2021 HALF-YEAR RESULTS News Release BASIS OF PRESENTATION This release covers the results of Lloyds Banking Group plc together with its subsidiaries (the Group) for the six months ended 30 June 2021. Underlying basis: In addition to the statutory basis of presentation, the results are also presented on an underlying basis. The Group Executive Committee, which is the chief operating decision maker for the Group, reviews the Group’s results on an underlying basis in order to assess performance and allocate resources. Management uses underlying profit before tax, an alternative performance measure, as a measure of performance and believes that it provides important information for investors because it allows for a comparable representation of the Group’s performance by removing the impact of certain items including volatility caused by market movements outside the control of management. In arriving at underlying profit, statutory profit before tax is adjusted for the items below, to allow a comparison of the Group’s underlying performance: • Restructuring, including severance-related costs, property transformation, technology research and development, regulatory programmes and merger, acquisition and integration costs • Volatility and other items, which includes the effects of certain asset sales, the volatility relating to the Group’s hedging arrangements and that arising in the insurance business, the unwind of acquisition-related fair value adjustments and the amortisation of purchased intangible assets • Payment protection insurance provisions The analysis of lending and expected credit loss (ECL) allowances is presented on an underlying basis and reconciled to figures prepared on a statutory basis. On a statutory basis, purchased or originated credit-impaired (POCI) assets include a fixed pool of mortgages that were purchased as part of the HBOS acquisition at a deep discount to face value reflecting credit losses incurred from the point of origination to the date of acquisition. Over time, these POCI assets will run off as the loans redeem, pay down or losses crystallise. The underlying basis assumes that the lending assets acquired as part of a business combination were originated by the Group and are classified as either Stage 1, 2 or 3 according to the change in credit risk over the period since origination. Underlying ECL allowances have been calculated accordingly. The Group uses the underlying basis to monitor the creditworthiness of the lending portfolio and related ECL allowances. Commentary within the results for the full year on page 1 and within the Interim Group Chief Executive’s statement on pages 7 to 9 is given on an underlying basis. Unless otherwise stated, income statement commentaries throughout this document compare the six months ended 30 June 2021 to the six months ended 30 June 2020, and the balance sheet analysis compares the Group balance sheet as at 30 June 2021 to the Group balance sheet as at 31 December 2020. Alternative performance measures: The Group uses a number of alternative performance measures, including underlying profit, in the discussion of its business performance and financial position. These measures are labelled with a '†' throughout this document. Further information on these measures is set out on page 125. CONTENTS Page Results for the half-year 1 Income statement – underlying basis 2 Key balance sheet metrics 2 Quarterly information 3 Balance sheet analysis 4 Group results - statutory basis 5 Interim Group Chief Executive’s statement 7 Summary of Group results 10 Segmental analysis – underlying basis 19 Divisional results Retail 21 Commercial Banking 23 Insurance and Wealth 25 Central items 27 Other financial information Reconciliation between statutory and underlying basis financial information 28 Banking net interest margin and average interest-earning assets 29 Volatility arising in the insurance business 30 Changes in Insurance assumptions 30 Tangible net assets per share 31 Return on tangible equity 31 Support measures 32 Risk management Principal risks and uncertainties 33 Credit risk portfolio 35 Funding and liquidity management 54 Capital management 59 Statutory information Condensed consolidated half-year financial statements (unaudited) 69 Consolidated income statement 70 Consolidated statement of comprehensive income 71 Consolidated balance sheet 72 Consolidated statement of changes in equity 74 Consolidated cash flow statement 77 Notes to the condensed consolidated half-year financial statements 78 Statement of directors' responsibilities 122 Independent review report to Lloyds Banking Group plc 123 Forward looking statements 124 Summary of alternative performance measures 125 Contacts 126 LLOYDS BANKING GROUP PLC 2021 HALF-YEAR RESULTS RESULTS FOR THE HALF-YEAR “During the first six months of 2021, the Group has delivered a solid financial performance with continued business momentum, bolstered by an improved macroeconomic outlook for the UK. While we are seeing clear progress in the vaccine roll out and emergence from lockdown restrictions, the coronavirus pandemic continues to have a significant impact on the people, businesses and communities of the UK. In this context, the Group remains committed to Helping Britain Recover from the pandemic and delivering for all stakeholders." William Chalmers Interim Group Chief Executive Solid financial performance with continued business momentum, bolstered by improved macroeconomic outlook • Good progress on Strategic Review 2021 priorities, including record customer satisfaction scores, improved capabilities in Markets products and a leading payments card spend market share • Announced today the acquisition of Embark, a fast growing investment and retirement platform business. Embark enhances our capabilities to address the attractive mass market and self-directed Wealth segment, completing the Group's Wealth proposition. Embark will also enable the Group to re-platform its pensions and retirement proposition, significantly strengthening its offering in Retirement, an important growth market • Statutory profit before tax of £3.9 billion, increased significantly on first half of 2020, benefiting from solid business momentum and a net impairment credit in the period • Net income of £7.6 billion, up 2 per cent, with increased average interest-earning assets at £441 billion, a strong banking net interest margin of 2.50 per cent and other income of £2.4 billion, alongside a reduction in operating lease depreciation • Sustained cost discipline with operating costs of £3.7 billion, including the impact of rebuilding variable pay in the context of stronger than expected financial performance • Remediation charge of £425 million, materially driven by the £91 million regulatory fine relating to the communication of historical insurance renewals, £150 million of redress and operational costs for HBOS Reading, and charges in relation to other ongoing legacy programmes • Net impairment credit of £656 million, including £333 million in the second quarter, as a result of an £837 million release driven by improvements to the macroeconomic outlook for the UK, combined with robust credit performance. Management judgements in respect of coronavirus retained, now c.£1.2 billion Balance sheet and capital strength further enhanced • Loans and advances at £447.7 billion, up £7.5 billion in the period, driven by strong growth of £12.6 billion in the open mortgage book • Customer deposits of £474.4 billion up £23.7 billion in the period, with continued inflows into the Group's trusted brands, including Retail current accounts which were up £9.9 billion in the period. Resulting loan to deposit ratio of 94 per cent, continues to provide a strong liquidity position and significant potential to lend into recovery • Strong capital build of 93 basis points in the first half prior to the interim ordinary dividend. Reintroduced a progressive and sustainable ordinary dividend policy, with an interim ordinary dividend of 0.67 pence per share • CET1 ratio of 16.7 per cent after dividend accrual, significantly ahead of both the ongoing target of c.12.5 per cent, plus a management buffer of c.1 per cent and regulatory requirement of c.11 per cent Outlook • Given our solid financial performance and the improved UK macroeconomic outlook, the Group is enhancing its guidance for 2021. Based on the Group's current macroeconomic assumptions: – Net interest margin now expected to be around 250 basis points – Operating costs now expected to be c.£7.6 billion – Net asset quality ratio now expected to be below 10 basis points – Return on tangible equity now expected to be c.10 per cent, excluding the c.2.5 percentage point benefit from tax rate changes – Risk-weighted assets in 2021 now expected to be below £200 billion Page 1 of 126 LLOYDS BANKING GROUP PLC 2021 HALF-YEAR RESULTS INCOME STATEMENT − UNDERLYING BASIS† Half-year Half-year Half-year to 30 June to 30 June to 31 Dec 2021 2020 Change 2020 Change £m £m % £m % Net interest income 5,418 5,478 (1) 5,295 2 Other income 2,417 2,461 (2) 2,054 18 Operating lease depreciation (271) (526) 48 (358) 24 Net income 7,564 7,413 2 6,991 8 Operating costs (3,730) (3,699) (1) (3,886) 4 Remediation (425) (177) (202) Total costs (4,155) (3,876) (7) (4,088) (2) Underlying profit before impairment 3,409 3,537 (4) 2,903 17 Impairment 656 (3,818) (429) Underlying profit (loss) 4,065 (281) 2,474 64 Restructuring (255) (133) (92) (388) 34 Volatility and other items 95 (188) (173) Payment protection insurance provision — — (85)