 58,000 dedicated colleagues who are instrumental to our success. Taking this together and combined with our financial strength, it is clear we have a fantastic opportunity to deepen relationships with our existing customers, both individuals and businesses. Currently, we fulfill fewer needs and earn less revenue per customer compared to our potential. For example, our analysis shows the typical consumer holds just over 7 financial products on average over their lifetime. Today, only 2.4% of these are with us despite Lloyds Banking Group offering the vast majority of financial products that they will buy. We, therefore, want to enable our customers to choose more of our products by providing them with an even simpler, faster and more personalized experience. So how will we do this? We have detailed 4 focus areas for growing the business alongside clear investment and business outcomes for each of these. First, in our retail insurance and wealth businesses, we start from a very strong position as the U.K.'s market leader in mortgages, current accounts, credit cards and car leasing and as a top 3 home insurance and workplace pensions provider. Building on this, we aim to bring more of our products and services to our existing customers. We will also innovate our product offering and enhance our platforms and technology to make it simpler for customers to access them through intermediaries. We will deploy GBP 600 million of strategic investment to maintain our leading market shares in core products and increase the average customer needs met, which will drive significant revenue growth and diversification. Across intermediary channels, everything from independent financial advisers and mortgage brokers to price comparison websites, we will invest GBP 400 million to capitalize on our scale and expertise to better deliver high-quality products and services to unlock new opportunities. We will strengthen our insurance offering to enable us to become a top 3 protection provider, and we'll also build upon our acquisition of the Embark Group. This forms part of our target of generating more than GBP 55 billion of new open book net inflows into the investments and retirement products by 2024. We'll achieve this through simpler and more intuitive digital offerings. Second, the mass affluent market in the U.K. is growing annually at nearly 10%. We have identified a clear gap in the market for a digital-led integrated offering combining a full set of banking, insurance and wealth products. We already have the largest mass affluent customer base in the U.K. of more than 2 million customers. However, currently, these customers are meeting a number of their banking and investment needs elsewhere. We will invest around GBP 300 million to deliver a superior proposition to capture more of these needs. Third, we will digitize and diversify our business, supporting and servicing small and medium-sized businesses, otherwise known as SME. These companies range from newly formed start-ups to a regional powerhouse with GBP 100 million of revenue. We have a significant opportunity to grow our market share in under-penetrated sectors. We will invest around GBP 500 million to digitize our client offering and cater to the growing preferences from businesses for digital-first, self-service channels. Fourth, we will target our corporate and institutional offering for growth. The business is already a leading provider of services to U.K.-linked customers, including 2/3 of FTSE 350 firms and is currently delivering solid returns. Building on this, we will invest around GBP 200 million to achieve disciplined growth targeted on our existing expertise in cash, debt and risk management. In financial markets, we will invest in our foreign exchange and our rates capability. All of this will be done while maintaining our prudent risk appetite and continuing to be selective about the areas in which we operate. As I've said, our strategy and purpose work hand-in-hand. Alongside returns for our shareholders, we want to drive positive outcomes for our customers, for colleagues and for the communities we serve. We believe that our scale across the country means we are better placed than any other financial services business in the U.K. to make this a reality. One part of this is our role in building an inclusive society. Our efforts here will be focused on improving access to quality housing, supporting financial inclusion, maintaining access to cash and enhancing the financial resilience of our customers. We believe Lloyds Banking Group can help more U.K. customers have access to simple and helpful wealth and protection solutions. In addition, in our commercial bank, we will support regional development by helping businesses in targeted sectors across the U.K. A great example of this is our key role working with our client, SSE, a major energy company, in the funding of Dogger Bank, the world's largest offshore wind farm. Situated 130 kilometers off the coast of Yorkshire, it will produce enough clean renewable electricity to supply 5% of the U.K.'s demand when it's completed in 2026. That's the equivalent of powering 6 million U.K. homes. And more than 3,000 U.K. jobs have been created or supported by its construction and operation. We are also proud to support Black entrepreneurs across the U.K. We've partnered with the Black Business Network to publish a landmark report reflecting more than 800 voices from Black communities and exploring the full entrepreneurial journey for Black business owners in Britain. This report made 10 key recommendations that we are taking forward in a range of collaborative initiatives. We are also looking at what we do in our own organization and have set a number of ambitious targets to create a more inclusive and diverse workforce that reflects the society we serve. As part of our rate action plan, we have committed to increasing representation of Black, Asian and minority ethnic colleagues in senior management roles, and we also have further target to have half of all senior roles filled by women by 2025. We also know that if we are to help create long-term positive outcomes for stakeholders, we have to play a central role in supporting the transition to a low carbon economy. Last year, I went to COP26. Not only was it a great privilege to attend on behalf of Lloyds Banking Group, but the conversations we had with other industry leaders, politicians and think tanks brought home the collective will to drive real change and the absolute urgency of empowering and enabling that transformation. I'm therefore very proud of the reinforced commitments we have made. These include targeting net zero for the activities we financed by 2050 or sooner, and our own operations being net zero by 2030. We can only achieve our long-term targets if we have clear, ambitious near-term objectives. And we've also outlined a number of goals we want to achieve by 2024. These include providing GBP 10 billion in green mortgages, lending GBP 8 billion in financing for plug-in electric vehicles or hybrids, GBP 15 billion in sustainable financing for business and between GBP 20 million and GBP 25 billion invested in climate-aware strategies through Scottish Widows by 2025. So wrapping up, it has certainly been a busy 2021 for Lloyds Banking Group, and I hope you share my excitement for the future. Lloyds Banking Group is a fantastic business. We believe we have put in place a strategy to become an even better business, unlocking our potential to bring more of our leading products to more customers. At the same time, we are reinforcing our unwavering vision for the group as a purpose-led organization. All of this combined will help us achieve more growth; build a more diversified and resilient business; maximize the potential of our dedicated people, technology and data capabilities; generate higher, more sustainable returns for our shareholders; and positively impact our customers, colleagues and communities. Before finishing, I'd like to thank all my colleagues across the group for the support they have given me since arriving. I've been inspired by their expertise, their insight and their dedication. They are what makes this organization so exceptional. They are all Helping Britain Prosper. Thank you. I'll hand over now to Amanda Mackenzie, our Chair of Responsible Business Committee.

Thank you, Charlie. Good morning, everybody. Lloyds Banking Group has been at the forefront of responsible business best practice for some time. And while there is still much to do, I hope you can take pride, as shareholders, in some of the achievements I will outline here and be reassured by our plans for the future. From the setting up of our independent charitable foundations being the first FTSE 100 to set gender and race targets to being the first U.K. bank to set an ambition to reduce the emissions we finance by more than 50% by 2030, I'm only too aware of the legacy upon which we build at my first AGM as your Chair of the Responsible Business Committee. During 2021 and as a result of the pandemic, we wanted to leverage our unique position at the heart of the U.K. economy. This meant our priority was to focus on helping Britain recover. To support this, we made a number of commitments across 5 areas where we could make the most difference to the recovery of the U.K... As a committee, it was important that we also spent time this year, providing oversight on other matters such as workforce engagement, culture and diversity and inclusion. We've seen a broad range of activities delivered through the group's Race Action plan, with the goal for Black heritage colleagues in senior roles endorsed and encouraged by the committee. In 2021, we also set a new aspiration for a leadership team that reflects the society we serve of 50% women in senior roles by 2025. We also recognize the important and integral role we can play in communities across the U.K. Whether that is through our long-term partnership with Mental Health U.K., that has seen colleagues raised over GBP 15 million to date or through the thousands of colleagues volunteering their skills and time. As one of the country's largest financial services companies, it's our responsibility to do our part to help communities prosper. We also discussed the progress we are making to build an inclusive society. For example, through the work we are doing to support the regional regeneration by launching the Regional Housing Growth Initiative. There is, of course, other -- one other very important area that, as a committee, we will dedicate our time to, and that is the climate crisis. The world's response will affect history, and we have a vital role to play in the U.K. in supporting the economy in this transition. Over the past year, we have announced 3 new operational climate pledges. One, the commitment to achieve net zero carbon operations by 2030. Two, we clearly defined our net zero ambitions for the emissions we finance. Our priority is to set these for our high fossil fuel sectors first. We have already published our interim sectoral emission reduction targets for the energy sector, which includes thermal coal, oil and gas and power generation in addition to also publishing a target for retail motor. Within the U.K., we've taken a leading position to completely exit thermal coal power in the U.K. by the end of this year, with a full exit from all entities that thermal coal -- with thermal coal facilities globally by 2030. As you would expect, we have now also announced plans for the decarbonization of our oil and gas portfolio, including no longer directly financing the development of new oil fields. These sectoral transition targets form a central part in our approach to become net zero. And three, earlier this year, Scottish Widows published their Climate Action Plan, one of the first of its kind. A key element of this plan is enhancing our stewardship activities with investee companies by engaging with them to set decarbonization targets and publish net zero time lines and plans. Another key action within this plan is the direct investment to support the transition. And Scottish Widows has committed to investing GBP 20 billion to GBP 25 billion in funds that are adapting their businesses to be less carbon-intensive, but importantly also developing climate solutions. Climate and nature are, of course, inseparable, and we are developing an integrated nature approach to managing environmental risks and opportunities. We will continue to expand our work here, focusing on both our own operations and the activities we are financing. We are also members of the task force for nature-related financial disclosures to develop the framework for organizations to report and act on evolving nature-related risk. Collectively, our targets, plans and reported progress will provide transparency on our overall progress towards our net zero ambitions. Much has been achieved in 2021, and I would like to thank the team for their tireless efforts and commitment. And now as we look forward under Charlie's leadership and Robin's Chairmanship, our future plans are, yes, exciting but challenging and exacting, and your committee will focus accordingly. Our role in society, as we embed our purpose, will be in helping tackle the social and economic issues facing the U.K. as one of the country's leading financial services providers. Our scale gives us a privilege we must all respect. As the breadth of responsible business best practice is increasingly intrinsic to the way best businesses operate, being both sustainable and inclusive needs to be at the heart of how our decisions are made. And in that spirit, we will do our work. Thank you very much.

Thank you, Amanda, 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. Voting will be open before shareholder questions and will remain open for the duration of those shareholder questions. I will give you a reminder to vote towards the end of shareholder questions and again before voting cases. So unless there are any objections, I would now like to 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. Resolutions 19 to 24 are special resolutions and to be approved require at least 3/4 of the votes cast to be in their favor. All the resolutions will be decided by a poll, which means that each shareholder present in person or by proxy or corporate representative has 1 vote for every share held. Turning to the voting handsets. Can I first check that everyone who would like a handset has one. Please raise your hand if you need one. Thank you. Many of you will have used them before. The leaflet handed to you on arrival will inform you on how to use them for voting. Once I declare voting open, the list of resolutions will appear on your devices. I would remind you that whilst you have the choice to withhold your vote, this is not a voting law and does not count either for or against a resolution. If you wish to vote on all resolutions in accordance with the Board's recommendations, there is an option to do this, which is shown at the top of the list of resolutions. To change your vote, you should choose the resolution and simply vote again and your original instruction will be replaced. To cancel the vote, select the resolution and press the x button. The vote will be removed and not counted. If you require help, please raise your hand and one of our stewards will be pleased to assist you. So I now declare the voting open. [Voting]

And we'll now move to the part of the meeting where shareholders or their appointed proxies have the opportunities to ask questions. As in respect for all shareholders, we ask that your questions keep to the order of the meeting so they should relate to the 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'll appreciate, these are not something that we can resolve in the room at the AGM, and it would be inappropriate to do so. There is the 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. Also in the interest of other shareholders, I'd ask you to keep your questions short and refrain if you could from delivering long speeches. If you have more than one question, please ask all your questions at the same time. And if you've already registered a question, I will call upon you to ask your question and a steward will provide access to a microphone so that you may ask that question.

So our first question comes from Rosemary Hartill. Hello. If you could just wait for a microphone, that would be great.

My name is Rosemary Hartill, I'm a former BBC News correspondent and a former member of various public Boards. I'm asking my question on behalf of ShareAction. ShareAction thanks Lloyd Banking Group for the constructive and open engagement that they have had with you over the past few years on time at related matters. Its members welcome and recognize the significant progress made in Lloyds Banking Group, February policy updates that mean it has placed financing restrictions on unconventional oil and gas and will not now support the direct financing of new oilfields. However, we do know this does not apply to gas projects. As you're aware, the latest IPPC report has once again exposed the scale of the crisis that we face and concluded that it is now or never to save off climate disaster. Furthermore, the UN Secretary General, António Guterres, stated that investing in new fossil fuel infrastructure is moral and economic madness. Such investments will soon be stranded assets, a blot on the landscape and the blithe on investment portfolios despite this, the current energy crisis is being used as an excuse by some to continue to finance oil and gas exploration and expansion. This is in opposition to the International Energy Association's net zero emission scenario that said to have a 50% chance of keeping global temperature rise to 1.5 centrigrade. There is no room for new oil and gas fields. The committee on climate change, too, has recently warned that granting new licenses for North Sea oil and gas fields would not produce any more fuel actually for decades, and it's well known that most of the fuel from these reserves is exported rather than used domestically. ShareAction's recent analysis found that 92% of Lloyd's financing to 50 of the top upstream oil and gas expanders was in the form of general corporate purpose finance, with only 80% of the financing being in the form of direct financing. So my question is, how will Lloyds Banking Group ensure its general corporate purpose finance is not going to be used for new oil and gas?

Thank you, Mrs. Hartill. And can I just say that we greatly value the discussions and ongoing communication we have with ShareAction, and we have much sympathy with everything that you are seeking to achieve. I should, first of all, make it clear that we have very limited exposure to oil and gas. It forms a very small amount of the businesses that we finance. But we recognize the importance of transition, which is why oil and gas is one of the first 3 sectors that we addressed in setting out very clear targets, and those are targets that are clearly set out. Again, I would emphasize that our focus is on reducing the level of emissions that we finance by 50% by 2030, as both Amanda and Charlie mentioned. And I would say that you made the point about the majority of our financing being general rather than specific, and that's right. And that is why in the policy that we've set out, we've made it very clear that we will work with the customers that whom we finance on their net transition plans so that those net transition plans are in place in good time to enable us to work with our customers to make sure that we meet our targets by 2030. And that is very much the focus. So I hope you will take that as a sign of our commitment in this regard. So the next question is from [ Judith Kisley ].

Asking a question on behalf of ShareAction. I hope you can hear me. So my question relates to voluntary ethnicity pay gap reporting as, recommended by the Race at Work Charter. Ethnicity pay gap reporting captures the average pay of workers from marginalized ethnicities in a company compared to the average pay of white workers. This is a similar concept to gender pay gap reporting, although that is now mandatory. Reports show that the average pay of ethnic minority workers are far lower than their white counterparts. With less than 2 weeks left until the second anniversary of the murder of George Floyd, investors are taking greater interest in diversity, equity and inclusion, both in their own firms and in investee companies. I was delighted to read that Lloyd's have been reporting their ethnicity pay gap data for 2 years since 2020 to drive progress towards becoming a more inclusive organization. The Chartered Institute of Personal and Development, CIPD, recommends that ethnicity pay gap data be aligned to gender pay gap reporting, and that pay gap data can be disaggregated according to Office of National Statistics categories on ethnicity. This would help identify the exact location and causation of gaps. ShareAction coordinates institutional investors with GBP 3.8 trillion in assets under management who are supportive of voluntary ethnicity pay gap reporting as a marker of responsible business practice. Could the Board provide an overview of Lloyd's position regarding ethnicity pay gap reporting in the U.K., including details about the disaggregation of data, which would be more granular than Black-Asian straight multiethnic. Additionally, would the board be willing to meet with ShareAction and the Good Worker Investor Coalition to discuss this issue further?

Thank you, [ Ms. Kisley ]. Again, I'm very proud that Lloyd's, before my time, was the first -- or one of the FTSE 100 companies to disclose this information. And we still remain in a minority. So we are definitely leaders in this, but it's something, again, as Charlie and Amanda both mentioned, that we really believe strongly that we have to push further. In terms of more detailed reporting, I think that's something we will consider. And again, we are perfectly happy to discuss with you as a responsible shareholder action group. I just think we need to be a little bit careful that by going too much into detail, we don't create false accuracy, which does not necessarily represent the underlying position, but I will certainly commit that we will work with you as we evolve our reporting in this matter. Mr. Gomez?

My question was city regions and all Russian [indiscernible]. I'll start off by putting a little bit of outline on this climate change. And from Teeside, second biggest industrial area in Europe, it's built below sea level, nuclear power stations, massive petrochemical plants, et cetera. What's that going to do with the economy? Russia, Ukraine, little points like this. They're growing enough food to feed 0.5 billion people on this world. when they harvest fail, who's going to feed this 0.5 billion? Where is that 0.5 billion people going to go? Now city regions, ladies and gentlemen, Wismann's big idea, and the biggest idea was Lord Prescott. Yes. And all the lords and ladies and gentlemen were sitting all these boardrooms looking down Britain. In other words, guilt by direct and indirect association and ignorance is no longer an issue with the people or the law because they're sick of them. 17 of these city regions, they're all in the north of England. And if one will start to fail because the councils that are running are more stupid than the dealer were born. [ Mr. Machim ], the elected Mayor of Teesside, just after he got elected, he was in the jewelries in hotel in Central Middlesbrough, a big public meeting. Him led the council all of a sudden this board group. Two of us stood up in that room and told the truth. I was one of them. And I explained them what happened from 2008 with HBOS, Lloyds Banking Group, people committed suicide, the staff that lost the jobs and everything else, and the signs was deafening. Now the biggest and most difficult thing is this. In 3 years' time, the less of the baby boomers retires, how are you going to replace these people, amidst predominantly women workers right the way across the board and jobs? In 2019, I was in Hyde Park with over millions of people in the last [indiscernible] march. And the press media interviewed me and many others. And I explained to the London Broadcasting currently, 1 in 3 unemployed looked like in the industrial Northeast of England. So what do you think 1 in 3 unemployed is going to look like in London, the South and Southeast, which is predominantly service and light industry? What a shock they got. Now if these city regions start to fail, who's going to pick the bill, the local tax payer, the economy or the British banks? Because the banks that's starting down there in this square mile, the foreign banks, the lot sticks and they'll go across to the mainland. And my grandfather, my father's father is a Belfast [indiscernible]. Now with [indiscernible] dates in London are telling us they're going to scrap the protocol. What do you think Europe and the rest of the world is going to do? And what do you think is going to happen in this economy and the people? But all this is just rubbish. It doesn't affect your bank. So what is your Plan B solution? And what is your Plan C to that more solution? How are you going to sort all this mess out? And that's for that Dogger Bank, that world's biggest wind mill. It will take 10 minutes to wipe it out with a couple of missiles. So all this is just talk, no solutions. And so we've had of the politicians that banks the financial institutions for 30-odd years. And the people in the Northeast nation or 2.5 million of us, we don't as well. The railways, the bridges and all the rest of the infrastructure, it came out the ground in the Northeast nation, the coal, the sky, everything. There's none of that left. So you can talk about all the figures and all what you do in cracking eggs with a stick, walking on water because if these city regions fall, that idiot in Moscow, you got an idiot in Beijing, yes, see what they're going to do. So what's your big figures going to do now? So please tell us and the rest of this nation, what exactly you were going to do.

Thank you, Mr. Gomez. The first thing I would say -- and obviously, it wouldn't be appropriate for me to comment on political issues.

No, it's not political.

No, no, no, I will answer your question, Mr. Gomez. I will answer your question about what we are doing. And I would emphasize in that regard that we are genuinely a national business. We have significant numbers of people that work in all sorts of different regions all around the country. For example, more than 20% of our workforce work and live up here in Scotland. And therefore, the regional economies are very important to us and particularly to our customers. And we really are trying to connect with those areas. We have regional ambassadors for each of the areas around the U.K. And their role is to connect with local business people with local politicians to see how we can work with those communities. We are, at the moment, working in 3 of those regional economies to see specifically how we can build a relationship with the local authorities, which helps the broader community. And we hope very much that, that will be something that we can develop elsewhere once we prove the success. So we are absolutely doing our very best because we have a vital interest in doing that in order to support our customers, our community and fundamentally, Mr. Gomez, it is part of Helping Britain Prosper.

So Lloyds Banking Group [indiscernible].

I think we do not get involved in that. If there was such a project, we would obviously consider the financing of that in the normal way which we would approach such projects.

Sorry to see you take sides [indiscernible] and everything else here. Do you understand both nuclear biological and chemical warfare and the winds drifted up and down Britain. 15, 20 years ago, we had a fire on the BASF plant in Teesside. Four days it took our fighters to get it under control. Now about 80 kilometers -- about 6 to 7 years later, 80 kilometers South -- North of -- South of London, there's a little petrol flame in depot went up and you had this trepid black cloud, and the wind was pushing towards London. And the papers and [indiscernible] were screaming. We're doomed. We're doomed. Toxic black cloud coming towards London. Have you imagined what will happen? Why look there? [indiscernible] the ground?

All right. Thank you, Mr. Gorman .

Now I'm an ex-serviceman. I don't know about you, William, [indiscernible] chemical warfare [indiscernible].

Thank you, Mr. Gorman , and thank you for your support for Ukraine. Thank you. Next question. Ms. McConnell?

I'm Pauline McConnell. And kind of just I see -- it's actually very nice to hear about your strategy, and I do think it is absolutely wonderful for one.

Thank you.

I think Charlie will generally be a breathe of fresh air and it's very exciting times ahead I think.

Thank you.

Now we heard you talk a lot about the fact about your dedicated colleagues and -- that are, I believe, 58,000 of them. So my question is then, when are we -- and it really is related to severance costs, if you can say it. When are you going to be at a point where you are going to take those wonderful colleagues that you talk about and actually help to reskill them for your new [indiscernible]? Because I, as a shareholder, I'm really concerned about the severance costs. And I was actually a person who left in 2017, but I have watched the severance costs over the last 5 years. And as I say, I'm really concerned about that. So I'm just wondering what you are going to do to start to use your internal resources better. I think we have now created -- and I see it from a shareholder point of view about controlling -- about trying to control costs. I think we've actually reached a culture within that organization, where people -- and I'm not talking about the junior staff. I'm talking about your leaders, your leadership team. I think we've actually reached a point where people feel that it's a God-given right to have redundancy that us shareholders are all sitting here actually paying for. So my question, I think, is to Charlie is, when is anybody going to step forward and actually look at how those redundancies are allocated and actually start controlling those redundancies? We're giving out redundancies now, but actually -- they're actually golden handshakes. Let's be honest. They're not redundancy payments. And these are enhanced redundancy payments. So this is amounting to hundreds of millions of pounds, right? So when -- how are we going to control those costs? And how are we ever going to set our people to actually to look at this because, as I say, this is very -- and I say this is as an ex colleague coming from a human resources function as well, which, I have to say, and I'm going to say this, was one of the most corrupt functions I have ever worked in. And I came from a corporate background, and it was one of the most corrupt functions I have ever worked in with the most corrupt leadership that have ever worked for. It was toxic. So my question is, when is it -- and I'm hoping that Charlie -- I'm really, really hoping that Charlie is going to do something about this.

Thank you, Ms. McConnell, and I'm sorry to hear about your experience at Lloyds. The main thing I'd like to say is that we really try our best to redeploy people into other forms of experience within the group, and we've been actually very successful.

[indiscernible] You have a whole redeployment team with a senior manager and [indiscernible] you have 5 colleagues probably [indiscernible] and they do nothing. It's failed service. That's how people have to look -- and you know them.

Well, I would...

[indiscernible] look for a new job -- have to look for a new job. But people genuinely -- I think there's a great don't want to work for you anymore. That's the thing. People don't want to work there, but they want to [indiscernible] people say, I'd really like to leave, but I'm certainly not leaving [indiscernible]. People won't even [indiscernible] anymore, and that's fueled by the corrupt managers that actually worked in there.

Well, all I can say is certainly, for example, when we're looking at, unfortunately, things like branch closures, the ability to redeploy staff from those branches is very high, and the statistics are very clear on that. We will absolutely take note of what you say, and it is definitely a priority for us as much as anything because actually, it is a waste of good human resource who are high quality.

[indiscernible] it's a waste of our money. I don't think half of the people sitting here today quite appreciate what was done inside the organization, and that's [indiscernible] and get golden handshakes, redundancy payment. [indiscernible] redundancies to people who are then brought back in again. [indiscernible] and by we, when you are making redundancy payments, which I'm not particularly fond of. But when you're making redundancy payments, instead -- with actually golden handshakes. You're calling them redundancy. many times.

Thank you. We've heard your concerns very clearly and we will reflect on them.

[indiscernible]

I think I said that we are doing things about it, but we will have those words in our ears as we consider these matters over the next few months.

Do a complete investigation into your HR. People . It would be a [indiscernible] that.

Thank you. So next question from Ms. McMillan , please.

My name is Lynn McMillan , and I'm a shareholder. I have long had a concern about the somewhat cozy cartel of the 4 big auditing companies in this country. I'm also as well as being a shareholder in receipt of a pension from British Home Stores, and you will know that your previous auditors, PwC, were fined for their failure to audit BHS properly before it went into liquidation. And your current auditors, Deloitte, have been fined with a very big fine for failure to audit another company properly. My question is, why are you only considering the 4 big auditors in this country when you look at auditors? I understand that you had to reject Ernst & Young and KPMG because of conflicts of interest when you appointed Deloitte. Are there no other companies out there that you could use to audit yourselves rather than these companies who have been proved by being fined to have acted improperly? And could I also ask what your policy is going to be in the future for changing your auditors because many companies have far too long a cozy relationship with their auditors, in my view?

Thank you, Ms. McMillan . And I understand the concern you raise because there are a limited number of firms that can audit the -- an organization of the size and complexity of Lloyds Banking Group. But when we did go through the process of tendering for our audit, which we did back in 2019, we did invite a range of different firms to participate, and our conclusion at the end was that Deloitte were the best able to do that. And we've now been working with them as they've taken over the audit, and this was the first year of the audit -- of their audit having taken over as auditors. And it's a massive task to switch auditors. But actually, it brings many good things, as you say, and I think we've benefited from that as well. I think you said that it's important to switch auditors on a regular basis, and we will obviously intend to continue doing that in line with the regulations that set out what we need to do on that regard.

So how -- when do we [indiscernible]?

I think the period of auditors, Sarah, is...

So you've got no plans to retender currently or we would look at that in line with regulation in terms of when that would be a point of retendering or in the future, where we had a mandatory need to change auditors?

We would change either if we decided that was the right thing to do or at the point in time when the regulations say that we would have to retender with the auditors, which is...

Which is when?

Which is?

So mandatory retendering after 20 years, and then we would consider whether we would retender after we need to consider it at 10 years, and then there would be a mandatory process later than that.

Thank you. Mr. Lewis ?

My name is P.J. Lewis. I'm a shareholder, and this might be questions of slightly different vein to those that have gone before, and it concerns the report and accounts, your Item 1 of the meeting. And particularly, the risk management section on Pages 184 to 193. Some shareholders may not be aware that the Agricultural Mortgage Corporation is a wholly-owned subsidiary of Lloyds Banking Group. It's also unregulated. And I think this pertains very interestingly to the comments by the Chief Executive about risk management and actually, in reference provision for HBOS and some of the errors there. As an unregulated lender, it considers itself not answerable to either the FCA or the PRA, and that may be one of the reasons why some consider it to have a, as you wish, either puck in the air attitude or alternatively, cowboy, but it certainly puts it in a company with fairly dubious lenders. Now turning to supervision. It would seem that their operations are covered by -- in terms of risk conduct on Page 186; operations on Page 189; and regulation, particularly on Page 191. And when I read those sections of the annual report, they're all frankly pretty light in terms of supervision and oversight, which isn't the case in terms of, for example, treasury risk. So I know that Lloyds Banking Group accepts responsibility for this wholly-owned subsidiary. And therefore, by deduction, actually, the likes of the regulators do apply. And there seems to be an air gap between what this organization, AMC, Agricultural Mortgage Corporation, thinks and what Lloyds Banking Group representatives think. And that's why it's of a particular concern to me. So my 3 questions, if I may, are, firstly, what specifically is the supervision and oversight of the Agricultural Mortgage Corporation? Secondly, do you, Chairman, consider that, that supervision and oversight is adequate? And thirdly, what financial provision is made for failure in terms of conduct, operational and regulatory risk within the Agricultural Mortgage Corporation?

Thank you, Mr. [ Lewis ]. I wish I had detailed answers to all those questions, but I fear that I don't have the level of insight into what the Agricultural Mortgage Corporation does in order to provide you with those. But what I will undertake to do, I am absolutely sure that, that entity is supervised in the same way, as you said, that we would supervise other organizations. But what I would suggest I do is go away and look into those questions and come back to you with the answers they deserve.

That's reasonable. How will you make the rest of the shareholders aware of that, please?

Well, we might -- I don't know whether either of my colleagues involved on the risk side have anything to say on this matter.

Yes. So essentially, the lending that is undertaken in the AMC would be subject to the standards of lending practice, and they are monitored and enforced by the Lending Standards Board. We would also have reference to our overall principles in terms of how we manage lending. We have a risk appetite which covers all of our various portfolios. So we would have to adhere to that. We have various principles as well in terms of as we assess credit risk. So I feel that there's various aspects to it that we will cover. So to me, it's within the risk appetite framework and -- sorry, the risk management framework and also the risk appetite that we have as well. But I think we can publish further detail.

So we will undertake to come back to you. I hope that covers the question as far as the broader shareholder group here is concerned, but we will place a summary of what we say to you on our website accordingly. Thank you. Mrs. [ Glover ]?

The bank made a profit of GBP 8.9 billion, but the cost of HBOS Reading keeps rising. But it doesn't promise recompense yet. Nothing has happened, and [indiscernible] keeps getting delayed. Recently in the news, Avon and Somerset Police handed themselves to the IOPC due to issues that suggested Lloyds' seniors had colluded with senior police to block investigations and acted racist. How will the bank recompense victims and when? If prima facie evidence was presented to the Board of Lloyds, would they take it seriously in relation to the impropriety at the Bristol business support unit? How would you react to this? And what are the -- what you doing in relation to risk and fraud from the issue to 28% Lloyds development capital, which is part-owned and commercial first? And will this Board report the past Board for false reports that whitewashed fraud as 3 landlords ruled bribery and fraud in relation to -- with the first -- commercial first?

This is Charlie Nunn. [indiscernible]. Thank you, Mr. Glover . First of all, HBOS Reading, as I said earlier, there is a very clear update on the situation around HBOS Reading on our website. We have very much given responsibility to Sir David Foskett to carry out that review, and we very much want him to come out with generous compensation for those involved. And that really is a matter for him. And the ongoing Dame Linda Dobbs investigation is a matter for her. They are rigorously independent of Lloyds and quite appropriately so. The situation in Bristol is a little different. It's very different, actually. We have reviewed that on a number of occasions. My understanding is that the police have also reviewed that. And as far as we are concerned, there is no evidence to justify the sort of comments that you've characterized around that.

Thank you. Mr. Murray ?

Mr. Chairman and fellow shareholders, I'm so sorry to have to report that despite all its platitudes and sound bites, this company is not one we should or can be proud of. Let me explain. Through the misdemeanors of several of its officers, including those in the Commercial Banking complaints division, it has presided over the totally unnecessary and avoidable destruction of a wonderful business in the North of Scotland, an award-winning restaurant. When the restaurant partners decided to buy a pub that was up for sale in their town, it was logical to incorporate the acquisition as a limited liability company. Incredibly and indefensibly, the Bank of Scotland tied both businesses borrowing up in, first, cross-securitized loans; and second, a dreadful financial instrument, EFG, the Enterprise Finance Guarantee, which was both mis-sold and improperly administered to the extent of possibly being fraudulently run by the bank I hasten to add. The company stumbled and was rightly wound up, but the bank brought down the restaurant partnership with it when it should have protected it. Not once in the 4 years before, during and after its demise that these bank officers ever bothered to visit these customers or their businesses, whether to help them or support them. They've added insult to injury by saying any visit would have made no difference. How callous, how ridiculously untrue. Bank of Scotland by your side, really? The bank officers were bullying and barking down the phone, and this became the soup du jour. Bank of Scotland then told the partnership to close. The bank has persistently denied, one, that it came up short; or two, even did anything wrong. Mind-blowing. But worse than that, cruel, dishonest and with fewer morals than a newly neutered tomcat. I appreciate this dreadful litany of the bank's wrongdoings cannot be resolved on the floor of this meeting. But will you, Mr. Chairman, meet with me after this AGM downstairs and assign either yourself or another main Board Director to meet with me further and hear the details of what these dreadful bank officers have been doing, not only in your name but also in the name of us, shareholders? These staff, including misters B and T and C and M, for undisclosed identification, they have bullied your customers, lied to them, perceivably attempted to blackmail them, continually obstructed our attempts to resolve this case and even carried out a complete investigation against themselves and declared that they had done nothing wrong, surprise, surprise. Now this may not be another Reading, but it's destroyed the lives and livelihoods of the 2 parties involved and faddled into this web of deceit, turpitude and destruction by this handful of officers who demonstrated an appalling attitude. So Chairman, in conclusion, may I repeat the request, please, for a meeting with you downstairs after this to map out where we go from here to restore justice to these 2 long-suffering injured parties?

Mr. Murray , this is a long-standing issue and it wouldn't surprise you to hear that we don't agree with your characterization of what has happened. I think the right way to continue to pursue this, if you wish to do so, is with people who are better able to deal with this than I am because they are experts in what should and should not be done in these circumstances. But I am obviously sorry to hear what you've had to say, and I suggest that you set on anything new that you want to set down and we will obviously consider that properly.

Can I just respond to that by saying this is the one opportunity we have. First of all, telling all the directors on the main Board what is going on in their name underneath you. So please be aware, we're talking about double [indiscernible]. We're talking about blackmailing and [indiscernible] failure to supply something like this would and also why . So I would repeat my request to you, Mr. Chairman, please, the one opportunity I have to meet downstairs just to move this a little further forward. Not for you to reappoint the same people doing the covering up and closing the [indiscernible] of this matter [indiscernible] from the main Board but also determination to root out all the evils that I have described to you in the organization. .

Thank you, Mr. Murray . You have made your point very clearly and the Board has listened to it. Thank you.

Please, can we meet downstairs?

As I said before, I simply don't think that would achieve anything.

You're obviously condoning this take this further yourself.

As I have said, we don't agree with your characterization of this. But obviously, your opinions are your opinions and...

One last [indiscernible] actually. Who and when will you explain to me why and how you disagree and listen to our arguments and ?

I think we've been in a lot of discussion over the years on this.

One meeting. 5 minutes at the back [indiscernible] and obstructing this [indiscernible]. Please, do the decent thing. Let's get into it and look further into it. by 4 named officers of the bank.

I will ask customer service to look at that correspondence, and Mr. Murray , I will look at it myself as well. And I think that's as far as it makes sense to get at this stage.

All right. Thank you for that. Thank you for the other shareholders for bearing with me on this.

Thank you. That is -- thank you. Okay. Next question, Ms. Boothroyd ?

Rachel Boothroyd from Unite the Union. Our question is simple really. We want to know how you can justify paying GBP 3.4 billion to shareholders, what amounts to a 23% pay rise to CEO, Charlie Nunn, and significant pay rises for nonexecutive directors while giving staff a pay rise, which is well below current inflation levels as they try to survive the worst drop in living standards since the 1950s. We'd like to know that the bank made GBP 5.9 billion in profit last year. The money is there, I think, without a doubt. And how is this a coherent strategy with what you call helping the U.K. to recover post-COVID, if you're not investing in the very people who are employed by you and who made that profit in the first place? And do you all honestly believe that's fair?

Thank you, Ms. Boothroyd . I will make 2 points, first of all, if I may. First of all, that Charlie has only been here a year so it's -- he hasn't had a pay rise. But as with all staff, we have paid executives a bonus this year when they were not paid a bonus last year. I would say that the Board has taken a pay rise of only 1%. But to move to the meat of your question, which I think is perfectly reasonable. Given the cost of living crisis that we're all facing, we did have a pay settlement of 3.6% this year. We very much focus that on lower-paid people so that everyone in the organization got a pay increase of at least GBP 1,000, which we felt was important given the current circumstances. And we felt that, that overall was the right outcome. And indeed, that was voted through by a majority of our trade union members. And obviously, we continue to think about how our staff are faring in this difficult time. And that's something that we will continue to discuss in our engagement with the unions, which we greatly value.

Can I just...

Of course.

Just to add [indiscernible] accept that offer. And a lot of them now in their pay a fee rise of GBP 30 to GBP 40 a month, which, as we know, goes absolutely nowhere near inflation, the increase in household bills, food expenditure and national insurance rises. It doesn't even touch the sides. We've had members telling us they've had to relocate because they can't pay their rent and that they happened to opt out or reduce their pension contributions. So I just want you all to know that.

Thank you. The next question from Mr. Medlock.

Mr. Chairman, members of the Board, fellow shareholders, I'm asking this question on behalf of Royal London Asset Management and Friends Provident Foundation, shareholders of Lloyds Banking Group. As the cost of living is a constant concern from governments to consumers, focusing corporate strategy around social issues become more urgent. Just transition ensures that social issues are considered when moving to a low carbon economy. It links the climate goals with other social outcomes, such as poverty eradication and regional development goals. Little consideration of the social risk of climate action could be a significant barrier to achieving net zero. Therefore, it must be addressed by all actors, including banks. We also think that including social considerations and the delivery of climate goals may ensure Lloyds capitalizes on opportunities from financing the transition to net zero. A climate plan that incorporates just transition would address the social impact of transitioning to a low-carbon economy on regions and enable vulnerable customers to benefit. So in this context, Mr. Chairman, our question is, would Lloyds Banking Group consider explicitly integrating just transition throughout its climate transition plan?

Thank you, Mr. Medlock. I think -- I hope -- as you've heard again from the opening speeches, we do see social impact as a really important part of what we do across the piece in this organization. I think the sort of formality of the just transition plan is evolving at this point, and we will definitely watch that with care to see whether we can combine our existing approach in this area with the just transition plan. But I think that's something we will keep under review, if that's all right. Thank you. Mr. [indiscernible]?

Well, 3 short questions possibly. We're very impressed with your Halifax share buying scheme you have. It's very cheap. And I just thought it could be improved, though, in one way because when you reinvest the dividend, if you got a fairly small holding, it's not done with just the cash buildup because the cost might be half the dividend or something. So I wonder if that could be looked into because sometimes don't charge when you have a regular payment. Secondly, you mentioned that your -- you have a company that is going to lease electric cars or you're going to finance them. And just over the last 4 years, I've been reading about synthetic fuel being made by Porsche initially and then universities in the South. And the idea is that you get hydrogen and then you take CO2 from the atmosphere. And therefore, you get a synthetic fuel that is 0 carbon. And then lastly, are you worried about the drop in growth as forecast in the economy as people are talking about 0% growth fairly soon? I just wonder what -- whether it will cause bad news for banks.

Thank you. Taking the 3 questions in order, we will certainly look into that, around HSO , we will take that. So Halifax dealing, we will take that away and consider that. I think as to hydrogen fuel, I think it's a very exciting prospect, but it's in very early stages of development. And at the moment, one of the issues is actually, creating the hydrogen is almost as difficult from an emissions point of view as what it solves. But I am sure that, that will develop over time, and we will definitely work with our car manufacturing clients to make sure that we take advantage of that. As to the economy, yes, of course, we are worried about it. But equally, we will do whatever we can to help the economy and I think, again, as we discussed in the opening speeches, the help that we're giving to small businesses, the GBP 13 billion that we lent to companies last year through the government's COVID schemes, 340,000 companies. I think we're doing everything that we can to help make sure that actually Britain does continue to prosper. Thank you, Mr. [indiscernible]. So I think we are coming towards the end of our questions, but the next one we have, Professor Harper .

I'm a former Lloyds Bank manager, and I have always respected Lloyds Bank prior to the 2008 banking crash. Unfortunately, your predecessors have done a very awful job in trying to recover the bank from that dire time. I'm a professor of banking. I train bankers and I've done it all my life. I work for revenue and customs, looking at the bank's balance sheets and looking at their activities for Lloyds and RBS. I'm time served, proven retail banker and internal auditor and former Managing Director. I'm 72 years old and have witnessed the good, bad and ugly and pure evil that banking has become. Customers can never trust banking to do the right thing. I have trained bankers for most of my careers and a mentor for graduates at university. Whilst employed at HMRC, I trained tax inspectors for the Tax Academy whilst working as retail banking inspector. I've written to you and your predecessors, offering to guide you with the rebuilding of the bank. To a man, you've all refused my offers. Terrible [indiscernible] and other reviews currently being undertaken in the United States as a result of George Osborne's activities have to be addressed and dealt with. I'm ashamed of this bank and your predecessors and its management office. I was hoping under Robin, the bank would once again regain the respect from the community and customers that he had under the stewardship of a good friend, Sir Jeremy Morse, but alas, no. We were once an honest bank, but alas, no longer. We can never be proud of the bank black horse again. The galloping herd is untrusted and a fraud, working to the Wild West herds that roam aimlessly. Now it is run by lawyers and not bankers, and this is my problem. Lawyers have very different ethics, morals and standards to those expected from bankers. The billions that you have spent on your lawyers fighting the defense pool is money wasted, said to be GBP 1 billion a year. Your victims are [indiscernible]. Your customers, families and their children, also businesses with their supply chain customers, are all victims. The whole country has paid the price through austerity, fines in excess of $540 million you and your predecessors have paid using shareholders' funds. The shareholders want reparation. As to your victims, we did not authorize these payments. Fines equate to crimes. As a professional retail banker, I'm ashamed of the current Board because you have done nothing to right the wrongs of yesteryear. You need to sack your lawyers and start to be honest. The billions you have spent fighting our victims is unacceptable. The post office chair has been measured and found wanting. She should be in prison instead of the innocent [indiscernible] who are victims of IT fraud. Lloyds Banking Group frauds are far greater than those undertaken by the post office. And their lawyers, one cannot leave NatWest RBS out of this charge. I noticed that the director in charge of RBS Global Recovery Group is on our Board. I'll say no more on that. All I would say is we're here to help you. You don't listen to us. I want to help you. I know the issues. I know how to train bankers, and I know how to get this right. Please, will you be with us and listen to us and act accordingly?

Well done, professor.

Thank you, Professor Harper . I actually feel that on behalf of my colleagues at Lloyds, I just need to put a slightly different slant on some of the things that have been said. I am proud of being Chairman of Lloyds Bank. I am proud of what our people do all day every day. And I fundamentally believe they do their best to achieve the right things for our customers. And I just think it's important that I put that on record because certainly, if you look at the external reviews, the rich reviews, for example, the service that we provide to our customers compares extremely well with those of our peer group. So I wouldn't want those -- I understand that some shareholders have fundamental issues with the group, and I respect that. but I wouldn't want shareholders as a whole to go away from this meeting feeling that some of the things that have been said today are representative of the whole of this organization. I'm sorry.

So are you saying there are no rotten apples at all in the group and the Board?

I don't think anyone can say in an organization of the complexity and size of this that everything we do every day of the week is perfect. No, I'm not. But I am proud of what this organization and what the people in this organization do for this country.

Can you help me root out the apple?

We've already had our discussion. Thank you, Mr. Murray . Okay. So we're now reaching the end of the question-and-answer session so please ensure you vote now if you wish to do so as I'll be closing the voting when the question-and-answer session ends. And I think we've got a final question from Mr. [indiscernible] as a proxy for Mr. Milan .

As the discussion has developed here today, my question has got a little bit of a Part B on it because I've noticed a few things that I might be able to help with. I'm here today as a result of at least 100 customers and shareholders of Lloyds Bank who have a grievance of one form or another, including my own. I am a professional criminal investigator and a former police detective. I can tell you that some of the issues that you are discussing here about Bristol, they are being resurrected by the police because they were not investigated properly the first time around. And I can assure you, as good as I understood here, I have a plethora of criminal matters that are covered in a lot of the cases. Having said that, they could amount to as much as GBP 3 billion of claims. This is my information, this is what I studied, and this is what I know. I'm not here to raise criticism. What I'm here now -- as I've seen what other people have said here, and it occurs to me that there is a disconnect between the buybacks calls, or whatever you like to call them, and the Board. And I would like to help the Board with a liaison of some sort. I have prepared a short handout, which I can give to you all in a minute, which will highlight some of the issues that you are not seeing. It is apparent from my studies over the last 7 years that the Board is not aware of a few of the bad apples, and we have people who are senior managers who are investigating their own wrongdoing, who are liaising with the financial investment service, and I can give you evidence of everything from forged signatories to false instruments being proffered in court and personally witnessing perjury. I don't wish to go any further with that. I can help the Board stop that now. That may be a big claim. I have a good team with me, and my team can help you. And what we need is your help and your commitment to help us stop this in its track. It has the potential of being far, far bigger than HBOS. We can stop it now by dealing with the issues. I've been with Lloyds for 40 years. 3/4 of that time with Lloyds, I had no issues. I've had loans. I've had business -- everything. Never had an issue. I had one small thing went wrong, and that's escalated to a very serious matter through cover-ups on the minority. And I agree. You've got 58,000 employees. Only a very small minority of those employees are bad apples, but we need to identify that. I've identified some. I need your help to stop this in its track now. And my question is, a couple of years ago, Lord Blackwell stood where you are now, and he gave a commitment publicly to work tirelessly, I think he said, with police and other agencies to stomper any fraud or any wrong doing within the group. And since then, I understand that there are replacements on the Board. I just would like to clarify, have I got that commitment from everybody on that Board today?

You do.

Thank you. Does that go for everybody?

It does.

Thank you. So on that score, I think a liaison between a -- should we say non-police agency and a non-agency, one representative -- so one single representative of the people who have now got agreements that is coming up to a head and it's now being investigated by at least 7 police forces that I know of individual matters. Before that gets out of hand, is there any way we can form some liaison in one where I can give you a piece of paper where you can stop it in its tracks.

Thank you, Mr. [indiscernible]. Please hand over the document that you would like to give to -- somebody from security will take it, and I will make sure that I read it myself. Thank you. Okay. Now we've come to the end of the question-and-answer session, and I'm about to close the voting. So please register any final votes now. I now declare the voting closed. And that concludes the voting at the meeting. Thank you. The proxy votes already received in respect of each resolution are now showing on the screen behind me, and the provisional result is that all resolutions have been carried. I'd like to thank shareholders for their continued support. The poll count will be conducted by our registers -- registrars, Equiniti, who will also act as poll scrutineers. 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. Please return your voting handset to one of the collection points outside this room. Thank you for attending the meeting today and for your support, which we continue to place great value on, and I wish you all a very safe journey home. Thank you very much indeed for your time.