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OPTIMISING LIQUIDITY & YIELD
SME
April 2016

BEYOND CREDIT RATINGS
2
Output
Qualitative Factors
Credit
Ratings
Institution/Limits
LiquidityFunding
Lending
Exposure
6 Factor Quantitative Framework
Basel III
Relationship strength, operational reach, news flow and ease of business
Input
Combining traditional measures with these factors provides a strong
framework to set counterparty limits
Market
Data
Capital
Buffer
Regulatory
Environment
An approach to assessing and monitoring your bank limits beyond traditional Credit Ratings

LOW RISK BUSINESS MODEL
3
Increasing recognition of balance sheet strength and de-risking through best in peer group
CDS*
Apr-2012 101 301 15 417
Apr-2013 50 156 15 221
Apr-2014 53 74 15 142
Apr-2015 57 60 15 132
Apr-2016 59 102 15 176
15/04/16
EXAMPLE: 5YR Wholesale Deposit (bps)
PERIOD
3MTH
LIBOR
LLOYDS
BANK CDS
ARRANGEMENT
FEE
TOTAL DIFFERENTIAL
Source: Bloomberg Data & Lloyds Bank analytics as
-241
Lloyds Bank PLC 102.497
Banco Santander SA 124.779
Santander UK PLC 90.456
Barclays Bank PLC 125.947
Royal Bank Of Scotland PLC 124.573
HSBC Holdings PLC 98.39
Source: Bloomberg Data as at 15/04/16
INSTITUTION CDS (bps)
*CDS: A credit default swap is a particular type of swap designed to transfer the credit exposure of fixed income products between
two or more parties.

SUMMARY OF RISK FACTORS
LONG
TERM
SHORT
TERM
LONG
TERM
SHORT
TERM
LONG
TERM
SHORT
TERM
Lloyds Bank PLC £49,303.71 16 4.80% 13.00% A1 P-1 A+ F1 A A-1 102.497
Banco Santander SA £46,678.65 18 4.70% 10.05% A3 P-2 A- F2 A- A-2 124.779
Santander UK PLC N/A N/A 4.00% 11.60% A1 P-1 A F1 A A-1 90.456
Barclays Bank PLC £28,191.15 40 4.20% 11.10% A2 P-1 A F1 A- A-2 125.947
HSBC Holdings PLC £88,486.56 9 5.00% 11.90% Aa2 P-1 AA- F1+ AA- A-1+ 98.39
Royal Bank Of Scotland PLC £26,773.86 44 5.60% 15.50% A3 P-2 BBB+ F2 BBB+ A-2 124.573
15/04/16
FITCH S&P'S
CDS
Source: Bloomberg data as of
INSTITUTION
MARKET
CAP (MN)
MARKET
CAP
(RANKING)
(1)
LEVERAGE
RATIO (2)
FULLY
LOADED
TIER 1 (3)
MOODY'S
A typical risk summary used by treasury teams to help determine Bank limits for deposits
3. The Fully Loaded Tier 1 Ratio measures a bank's core equity capital compared with its total risk-weighted assets. This provides a form of measure of a bank's capital
adequacy or financial strength.
1. Ranking is based on the largest market capitalised banks (1731) in the world
2. The Basel III leverage ratio is defined as the Capital Measure (the numerator) divided by the Exposure Measure (the denominator), with this ratio
expressed as a percentage. The basis of the calculation is the average of the three month-end leverage ratios over a quarter. The ratio provides a form
of measure of the bank’s capital compared with its financial leveraging and the bank’s ability to meet financial obligations.
4

HSBC Bank PLC Lloyds Bank PLC Santander UK PLC Banco Santander SA Barclays Bank PLC RBS PLC
Fitch (review date 19th May 2015) Moody's (review date 28th May 2015) S&P (review date 9th June 2015)
FITCH
LONG TERM SENIOR DEBT RATING OF LLOYDS BANK PLC & LLOYDS BANKING
GROUP UPGRADED TO ‘A+’ FROM ‘A’ (19TH MAY 2015)
MOODY’S
LONG-TERM SENIOR DEBT AND DEPOSIT RATINGS OF LLOYDS BANK PLC
CONFIRMED AT ‘A1 / P-1’ & OUTLOOK UPGRADED TO POSITIVE (28TH MAY 2015)
S&P
LLOYDS SENIOR DEBT RATING ARRIFMED AT ‘A’ (OUTLOOK STABLE) ON
CONCLUSION OF SOVEREIGN SUPPORT REVIEW (9TH JUNE 2015)
CREDIT RATING AGENCIES ACTIONS 2015
5
AA-
Aa2
AA-
A+ A1
A A
A1
A A A2
A-
A- A3
BBB+
A3
BBB+BBB+
One notch upgrade One notch downgrade
Revised rating landscape following Agencies removal of UK Bank assumed Sovereign support post
implementation of BRRD regulation
Spain not yet
adopted BRRD
therefore not
assessed

LOW RISK BUSINESS
Mortgage credit quality continues to improve with book supported by employment trends and low
interest rates
6
LBG: Lloyds Banking Group
LTV: Loan to Value
HPI: House Price Index
Source: Lloyds Banking Group FY2015 Results.

Is the PRA
satisfied that
the bank is
failing or likely
to fail?
Is the BoE satisfied
that it is reasonably
likely that action will
be taken that will
result in the bank no
longer failing or
likely to fail?
Does automatic
write down or
conversion of
capital instruments
at the point of non-
viability ensure the
firm is no longer
failing or likely to
fail?
Does the BoE
consider it is
necessary to
exercise a
stabilisation power
having regard to
the objectives of
the resolution
regime?
Does the failing firm
have protected
deposits?
Consider which
tool, or combination
of tools, provides
appropriate degree
of continuity of
critical economic
functions
No action required
by resolution
authority
Place firm into bank
insolvency
procedure, for pay-
out or transfer
Carry out chosen
resolution strategy
No further action
within the resolution
regimeNo
Yes
Stabilisation tools:
• Private sector purchaser: transfer all or part of the business to a willing purchaser
• Bridge bank: this is used to transfer all or part of the business to a subsidiary pending a future sale
or share issuance.
• Bail-in: this is used to absorb the losses of a failed firm, and recapitalise that firm using the firm’s
own resources. The claims of shareholders and unsecured creditors are written down and/or
converted into equity to restore solvency, in a manner that respects the hierarchy of claims in
insolvency.
• Good Bank/Bad Bank: Separate clean and toxic assets allocated between good and bad bank
through a partial transfer of assets and liabilities
January 2015: Banks that fail will have losses imposed on shareholders and creditors (including depositors)
before being able to access alternate means of support
Yes Yes
No No
No
Yes
Yes
No
• Private sector purchaser
• Bridge bank
• Bail-in
• Good Bank/Bad bank
PRA: Prudential Regulation Authority
BoE: Bank of England
Source: Bank of England’s approach to resolution, October 2014
www.bankofengland.co.uk/financialstability/Documents/resolution/apr231014.pdf
BANK RECOVERY AND RESOLUTION DIRECTIVE
(BRRD)
7

Bail-in order of priority (from January 2015)
*Interest incurred post-insolvency and liquidators will only arise in the event of liquidation where both will belong to the holding company
1
2
3
4
5
7
8
9
6
10
Shareholders (ordinary shares)
Shareholders (preference shares)
Interest Incurred post-insolvency*
Unsecured subordinated creditors (eg subordinated bondholders)
Unsecured Senior Creditors
Floating charge holders
Preferential creditors (secondary)
Preferential creditors (ordinary)
Liquidators*
Fixed charge holders
(BRRD)
8
Potential running order of a Bail In with supporting ring fence structure

Bail-In Waterfall (2)
12.0
2.1
Tier 2
ECN tier 2
Fully loaded
CET1
Tier 1
18.8
2.7
1.4
10.3
Dec 2013
pro forma
4.4
CET1* and total capital vs. peers(1) (%)
2015 CAPITAL POSITION OF PEER BANKS
9
Lloyds Banking Group is a strongly capitalised bank within its peer group with a £81bn Bail In buffer
Bail-In
£28.5bn
£19.5bn
£33.0bn
£222.0bn
£229.0bn
£33.0bn
Equity Capital
Sub Debt
Senior Unsecured
greater than one
year
Unsecured Funding
(e.g. Corporate &
Local Authority
Deposits)
FSCS (Retail)
Secured Funding
£81BN
1) Peers are RBS, Barclays and HSBC as reported at Q3 2015 and Standard Chartered at HY 2015
2) Lloyds Banking Group as of 31st December 2015
3) LBG: 13.0% pro forma
*CET1: A measurement of a bank's core equity capital compared with its total risk-weighted assets. This is the measure of a bank's financial strength.

£10 loss
------------------ ------------------
£300 assets £290 assets £290 assets
£3 sub-debt
£2 sub-debt
£10 loss on
assets
£10 loss on
assets
£120 deposits
£128 other
liabilities
£9 Equity
£40 senior
liabilities of
which £10
unsecured
£40 senior
liabilities of
which £10
unsecured
£33 senior
liabilities of
which £3
unsecured
£9 Equity
£120 deposits
£128 other
liabilities
£120 deposits
£128 other
liabilities
Worked Bail In Example
Bank PLC has a balance sheet worth £300, funded by equity of £9 and other liabilities of £291.
Bank PLC incurs losses on its assets of £10, £9 of equity and £1 sub-debt are written down to absorb the £10 loss. This reduces the
assets and liabilities to £290.
The new balance sheet to meet the PRA’s capital requirements. The £9 of equity and £1 of sub-deb have been written off to absorb
the £10 loss. Consequently, £7 of unsecured senior liabilities and £2 of sub-debt is converted to equity.
1 2 3
1
2
3
£300 £300 Net £290/Gross £300 £290 £290 £290
(BRRD)
10

PRUDENTIAL REGULATION AUTHORITY (PRA) STRESS
TEST SCENARIOS 2014
11
Sourced from the Bank of England site (16/12/2014). http://www.bankofengland.co.uk/financialstability/Documents/fpc/keyelements.pdf
Annual GDP
Annual Inflation
Unemployment
HPI & CRE
Analysis of key metrics used by PRA
HPI: -35
CRE: -30%
+5.2%
-3.9%
+5.9%
-3.9%
SCENARIOSCAPITALRULESMETHODOLOGY
Key UK economic metrics (to trough):
 GDP (Gross Domestic Product): 3.9%
 CPI rate: 6.5%
 Unemployment: +5.2%
 HPI (House Price Index): -35%
 CRE (Commercial Real Estate) : -30%
 Base Rate: 4.25%
 Equities: -28%
Market shock assessed against EBA
(European Banking Authority) scenarios.
 PRA implementation of CRDIV
(Capital Requirement Regulation &
Directive) Capital Rules as outlined
in PS 7/13
 No prudential filter applied for AFS
assets
 Hurdle rates CET1 > 7% base, >
4.5% stress
 Leverage ratio > 3% in base. No
hurdle in stress
 Dynamic balance sheet with
deleveraging restrictions.
 No post 31-Dec capital actions
included (balance sheet as of close
31 Dec 13)
 Securitisation & Market risk
methodology aligned to EBA.
 No additional methodology
restrictions

TEST SCENARIOS 2015
12Sourced from Bank of England site (01/12/2015). http://www.bankofengland.co.uk/financialstability/Documents/fpc/results011215.pdf
Analysis of key metrics used by PRA
-3.9%
SCENARIOSCAPITALRULESMETHODOLOGY
Key UK economic metrics (to trough):
 Oil falls to USD 38p/b
 World GDP falls 7% from IMF World
economical forecast
 China house prices – 35%
 Hong Kong CRE – 45%
 China GDP slows from 7.5% to 1.7%
 CPI rate: -1.0%
 UK house prices: -20%
 UK Base Rate: 0%
 CET1 ratio > 4.5% of RWAs
 New Threshold for 2015 – 3% of
leverage exposure measure
 Stress scenario would reduce
aggregate CET1 ratio across 7
banks from 11.2% to low of 7.6% in
2016
 Aggregate Tier 1 leverage ratio
falls from 4.4% at the end of 2014 to
low of 3.5% in 2016
 Designed to assess resilience of
UK banks
 2015 stress test has 3 main
components:
1. Macroeconomic factors
2. Trade risk element of stress
3. Stressed projections for
potential misconduct
 In house modelling played a
greater role than 2014 test
CPI and Bank Rate in the UK in the 2014 and
2015 stress scenarios
Differences in severity of GDP shocks between the
2014 and 2015 stress tests
Projected cumulative five-year impairment charges in
China and Hong Kong
UK residential property price index and commercial
real estate index in the 2014 and 2015 stress
scenarios

TEST – 2014 VS 2015
13
4.7%
5.0%
3.9%
5.0%
4.6%
5.0%
3.5%
4.2%
3.6%
4.1%
2.4%
3.9%
2.0%
2.9%
4.1%
3.5%
3.0%
3.2%
2.6%
3.3%
2014 2015 2014 2015 2014 2015 2014 2015 2014 2015
Lloyds Banking Group Royal Bank of Scotland HSBC Barclays Santander UK
Leverage Ratio Leverage Ratio (PRA Stressed)
PRA Stress Leverage Ratio Test Results
12.0%
13.7%
10.8%
12.7%
11.2%
11.8%
10.0%
11.1%
11.8% 11.7%
5.0%
9.5%
4.6%
5.9%
8.7%
7.0% 7.0% 6.8%
7.6%
9.5%
2014 2015 2014 2015 2014 2015 2014 2015 2014 2015
Lloyds Banking Group Royal Bank of Scotland HSBC Barclays Santander UK
CET1 Ratio CET1 Ratio (PRA Stressed)
PRA Stress CET1 Ratio Test Results
Sourced from the Bank of England site (01/12/2015). http://www.bankofengland.co.uk/financialstability/Documents/fpc/results011215.pdf
Past performance is not a guarantee of future results

BASEL III REPLACES INDIVIDUAL LIQUIDITY
ADEQUACY STANDARD (ILAS)
14
Key changes for Bank stress event buffer
*30 Day coverage period is called Liquidity Coverage Ratio (LCR)
Cash comes in 2 types
Basel III Coverage Period*
ILAS Coverage Period
Day 1 30 Days 94 Days
1
2
 Current A/C
 Client A/C
 Cash Management
 Call A/C
 Term / Notice
 Current A/C
 Client A/C
 Cash Management
* Subject to economic incentive guidelines for calculation of LCR
Operational Investment
Cash held contractually less than 30 days falls into the Basel III Coverage period

OUTFLOW COVERAGE: LIQUIDITY COVERAGE RATIO
(LCR)
15
LCR 1 day to 30 days coverage duration
Operational*
Current A/C
Client A/C
Cash Mgmt
Investment
Call A/C
Current A/C
Client A/C
Cash Mgmt
Day 30
32 Days 95 Days
3 months 6 monthsDay 1
Notice A/C’s
25% Outflow
40% Outflow
Last 30 days of term deposits
needs to be covered as
Investment at 40% * Subject to economic incentive guidelines for calculation of LCR
Until notice is given there is no coverage outflow
Cash held contractually less than 30 days is now less attractive to deposit takers

OUR PRODUCT GUIDE
16
<3MTH
Call Account
Transactional Bank Account*
<3MTH Fixed Term Deposit
32 Day Notice Account
3-12MTH Fixed Term Deposit
12MTH Fixed Term Deposit
12MTH+ Fixed Term Deposit
OPERATIONAL CASH
Generally required within 3 Months
for day to day business
CORE CASH
Generally required between 3 to 12
Months not for day to day business
STRATEGIC CASH
Generally not required for at least
12 Months
3-12MTH
12MTH+
*Transactional Bank Account is not provided by Financial Markets and is available from your Local Relationship
Management Team
Deposit products available from Lloyds Banking Group

Description
 Variable interest rate is paid on funds that remain committed on a rolling 32
day basis
 Minimum of £10’000 and a maximum of £5,000,000
1
can be withdrawn giving
Lloyds Bank 32 calendar days’ notice, providing the remaining balance is over
£10,000
 Interest is calculated by reference to the Bank of England Bank Rate
 32 Day Notice Accounts are available in GBP only
Benefits
 Participate fully in any increase in the Bank of England Bank Rate.
 Interest is paid to the account daily.
Limitations and Risks
 The interest rate received on funds will decrease if the Bank of England Bank
Rate decreases
 Funds are committed for a minimum period of 32 calendar days
 Once notice is given a Reversion Rate will be applied on the notice account
balance. The Reversion Rate will apply for the entirety of the notice period.
32 DAY NOTICE ACCOUNT
17
32 Day Notice Account that pays a variable interest rate and has improved return over 32 day
Fixed Term Deposit for the same tenor
Quick Facts:
Account Type Notice Deposit
Currency GBP
Minimum Notice Period 32 Days
Interest Payment
Frequency
Daily
Minimum Opening
Balance
10,000 (£)
Minimum Withdrawal
Amount
10,000 (£)
Minimum Account
Balance
10,000 (£)
Maximum Account
Balance1
5,000,000 (£)
GBP
Interest Rate2
Variable interest rate
tracking BoE Bank Rate
with an agreed margin.
Reversion Rate BoE Bank Rate
1. Larger amounts may be available at Lloyds Bank’s discretion
2. Indicative Interest Rate only. The Interest Rate will be agreed
with you at account opening.

OPTION TO USE A LAYERED APPROACH
18
You can chose to use our layering deposit solution that may deliver flexibility of liquidity
• The example above left shows an example rolling layered deposit
approach where we take an example £1M portfolio, split out into 4
equal amounts and place into a 3, 6, 9 and 12 month deposits.
• On the maturity of each deposit there are two ways the deposits
can be rolled:
1. Preserving current maturity
Each deposit is then rolled at its maturity date into the
same term.
2. Maximising Return
When each deposit matures a new 12 month deposit
is entered into. At any time there is a 3 month liquidity
on ¼ of the portfolio.
0 5 10 15
Months
250
250
250
250
DepositSize£k
Rolling layered deposit – initial set up
0 5 10 15 20
Months
DepositSize£k
1. Rolling and preserving current maturity
0 5 10 15 20
Months
DepositSize£k
2. Rolling into 12 month deposits
This is a hypothetical illustration, actual results may vary
250 250
250 250 250
250 250 250 250
250 250 250 250 250 250 250 250
250 250
250 25
250
250250
250
250
250

CASH-FLOW VS YIELD PORTFOLIO REVIEW
An approach to assessing cash-flow to potentially improve yield
Typical deposit portfolio:
Long Date
(12m+)
Medium Date (3m –
11m)
Short Date (1 day
– 3m)
Call
Operational
Long Date
(12m+)
Medium Date (3m –
11m)
Call
Revised deposit portfolio:
• Enhanced blended return = Y%
Operational
Short Date (1 day
– 3m)
Supports
payment profile
Potential mix
change but
still supports
payment
profile
19
Return on capital Return on capital
• Blended return = X%
• Or £x return sum
Please note this is for illustrative purposes only
Scenario 1 Scenario 2

MONTHLY CASH-FLOW TOOL EXAMPLE
20
Change your return with Lloyds Bank
Returns are based on current Lloyds Bank deposits rates. Past performance is not a guarantee of
future results and potential returns and forecasts may not be achieved

UK OUTLOOK
21
Source: Lloyds Bank International Financial Outlook, April 2016
Forecast may not be achieved.
Lloyds Banking Group house view on key rates

PROGRESS AGAINST STRATEGIC PRIORITIES
22
Source: Lloyds Banking Group FY2015 Results.

DISCLAIMER
23
This presentation is for information purposes only. It is intended as a summary only and whilst it contains some information about the potential
risks and benefits of various financial instruments it should not of itself, form the basis for any investment decision. Whilst Lloyds Bank has
exercised reasonable care in preparing this presentation and any views, analysis or other information expressed or presented are based on
sources it believes to be accurate and reliable, no representation or warranty, express or implied, is made as to the accuracy, reliability or
completeness of the information contained herein. If you receive information from us which is inconsistent with other information which you have
received from us, you should refer this to your Lloyds Bank Sales representative for clarification.
Not all products or transactions will fulfill your requirements. You should be aware that any product or transaction which you enter into with us is,
in the absence of any written agreement to the contrary, on the basis that you are able to make your own independent assessment and decision
as to your requirements and whether that product or transaction fulfils those requirements. Your decision will be based on your own knowledge
and experience and any professional advice which you may have sought in relation to the financial, legal, regulatory, tax or accounting aspects of
the proposed product or transaction. Lloyds Bank, its directors, officers and employees accept no responsibility or liability for any loss (whether
direct, indirect, consequential, loss of profit or damages) howsoever caused or howsoever arising, in relation to this presentation or any
subsequent product or transaction entered into.
Lloyds Banking Group plc and its subsidiaries may participate in benchmarks in any one or more of the following capacities; as administrator,
submitter or user. Benchmarks may be referenced by Lloyds Banking Group plc for internal purposes or used to reference products, services or
transactions which we provide or carry out with you. More information about Lloyds Banking Group plc’s participation in benchmarks is set out in
the Benchmark Transparency Statement which is available on our website.
This communication does not constitute an offer to sell or a solicitation of an offer to buy securities in the United States (“US”) and is not being
directed at persons who are located in the US or who are US Persons, as defined in Rule 902 of Regulation S under the U.S Securities Act 1933,
as amended (altogether, “US Persons”).
Lloyds Bank is a trading name of Lloyds Bank plc and Bank of Scotland plc, which are both subsidiaries of Lloyds Banking Group plc. Lloyds Bank
plc. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 2065. Bank of Scotland plc. Registered
Office: The Mound, Edinburgh EH1 1YZ. Registered in Scotland no. SC327000. Authorised by the Prudential Regulation Authority and regulated
by the Financial Conduct Authority and the Prudential Regulation Authority under registration numbers 119278 and 169628 respectively. (09.15).

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Lloyds Bank Optimising Liquidity and Yield

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