2002 Results2002 Results

Peter EllwoodPeter EllwoodGroup Chief ExecutiveGroup Chief Executive

14 February 200314 February 2003

Performance Headlines Performance Headlines -- StatutoryStatutory

•• Profit before tax £2,607 million, down Profit before tax £2,607 million, down £554 million£554 million

•• Income £8,878 million, down £11 millionIncome £8,878 million, down £11 million

•• Operating expenses £4,915 million, up Operating expenses £4,915 million, up 3%3%

•• Return on equity 16.7%Return on equity 16.7%

2002 Results 2002 Results -- UnderlyingUnderlying

•• Income up 2% to £9,484 millionIncome up 2% to £9,484 million

•• Costs flatCosts flat

•• Customer lending up 9% to £135 billionCustomer lending up 9% to £135 billion

•• Customer deposits up 7% to £116 billionCustomer deposits up 7% to £116 billion

Capital & DividendCapital & Dividend

•• Capital ratios satisfactoryCapital ratios satisfactory–– Total Total 9.6% 9.6% –– Tier 1 Tier 1 7.8%7.8%

•• The Group may inject some capital into The Group may inject some capital into Scottish Widows if the level of the FTSE Scottish Widows if the level of the FTSE 100 index falls to approximately 3,000100 index falls to approximately 3,000

•• Final dividend 23.5p, total 34.2p, Final dividend 23.5p, total 34.2p, up 1.5up 1.5%%

Asset QualityAsset Quality

Total customer lendingTotal customer lending £134.5 billion£134.5 billion

Residential mortgages Residential mortgages £62.5 billion£62.5 billion

RiskRisk--weighted assets weighted assets £122.4 billion£122.4 billion

NonNon--performing lendingperforming lending £1,414 million£1,414 million

Total provisionsTotal provisions £1,767 million£1,767 million

Provisions coverProvisions cover over 120%over 120%

Market ShareMarket Share

20022002 20012001Added value current accountsAdded value current accounts 43%43% 38%38%Current accounts Current accounts (18+ customers)(18+ customers) 24%24% 24%24%Personal lending Personal lending (balances)(balances) 14%14% 13%13%Credit cards Credit cards (balances)(balances) 10%10% 9%9%Personal depositsPersonal deposits 10%10% 10%10%Life & pensions Life & pensions (APE)(APE) 6%6% 6%6%Mortgages Mortgages (gross new lending)(gross new lending) 9%9% 9%9%Business banking Business banking (customers)(customers) 19%19% 19%19%

2002 Results2002 Results

UK Retail Banking & Mortgages UK Retail Banking & Mortgages --key achievementskey achievements•• Underlying profit before tax up 9%Underlying profit before tax up 9%

•• Personal loan balances up 15% Personal loan balances up 15%

•• Credit card balances up 27%Credit card balances up 27%

•• Savings balances up by 11%Savings balances up by 11%

•• Mortgage business grew stronglyMortgage business grew strongly

•• Current account base grewCurrent account base grew

2002 Results2002 Results

Insurance & Investments Insurance & Investments -- key key achievementsachievements

•• New business income 11% ahead of of 2001New business income 11% ahead of of 2001

•• Sales through IFAs up 25%Sales through IFAs up 25%

•• Life and pensions sales up 7%Life and pensions sales up 7%

•• LongLong--term savings remain a significant growth term savings remain a significant growth opportunityopportunity

2002 Results2002 Results

Insurance & Investments Insurance & Investments -- key key achievementsachievements

•• Our general insurance business continues to Our general insurance business continues to outout--performperform

•• Fee income from broking and underwriting up 19%Fee income from broking and underwriting up 19%

•• Profit up 16% to £754 million*Profit up 16% to £754 million*

•• We continue to be the leading UK distributor of We continue to be the leading UK distributor of personal lines insurance with over 9 million policies personal lines insurance with over 9 million policies in forcein force* excluding investment variance* excluding investment variance

2002 Results2002 Results

Wholesale & International Banking Wholesale & International Banking --key achievementskey achievements•• Good asset growthGood asset growth

•• Strong profit growth in NBNZ Strong profit growth in NBNZ -- up 32%up 32%

•• Asset Finance division strengthened through Asset Finance division strengthened through acquisitionacquisition

•• Continued focus on high quality assetsContinued focus on high quality assets

2002 2002 -- a Challenging Yeara Challenging Year

•• Economic uncertaintyEconomic uncertainty

•• StockmarketStockmarket turbulence turbulence

•• Regulatory pressuresRegulatory pressures

•• CompetitionCompetition

2002 2002 -- a Challenging Yeara Challenging YearExternal InfluencesExternal Influences

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2002 2002 -- a Challenging Yeara Challenging YearRegulatory PressuresRegulatory Pressures

•• 10 substantial financial services reviews 10 substantial financial services reviews over the last 3 years aloneover the last 3 years alone

•• Introduction of price controls Introduction of price controls –– Stakeholder pensionsStakeholder pensions–– SME current accountsSME current accounts

•• Markets fiercely competitiveMarkets fiercely competitive

Our VisionOur Vision

•• A business which truly creates value for A business which truly creates value for our customersour customers

•• A business where our customers trust us A business where our customers trust us to look after more of their financial affairsto look after more of their financial affairs

•• A business where our staff understand our A business where our staff understand our strategy, agree with it and know that what strategy, agree with it and know that what they do is vital to our successthey do is vital to our success

Our Strategic AimsOur Strategic Aims

1st choice: customer value creation, customer trust1st choice: customer value creation, customer trust

Leader in chosen marketsLeader in chosen markets

Create investment headroom by driving down Create investment headroom by driving down costscosts

World class:World class:CRMCRM

managing changemanaging changemanaging and leadingmanaging and leading

our peopleour people

maximising shareholder value over maximising shareholder value over timetime

==

First Choice for CustomersFirst Choice for Customers

•• Selling Selling more products to more customers more products to more customers than ever beforethan ever before

•• Largest branch network in the UKLargest branch network in the UK

•• One of the largest telephone and internet One of the largest telephone and internet banking operations in Europebanking operations in Europe

•• Advanced segmentation allowing us to Advanced segmentation allowing us to offer more relevant products and servicesoffer more relevant products and services

Leader in Chosen MarketsLeader in Chosen Markets

Market positionMarket position 20022002 20012001Personal loansPersonal loans 11 11Home insuranceHome insurance 11 11Current accounts Current accounts (customers)(customers) 11 11Added value current accounts Added value current accounts (customers)(customers) 11 11Motor financeMotor finance 11 11Business banking Business banking (number of customers)(number of customers) 33 33Mortgages Mortgages (balances outstanding)(balances outstanding) 33 33Credit cards Credit cards (cards in issue)(cards in issue) 33 33

estimates based on internal data and a range of external sourcesestimates based on internal data and a range of external sources

Driving Down CostsDriving Down Costs

•• Achieved target to hold cost growth at a Achieved target to hold cost growth at a rate not exceeding inflation rate not exceeding inflation -- underlying underlying costs flatcosts flat

•• Excluding acquisitions, staff numbers Excluding acquisitions, staff numbers reduced by over 4,000reduced by over 4,000

Intellectual CapitalIntellectual Capital

•• Source of competitive advantageSource of competitive advantage

•• Investing to develop our peopleInvesting to develop our people

•• Recruiting the bestRecruiting the best

•• Capturing the benefitsCapturing the benefits

SummarySummary

•• We will continue to capitalise on our strengths:We will continue to capitalise on our strengths:–– Strong franchiseStrong franchise–– Strong products Strong products –– Improving serviceImproving service–– Strong distribution capability Strong distribution capability –– Strong brandsStrong brands

•• We will continue to focus on creating value for our We will continue to focus on creating value for our customers to create value for our shareholderscustomers to create value for our shareholders

•• We will continue to build strong intellectual capitalWe will continue to build strong intellectual capital

•• We are well positioned for organic growthWe are well positioned for organic growth

2002 Results2002 Results

Philip HamptonPhilip HamptonGroup Finance DirectorGroup Finance Director

14 February 200314 February 2003

Key Issues Key Issues -- 20022002

•• Financial performanceFinancial performance

•• Disclosure issues and pensionsDisclosure issues and pensions

•• CapitalCapital

Group Profits and EPSGroup Profits and EPS

20012001£m£m

20022002£m£m

IncreaseIncrease(Decrease)(Decrease)

%%

Reported preReported pre--tax profittax profit 3,1613,161 2,6072,607 (18)(18)

TaxationTaxation 875875 764764

Attributable profitAttributable profit 2,2292,229 1,7811,781 (20)(20)

Minority interestsMinority interests 5757 6262

Reported EPS (p)Reported EPS (p) 40.340.3 32.032.0 (21)(21)

PostPost--tax return on equity (%)tax return on equity (%) 18.118.1 16.716.7

Group Profits and EPSGroup Profits and EPS

EPS* (p)EPS* (p) 52.152.1 44.144.1

20012001£m£m

20022002£m£m

Reported preReported pre--tax profittax profit 3,1613,161 2,6072,607

Changes in economic assumptionsChanges in economic assumptions -- (55)(55)

Profit before tax*Profit before tax* 4,0204,020 3,5043,504

Investment varianceInvestment variance 859859 952952

PostPost--tax return on equity* (%)tax return on equity* (%) 23.323.3 23.023.0

* excluding changes in economic assumptions and investment * excluding changes in economic assumptions and investment variancevariance

Profit Before Tax by Main BusinessProfit Before Tax by Main Business

Profit before tax*Profit before tax*

20012001£m£m

20022002£m£m

IncreaseIncrease(Decrease)(Decrease)

%%

UK Retail Banking and MortgagesUK Retail Banking and Mortgages 1,2051,205 1,1721,172 (3)(3)

Insurance & InvestmentsInsurance & Investments 1,4211,421 1,2311,231 (13)(13)

Wholesale MarketsWholesale Markets 852852 626626 (27)(27)

International BankingInternational Banking 357357 379379 66

Central group itemsCentral group items 185185 9696

4,0204,020 3,5043,504 (13)(13)* excluding changes in economic assumptions and investment * excluding changes in economic assumptions and investment

variancevariance

Revenue GrowthRevenue Growth

20012001£m£m

20022002£m£m

IncreaseIncrease(Decrease)(Decrease)

%%

Net interest incomeNet interest income 4,9224,922 5,1715,171 55

Other finance incomeOther finance income 307307 165165

Other incomeOther income 3,6603,660 3,5423,542 (3)(3)

Group net interest margin (%)Group net interest margin (%) 3.403.40 3.203.20

Total incomeTotal income 8,8898,889 8,8788,878 --

Business Volumes Business Volumes -- 20022002

•• Total customer lending increased by 9% to Total customer lending increased by 9% to £134.5 billion£134.5 billion–– consumer credit up 17% to £14.9 billionconsumer credit up 17% to £14.9 billion–– mortgage balances up 10% to £62.5 billionmortgage balances up 10% to £62.5 billion–– commercial lending up 5% to £40.7 billioncommercial lending up 5% to £40.7 billion–– international lending up 11% to £18.2 billioninternational lending up 11% to £18.2 billion

•• Debt securities grew by 21% to £29.3 billionDebt securities grew by 21% to £29.3 billion

•• Customer deposit balances increased by 7% to Customer deposit balances increased by 7% to £116.3 billion£116.3 billion–– current account balances up 12% to £27.9 billioncurrent account balances up 12% to £27.9 billion

Net Interest Margin Net Interest Margin -- 20022002

%%

2.002.00

2.502.50

3.003.00

3.503.50

4.004.00

Q1Q1 Q2Q2 Q3Q3 Q4Q4

GroupGroup DomesticDomestic InternationalInternational

3.423.42

3.213.213.213.213.303.30

3.333.333.163.163.093.09

3.213.21

2.912.91 2.932.93

2.402.40

2.772.77

Operating ExpensesOperating Expenses

20012001£m£m

20022002£m£m

IncreaseIncrease%%

Administrative expensesAdministrative expenses 4,2264,226 4,2144,214 --

Depreciation/amortisationDepreciation/amortisation 550550 701701 2727

Total operating expensesTotal operating expenses 4,7764,776 4,9154,915 33

Cost ControlCost Control

•• Costs, excluding impact of acquisitions and Costs, excluding impact of acquisitions and operating lease depreciation, were kept flatoperating lease depreciation, were kept flat

•• Staff numbers, excluding acquisitions, reduced Staff numbers, excluding acquisitions, reduced by 4,191by 4,191

•• We expect that the Group’s operating expenses We expect that the Group’s operating expenses in 2003, excluding the impact of acquisitions, in 2003, excluding the impact of acquisitions, will grow by no more than the rate of inflationwill grow by no more than the rate of inflation

Charge for Bad and Doubtful DebtsCharge for Bad and Doubtful Debts

2002200220012001£m£m £m£m 20022002

% of Average% of AverageLendingLending

UK Retail BankingUK Retail Banking 439439 564564 2.952.95

MortgagesMortgages (24)(24) (1)(1) 0.000.00

Total chargeTotal charge 747747 1,0291,029 0.770.77

Wholesale MarketsWholesale Markets 155155 311311 0.770.77

Central group itemsCentral group items (6)(6) (7)(7)

International BankingInternational Banking 183183 162162 1.241.24

Asset QualityAsset Quality

•• In Retail Banking and Mortgages, overall arrears In Retail Banking and Mortgages, overall arrears position remained stableposition remained stable

•• NonNon--performing lending as a percentage of total performing lending as a percentage of total lending, unchanged at 1.0%lending, unchanged at 1.0%

•• Total provisions represent over 120% of Total provisions represent over 120% of nonnon--performing lendingperforming lending

ArgentinaArgentina

•• Economic situation continues to be difficultEconomic situation continues to be difficult

•• General provision increased by £50 millionGeneral provision increased by £50 million

•• Total exposure reduced during 2002 from Total exposure reduced during 2002 from £610 million to £190 million, net of provisions £610 million to £190 million, net of provisions and chargesand charges

•• Provisions represent some 50% of total exposureProvisions represent some 50% of total exposure

BrazilBrazil

•• Economic situation has somewhat stabilisedEconomic situation has somewhat stabilised

•• Total exposure, net of provisions and charges, Total exposure, net of provisions and charges, reduced during 2002 from £3.3 billion to reduced during 2002 from £3.3 billion to £1.9 billion£1.9 billion

•• Domestic Government bond portfolio reduced Domestic Government bond portfolio reduced to £550 million, sterling equivalent, from to £550 million, sterling equivalent, from £1.4 billion a year ago£1.4 billion a year ago

DisclosureDisclosure

•• Segmental profit and loss accountsSegmental profit and loss accounts

•• Provisions charge by retail productsProvisions charge by retail products

•• Embedded value economic assumption changesEmbedded value economic assumption changes

•• FRS 17 related disclosuresFRS 17 related disclosures

•• Restructuring costs into business unitsRestructuring costs into business units

•• UK Retail Banking and Mortgages combinedUK Retail Banking and Mortgages combined

•• EMD into central group itemsEMD into central group items

Group Pension Schemes Group Pension Schemes ––P&L AccountP&L Account

•• Pension scheme income and costs included in Pension scheme income and costs included in profit and loss accountprofit and loss account

•• Pension costsPension costs 347347 318318

•• Expected return on scheme assetsExpected return on scheme assets 844844 817817

Interest cost of scheme liabilitiesInterest cost of scheme liabilities (537)(537) (652)(652)

20012001£m£m

20022002£m£m

Other finance incomeOther finance income 307307 165165

Group Pension Schemes Group Pension Schemes --Balance SheetBalance Sheet

•• Net pension deficit of £2,077 million, included Net pension deficit of £2,077 million, included in balance sheetin balance sheet

•• Reduces shareholders’ equity to £7,972 Reduces shareholders’ equity to £7,972 million, but regulatory capital does not include million, but regulatory capital does not include FRS 17 market movementsFRS 17 market movements

Group Pension Schemes Group Pension Schemes ––Cash FlowCash Flow

•• Total fair value of the Group’s defined benefit Total fair value of the Group’s defined benefit schemes’ assets at 31 December 2002 was schemes’ assets at 31 December 2002 was £9,083 million (December 2001: £11,126 million)£9,083 million (December 2001: £11,126 million)

•• The triennial actuarial valuations, at 30 June 2002, The triennial actuarial valuations, at 30 June 2002, indicate that the schemes remain satisfactorily indicate that the schemes remain satisfactorily funded, although employer’s cash contributions are funded, although employer’s cash contributions are now requirednow required

•• These cash contributions are likely to be around These cash contributions are likely to be around £150 million in 2003, and £300 million in 2004 £150 million in 2003, and £300 million in 2004 (no P&L effect)(no P&L effect)

CapitalCapital

•• £0.9 billion tier 1, £1.2 billion tier 2 raised in £0.9 billion tier 1, £1.2 billion tier 2 raised in 20022002

•• Satisfactory capital ratiosSatisfactory capital ratios

–– tier 1tier 1 7.8%7.8% (2001: (2001: 7.8%)7.8%)

–– totaltotal 9.6%9.6% (2001: (2001: 8.8%)8.8%)

•• Strong capital generation from banking businessStrong capital generation from banking business

–– high ROEhigh ROE

–– good quality earnings streamgood quality earnings stream

Scottish Widows Scottish Widows -- CapitalCapital

FTSE 100FTSE 100

3,9403,940

Equity BackingEquity BackingRatioRatio

53%53%

EstimatedEstimatedFree AssetFree Asset

Ratio*Ratio*

10.0%10.0%

The FTSE 100 index could fall to below 3,000 before the The FTSE 100 index could fall to below 3,000 before the Group would need to inject capital into its life operations for Group would need to inject capital into its life operations for solvency purposes.solvency purposes.

At this level the Group may need to inject up to £300 million toAt this level the Group may need to inject up to £300 million tosupport business growth.support business growth.

* before adjusting for the inclusion of minimum solvency margin,* before adjusting for the inclusion of minimum solvency margin,at 31 December 2002at 31 December 2002

Economic ProfitEconomic Profit

1,1191,119

821821

20012001 2002200200

400400

800800

1,2001,200

£m£m

Delivering Value to Delivering Value to ShareholdersShareholders

Forward Looking StatementsForward Looking Statements

This document is a summary only of certain information contained in the press announcement dated 14 February 2003 and should be read in conjunction with the full text of the announcement.

This document contains forward looking statements with respect to the business, strategy and plans of the Lloyds TSB 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 TSB Group’s 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 on circumstances that will occur in the future. Lloyds TSB Group’s actual future results may differ materially from the results expressed or implied in these forward looking statements as a result of a variety of factors, including UK domestic and global economic and business conditions, risks concerning borrower credit quality, market related risks such as interest rate risk and exchange rate risk in its banking businesses and equity risk in its insurance businesses, inherent risks regarding changing demographic developments, catastrophic weather and similar contingencies outside Lloyds TSB Group’s control, any adverse experience in inherent operational risks, any unexpected developments in regulation or regulatory actions, changes in customer preferences, competition, industry consolidation, acquisitions and other factors. For more information on these and other factors, please refer to Lloyds TSB Group’s Registration Statement on Form 20-F filed with the US Securities and Exchange Commission and to any subsequent reports furnished by Lloyds TSB Group to the US Securities and Exchange Commission or to the London Stock Exchange. The forward looking statements contained in this document are made as of the date hereof, and Lloyds TSB Group undertakes no obligation to update any of its forward looking statements.