Blueprint
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
28
November 2017
LLOYDS BANKING GROUP
plc
(Translation of registrant's name into
English)
5th Floor
25 Gresham Street
London
EC2V 7HN
United Kingdom
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports
under
cover Form 20-F or Form 40-F.
Form
20-F..X.. Form 40-F
Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes
No ..X..
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
_______
Index
to Exhibits
Item
No.
1
Regulatory News
Service Announcement, dated 28 November 2017
re: Bank of
England 2017 Stress Test Passed
28
November 2017
LLOYDS BANKING GROUP PASSES THE BANK OF ENGLAND
2017 STRESS TEST
Lloyds
Banking Group plc (the Group), together with six other financial
institutions in the UK, has been subject to the 2017 stress test
conducted by the Bank of England (BoE).
The
test applies a hypothetical adverse stress to banks' balance sheets
as at 31 December 2016 and assesses banks' capital adequacy against
their own minimum Common Equity Tier 1 (CET1) capital and Tier 1
leverage thresholds. For the Group these thresholds have increased
from 7.0 per cent to 7.5 per cent for CET1 (4.5 per cent Pillar 1
mimima plus 3.0 per cent Group specific Pillar 2a) and from
3.0 per cent to 3.25 per cent for Tier 1 leverage.
In
addition, the test also includes a 'systemic reference point' (SRP)
assessment for globally systemic banks (G-SIBs). As the Group is
not a G-SIB, this hurdle rate does not apply.
This
year's stress scenario for the UK combines rapidly rising interest
rates and unemployment in conjunction with significant falls in
property prices and GDP. In particular base rates rise to
4 per cent in the first year and remain at this level for a
further 3 years, GDP falls 4.7 per cent in the first year,
unemployment increases to a peak of 9.5 per cent in the second
year, and UK house and commercial property prices fall 33 per cent
and 40 per cent respectively over the first three years. In
addition the pound depreciates significantly against the dollar
with a 32 per cent fall in the first year. This scenario is
the most severe stress for the Group since inception of the BoE
stress tests.
Result of the stress test
Despite
the severity of the stress, the Group exceeds the capital and
leverage thresholds set out for the purpose of the stress test
before the application of any management actions; therefore, the
Group is not required to take any capital action as a result of
this stress test.
In the
trough of the stress, the BoE calculated the Group's estimated CET1
ratio as 7.5 per cent and its leverage ratio as 3.8 per cent
pre-management actions, and 7.9 per cent and 3.9 per cent
post-management actions, respectively, compared with a CET1 ratio
of 12.8 per cent1 and leverage ratio
of 5.2 per cent as at 31 December 2016. The Group continues to be
strongly capital generative and, as previously reported, the CET1
ratio at 30 September 2017 was 14.9 per cent2.
As
stated by the BoE, there is no mechanical link between the stress
test results and the setting of capital buffers. The PRA buffer is
expected to be communicated to the Group by the PRA before the
publication of the Group's 2017 results.
Further details
Details
of the PRA approach to the stress test and the detailed results in
relation to all participating financial institutions are available
from the Bank of England's website.
|
1
|
Adjusted
for the acquisition of MBNA.
|
|
2
|
Pre
dividend accrual (14.1% post dividend accrual).
|
For
further information:
Investor Relations
Douglas
Radcliffe
+44 (0)20 7356 1571
Group
Investor Relations Director
douglas.radcliffe@lloydsbanking.com
Edward
Sands
+44 (0)20 7356 1585
Director
of Investor Relations
edward.sands@lloydsbanking.com
Corporate Affairs
Fiona
Laffan
+44 (0) 20 7356 2081
Group
Corporate Communications Director
fiona.laffan@lloydsbanking.com
Matt
Smith
+44 (0) 20 7356 3522
Head of
Corporate Media
matt.smith@lloydsbanking.com
FORWARD LOOKING STATEMENTS
This
document contains certain forward looking statements with respect
to the business, strategy and plans of Lloyds Banking Group and its
current goals and expectations relating to its future financial
condition and performance. Statements that are not historical
facts, including statements about Lloyds Banking Group's or its
directors' and/or management's beliefs and expectations, are
forward looking statements. By their nature, forward looking
statements involve risk and uncertainty because they relate to
events and depend upon circumstances that will or may occur in the
future. Factors that could cause actual business, strategy, plans
and/or results (including but not limited to the payment of
dividends) to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such forward
looking statements made by the Group or on its behalf include, but
are not limited to: general economic and business conditions in the
UK and internationally; market related trends and developments;
fluctuations in interest rates (including low or negative rates),
exchange rates, stock markets and currencies; the ability to access
sufficient sources of capital, liquidity and funding when required;
changes to the Group's credit ratings; the ability to derive cost
savings and other benefits including, but without limitation as a
result of any acquisitions, disposals and other strategic
transactions; changing customer behaviour including consumer
spending, saving and borrowing habits; changes to borrower or
counterparty credit quality; instability in the global financial
markets, including Eurozone instability, instability as a result of
the exit by the UK from the European Union (EU) and the potential
for other countries to exit the EU or the Eurozone and the impact of any sovereign
credit rating downgrade or other sovereign financial issues;
technological changes and risks to the security of IT and
operational infrastructure, systems, data and information
resulting from increased threat of cyber and other
attacks; natural, pandemic and other disasters, adverse weather and
similar contingencies outside the Group's control; inadequate or
failed internal or external processes or systems; acts of war,
other acts of hostility, terrorist acts and responses to those
acts, geopolitical, pandemic or other such events; changes in laws,
regulations, accounting standards or taxation, including as a
result of the exit by the UK from the EU, or a further possible
referendum on Scottish independence; changes to regulatory capital
or liquidity requirements and similar contingencies outside the
Group's control; the policies, decisions and actions of
governmental or regulatory authorities or courts in the UK, the EU,
the US or elsewhere including the implementation and interpretation
of key legislation and regulation together with any resulting
impact on the future structure of the Group; the ability to attract
and retain senior management and other employees; actions or
omissions by the Group's directors, management or employees
including industrial action; changes to the Group's post-retirement
defined benefit scheme obligations; the extent of any future
impairment charges or write-downs caused by, but not limited to,
depressed asset valuations, market disruptions and illiquid
markets; the value and effectiveness of any credit protection
purchased by the Group; the inability to hedge certain risks
economically; the adequacy of loss reserves; the actions of
competitors, including non-bank financial services, lending
companies and digital innovators and disruptive technologies; and
exposure to regulatory or competition scrutiny, legal, regulatory
or competition proceedings, investigations or complaints. Please
refer to the latest Annual Report on Form 20-F filed with the US
Securities and Exchange Commission for a discussion of certain
factors together with examples of forward looking statements.
Except as required by any applicable law or regulation, the forward
looking statements contained in this document are made as of
today's date, and Lloyds Banking Group expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward looking statements. The information,
statements and opinions contained in this document do not
constitute a public offer under any applicable law or an offer to
sell any securities or financial instruments or any advice or
recommendation with respect to such securities or financial
instruments.
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LLOYDS
BANKING GROUP plc
(Registrant)
By: Douglas
Radcliffe
Name: Douglas
Radcliffe
Title: Group
Investor Relations Director
Date:
28 November 2017