KEY HIGHLIGHTS

Key Highlights Eric Daniels Quote 

RETURN TO PROFITABILITY

• The Group returned to profitability on a combined businesses basis with profit before tax of
  £1,603 million (first half of 2009: £3,957 million loss).
• Statutory profit before tax was £1,296 million (first half of 2009: £5,950 million which included the
  £11,173 million gain on acquisition of HBOS).

BUILDING A STRONG BUSINESS

• Robust gross lending to support the UK’s economic recovery with the Group extending £14.9 billion of
  gross new mortgages to UK homeowners and £23.7 billion of committed gross lending to UK businesses.
• Strong trading performance against the backdrop of a stabilising economy. The Group delivered good
  revenue growth, lower costs and a significant reduction in impairment whilst continuing to build our customer
  franchises. Our cost:income ratio also saw further improvement to 43.5 per cent.
• Total income, net of insurance claims, increased by 5 per cent to £12,481 million which included a gain of
  £423 million (first half of 2009: £745 million) as a result of the Group’s liability management transactions.
  Excluding the impact of liability management transactions income was 8 per cent higher.
• Banking net interest margin improved to 2.08 per cent in the first half of the year, compared to 1.72 per cent
  in the first half of 2009 and 1.83 per cent in the second half of 2009, as higher asset pricing and compression of
  the spread between base rate and LIBOR more than offset the impact of lower overall deposit margins.
• Integration ahead of schedule and we remain on track to deliver £2 billion synergy run-rate by the end
  of 2011. Increased annualised run-rate savings of c£1,300 million expected by the end of 2010.
• Total impairments significantly lower than originally envisaged at £6,554 million (first half of 2009:
  £13,399 million).
• Balance sheet reduction plans on track. In the first half of 2010 we achieved further reductions of £23 billion
  and remain on track to deliver our targeted balance sheet reductions of £200 billion.
• Strong capital position and good progress on funding. Core tier one capital improved to 9.0 per cent. The
  Group has reduced its overall reliance on wholesale funding (and further reductions are planned) and
  maintained its prudent maturity profile.

DELIVERING HIGH QUALITY SUSTAINABLE GROWTH

• Strategy: significant opportunity exists to leverage our customer focused relationship-led model
  across the enlarged franchise.
• Outlook: We expect to deliver strong medium-term performance as the UK economy sees a gradual
  recovery.
  

Also in Interim Results 2010

• Interim Results 2010 news release
• Chief Executive's full statement
• Finance Director's full statement