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HELPING BRITAIN PROSPER

ESG BOND

Quarterly Investor Report

Statement of Allocation

31st December 2014

2

António Horta-Osório

CEO, Lloyds Banking Group

I don’t believe that our responsible business activities are separate from any of our other business

activities. We have one strategy for delivering sustainable success – being the best bank for

customers – and doing business responsibly is inherent in this strategy.

Investor appetite was very strong for the Group’s first Environmental, Social and Governance bond,

demonstrating the growing importance of socially responsible lending and investing.

That we have been able to identify the direct creation or safeguarding of over 358 jobs, with many

more impacted indirectly, is a resounding endorsement of our commitment to Helping Britain

Prosper.

James Garvey

Managing Director, Capital Markets

CONTENTS

Background 4

Eligible Assets as at 31st December 2014 5

Highlights 6

Overall Allocation Summary 8

Allocation by Region and Type 9

Case Studies 10

Appendices 12

3

BACKGROUND

The £250 million ESG bond was issued on the 9th July 2014 and loans attributed to the bond meet eligibility criteria discussed and

agreed with our sustainability partner Sustainalytics, in addition to our investors. The bond matures on 9th December 2018 and pays

2.75% fixed coupon semi annually.

Lloyds has worked with Sustainalytics to create a robust ESG bond framework. A process to identify all loans to SME’s from Lloyds’

source systems has been put in place. These loans undergo three tiers of eligibility criteria, resulting in amounts allocated to the

selected key performance indicators.

4

Tier 1 Exclusionary Criteria

Tier 2 Governance Criteria

Tier 3 Environmental and Social Criteria

SIC1 code screening to exclude alcohol, tobacco, gambling, military

weapons, fossil fuels, palm oil and payday lending

Lloyds’ Code of Business Responsibility (link)

Lloyds’ SME Charter (link)

Regional Growth Fund

Small scale renewable energy projects

SME’s and healthcare providers in the bottom 30% of economically

disadvantaged areas. List of postcodes as defined by the Index of

Multiple Deprivation produced by the Office for National Statistics

1. SIC refers to Standard Industry Code

http://www.lloydsbankinggroup.com/globalassets/documents/our-group/responsibility/policies-and-codes/code_of_business_responsibility.pdf

http://www.lloydsbank.com/business/who-we-are/charter.asp

ELIGIBLE ASSETS: AS AT 31 DECEMBER 2014

5

TOTAL ALLOCATION

£250.0m

of eligible loans allocated

ECONOMICALLY DISADVANTAGED AREAS

£241.0m

of eligible loans allocated to the 30% most

economically disadvantaged areas1

HEALTHCARE

£19.3m

allocated to healthcare providers in the 30% most

economically disadvantaged areas1

REGIONAL GROWTH FUND

£11.6m

lent to customers who have been awarded

grants through the Regional Growth Fund1

RENEWABLE ENERGY

£0.8m

allocated to small scale renewable

energy projects1

- indicator has been subject to independent assurance. PwC’s assurance report can be found in Appendix B.

1. Lending can meet one or more of the above eligible criteria. For example, healthcare is a subset of the economically disadvantaged areas.

A

A

A

A

A

A

HIGHLIGHTS

6

250m

Of eligible

loans

100%

Of the bond

allocated

96%

Allocated to 30%

most economically

disadvantaged areas

7m

Of renewable

projects credit

approved

358

Jobs created or saved

through lending awarded

under the RGF

1,468

Qualifying

loans

12m

Lent via the

RGF

19m

Allocated to

Healthcare

providers

2

Renewable

projects

7

HIGHLIGHTS

£250m Allocation by Region

Central England Central LondonEast England East MidlandsMidlands North EastNorth West ScotlandSouth Central South EastSouth West Wales & Borders

RGF by Sector

Accommodation & FoodAdministrative & SupportConstructionInformation & CommunicationManufacturingProfessional, Scientific & TechnicalReal EstateTransportation & StorageWater Supply, Sewerage & Waste MgtWholesale & Retail Trade

£250m Lending by Type1

RGFRenewablesHealthcareDisadvantaged Areas

1. Lending can meet one or more of the eligible criteria. For example, healthcare is a subset of the economically disadvantaged areas.

ZE

ZE3

KW

KW

AL

B

BA

BB

BD

BHDT

GY

JE

BL

BN

BRBS

CA

CB

CF

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CR

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CV

CW

DA

DD

AB

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DG

DH

LD

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DY

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EH

EN

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GL

GU

HA

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BT

BR

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EEC

EN

H A

IG

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N

LONDON

NW

SE

SL

SM

SWTW

UBW

WC

WD

OVERALL ALLOCATION SUMMARY

8

The £250m bond is fully allocated as at 31st December 2014.

Average loan per customer equates to £170k

A total of 1,468 qualifying loans across 17 industrial sectors

Lending across the UK in 96 of 122 postcode areas

A total of £2.1bn of gross new lending in SME from 9th July to

31st December 2014

£ millions

0 - 0.5

0.5 - 1

1 - 5

5 - 10

10+

UK Regional Loan Allocation by Value

Loan Value by Criteria (£ millions)

ZE

ZE3

KW

KW

AL

B

BA

BB

BD

BHDT

GY

JE

BL

BN

BRBS

CA

CB

CF

CH

CM

CO

CR

CT

CV

CW

DA

DD

AB

DE

DG

DH

LD

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DY

EEC

EH

EN

EX

FY

GL

GU

HA

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HU

HX

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IV

KA

KA

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KY

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LA

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ME

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NE

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NP

NR

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PA

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PR

RG

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SR

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UB W

WA

WC

WD

WF

WN

WR

WS

WV

YO

BT

BR

CR

EEC

EN

H A

IG

KT

N

LONDON

NW

SE

SL

SM

SWTW

UBW

WC

WD

ALLOCATION BY REGION AND TYPE

9

£19.3m of healthcare lending distributed across the UK to 79 customers. All sectors within Human Health and Social Work are considered

The largest sector lent to (34%) is the dental practices sector

Healthcare RGF

£ millions

0 - 0.5

0.5 - 1

1 - 5

5 - 10

10+

Regional Loan Allocation by Value

ZE

ZE3

KW

KW

AL

B

BA

BB

BD

BHDT

GY

JE

BL

BN

BRBS

CA

CB

CF

CH

CM

CO

CR

CT

CV

CW

DA

DD

AB

DE

DG

DH

LD

DN

DY

EEC

EH

EN

EX

FY

GL

GU

HA

HD

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HP

HR

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HU

HX

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IV

KA

KA

KT

KY

KY

L

LA

LD

LL

LLLN

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LU

M

ME

MK

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NE

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NP

NR

NW

OL

FK

OX

PA

PA

PA

PA

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PA

PA

PA

PA

PA

PE

PH

PL

PO

PR

RG

RH

RM

S

SA

SE

SG

SK

SL

SM

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SOSP

SR

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SW

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TN

TQ

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UB W

WA

WC

WD

WF

WN

WR

WS

WV

YO

BT

BR

CR

EEC

EN

H A

IG

KT

N

LONDON

NW

SE

SL

SM

SWTW

UBW

WC

WD

£11.6m of lending to customers who have

been awarded grants through the regional

growth fund

358 jobs created or saved across the UK

as a result of the grants awarded

Regional Jobs Created or Safeguarded

Jobs

0 - 5

5 - 10

10 - 20

20 - 30

30+

£0.8m of renewable lending distributed

across the UK for two renewable projects

4 Biomass Boilers and 2 60KW wind

turbines funded under the two projects

A total of £6.6m of small scale renewable

projects were credit approved during the

period 9th July to 31st December 2014,

however only £0.8m is allocated to the

bond as the remaining loans have not yet

drawn

Renewables

ZE

ZE3

KW

KW

AL

B

BA

BB

BD

BHDT

GY

JE

BL

BN

BRBS

CA

CB

CF

CH

CM

CO

CR

CT

CV

CW

DA

DD

AB

DE

DG

DH

LD

DN

DY

EEC

EH

EN

EX

FY

GL

GU

HA

HD

HG

HP

HR

HS

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HU

HX

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IV

KA

KA

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KY

KY

L

LA

LD

LL

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ME

MK

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N

NE

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NP

NR

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PA

PA

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PE

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PL

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RG

RH

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SA

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BT

BR

CR

EEC

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H A

IG

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LONDON

NW

SE

SL

SM

SWTW

UBW

WC

WD

Allocation of Renewable Loans by Value

£ millions

0 - 0.5

0.5 - 1

1 - 5

5 - 10

10+

STAIRCRAFT (MIDLANDS) LTD

10

Leading staircase manufacturer, Staircraft

(Midlands) Limited, has opened two new

sites in the West Midlands following a

£1.6million investment from Lloyds Bank.

The expansion came after the firm exceeded

its manufacturing capacity at its Nuneaton

base, and needed to identify new space. A

combined financial package of £700,000 from

Lloyds Bank Commercial Banking and

£900,000 from Lloyds Bank Commercial

Finance has now enabled the acquisition of a

new freehold unit in Coventry, together with

the lease of an additional production space in

Wednesbury.

With more than 25 years of experience in the

sector, Staircraft, which produces wooden

staircases for major house builders, is using

the funding to reinforce its status as one of the

leading national suppliers in its field.

Through the expansion, Staircraft expects to

increase its sales turnover from £6million to

around £10million in 2014, growing to an

estimated £15million next year. In line with its

increased capacity, the move has also seen

approximately 50 new roles offered between

the two additional manufacturing sites,

increasing its employee numbers to 150.

Throughout the fundraising process, Staircraft

was assisted by Coventry and Leamington

based accountants and financial advisors

Harrison Beale & Owen which also helped to

secure additional funding through the

Regional Growth Fund provided by the

Coventry and Warwickshire Local Enterprise

Partnership.

The Regional Growth Fund is a Government

initiative that provides grants to SMEs looking

to purchase new assets and create economic

growth and local employment opportunities.

Andrew Hamilton, Director at Staircraft

(Midlands) Limited, said: “After exceeding our

production capabilities at our Nuneaton base,

it was vital for us to secure new premises in

order to meet customer demand for our

products, and we are pleased to announce our

expansion into Coventry and the Black

Country.”

Kevin Roberts, Relationship Director at Lloyds

Bank Commercial Banking, said: “We’re

passionate about helping to drive the

economic recovery by providing access to

lending for businesses, and we’re pleased to

have worked with Staircraft on this ambitious

plan for growth.”

Lauro Rodi, Regional Manager at Lloyds Bank

Commercial Finance in the Midlands, said:

“The financial package we’ve provided to

Staircraft (Midlands) Limited has allowed it to

spread the cost of its investment over a fixed

term, enabling a more manageable and

beneficial acquisition process.

“We’re committed to working with

businesses to demonstrate how they can

benefit from asset finance funding, offering

a means to realise growth ambitions

without any adverse impact on day-to-day

operations.”

“The support of Lloyds Bank has allowed us to realise

our vision for growth in the Midlands, and through this

investment, we are looking forward to maximising our

performance as a business, whilst creating new jobs for

the local community.” Andrew Hamilton, Director, Staircraft (Midlands) Ltd

From left: Kevin Roberts, Lauro Rodi of Lloyds and Andrew

Hamilton, Director at Staircraft (Midlands) Ltd

CASE STUDY

An Oldbury-based provider of supported

living for adults with learning and physical

difficulties and autism is to open a new

facility in Birmingham, following an

investment of over £300,000 from Lloyds

Bank Commercial Banking.

The package will fund the latest

expansion for Livewell

(Care & Support) Ltd, as it

prepares to open a new project

in Great Barr, which will feature

accommodation for six people

requiring supported living care

in a socially inclusive

community environment.

The project is the company’s

biggest scheme to date, and will

also generate up to 15 new jobs

in the next 12 months, reinforcing

Lloyds Bank’s commitment to

helping to drive the economy by

supporting the growth of small

businesses within the healthcare

sector.

Founded in 2011, Livewell works

with adults living with autism,

learning and physical disabilities and other

long-term health conditions, and provides

specialist supported living and domiciliary

care.

The company specialises in encouraging

social inclusion, enablement, independence,

choice and autonomy, whilst involving family

and friends to enhance the levels

of support provided. Livewell currently

provides support to 30 people across the

Midlands, ranging from three hours of care

per day to a round-the-clock service.

It works with individuals both in their own

home and in the supported living properties

and, with the support of Lloyds Bank, this

number is set to increase to 48 before the

end of 2014.

Jayne Watkins, Director at Livewell (Care &

Support) Ltd, said: “Since 2011, we have

been working hard to provide

support to adults living with

autism, learning disabilities

and other long-term health

conditions, and this

investment from Lloyds Bank

has helped us to activate our

biggest project to date.”

Andy Pearson, Relationship

Manager at Lloyds Bank

Commercial Banking, said:

“At Lloyds Bank, we pride

ourselves on our in-depth

understanding of the

specific requirements of the

healthcare industry, and

we’re proud to be

supporting Livewell as it

presses ahead with its latest

expansion.

“This is a package which underpins our

commitment to the sector, helping to

safeguard the availability of quality care and

support here in the Midlands.”

LIVEWELL (CARE & SUPPORT) LTD

11

From left: Jayne Watkins, Nick Stanley and Raj Rana from Livewell (Care & Support) Ltd

“In the planning stages of the project, Lloyds

Bank stood out to us thanks to its innovative

approach and understanding of what we were

trying to do. The team have been great to work

with, and we thank them for their support.” Jayne Watkins, Director, Livewell (Care & Support) Ltd.

CASE STUDY

APPENDIX A

Reporting Criteria

APPENDIX A - CONTENTS

Introduction 14

Total amount of lending to SME’s 16

Total amount of lending to Healthcare providers 17

Total amount of lending to participants of the RGF 18

Total amount of lending to renewable projects 19

Tier 1 Exclusionary List 20

13

APPENDIX A – REPORTING CRITERIA

14

The Reporting Criteria document details the approach and scope used to report key indicators in Lloyds Banking Group’s Helping

Britain Prosper ESG Bond: Investor report.

Period covered by the data

The period in scope is from bond issue (9th July 2014) to 31st December 2014.

Scope and Organisation Boundary for ESG Reporting

The scope covers the investors as well as the loans attributed to the bond which have been issued by Lloyds Banking Group and

meet numerous eligibility criteria.

Selected Key Performance Indicators

1. Total amount allocated to the bond issue.

2. Total amount of lending to Small and Medium sized enterprises (“SMEs”) in the most economically disadvantaged areas.

3. Total amount of lending to Heathcare Providers in the most economically disadvantaged areas.

4. Total amount of lending to enterprises which have been awarded grants through the UK’s Regional Growth Fund (“RGF”).

5. Total amount of lending to small scale renewable energy projects.

Background

The £250 million ESG bond was issued on the 9th July 2014 and loans attributed to the bond meet eligibility criteria discussed and

agreed with our sustainability partner Sustainalytics, in addition to our investors.

A process to identify all loans to SMEs from Lloyds’ systems has been put in place. These loans then undergo 3 tiers of eligibility

criteria resulting in amounts allocated to the above key performance indicators.

Introduction


15

Tier 1: Exclusionary Criteria

Lloyds’ will categorise organisations it has lent money to by Standard Industrial Classification (“SIC”) code. The SIC is a system for

classifying industries by a four-digit code. Lloyds has agreed a list of SIC code with its sustainability partner, Sustainalytics, which

covers the sectors to be excluded.

Tier 2: Governance/Responsible Lending Criteria

1. Lending and transactions must in compliant with Lloyds’ code of business responsibility and

2. Lending and transactions must be compliant with Lloyds’ SME charter

Tier 3: Environmental and Social Criteria

SMEs or agricultural enterprises that pass through Tiers 1 and 2 criteria will qualify for the proceeds of the ESG bond if they fulfil

one or more of the following criteria:

1. SME is located in the 30% most economically disadvantaged areas of the UK. Disadvantaged areas are determined using

the Index of Multiple Deprivation (IMD) published by the Office for National Statistics.

2. Healthcare providers located in the 30% most economically disadvantaged areas of the UK.

3. Enterprises which have been awarded grants through the UK’s Regional Growth Fund (“RGF”).

4. Small scale renewable projects that increase energy efficiency or climate change resilience (including flood recovery) of

operations.

Loan Allocation

All loans allocated to the bond represent new to bank lending from 9th July 2014 to 31st December 2014. This includes any new

lending applications by existing or new qualifying customers. The allocated amount is the amount lent not the committed value and

as a result material drawings and repayments (greater than 20% of the drawn value) are considered. Allocated amounts may

include an upfront arrangement fee depending on the terms and conditions of the loan.

Reporting

As at the 31st December 2014 the bond is fully allocated. Going forward an annual investor report will be produced until maturity in

2018.


16

Definition This Key Performance Indicator (“KPI”) measures the amount of lending to SMEs in the most economically disadvantaged areas of the UK.

Scope The KPI applies to all lending across the UK.

It covers the period from 9th July 2014 to 31st December 2014.

Units Total amount of Lending (£) drawn during the above mentioned period.

Method The total amount of new lending drawn during the above period by SME customers.

Lending from our core systems (“ACBS” and “CAP”) covering both fixed and floating rate lending as well as Hire Purchase Agreements sourced from our Commercial

Finance team has been retrieved and filtered to ensure compliance with Tier 1 and Tier 2 Criteria. All data is considered and where data quality is an issue, such

loans are excluded from the amount allocated to the bond.

Tier 1 filtering is based on excluding lending to companies within certain industrial sectors. A defined set of Standard Industrial Classification (“SIC”) codes agreed

with our sustainability partner (Sustainalytics) is used. These can be found on slide 20.

Tier 2 filtering is based on responsible lending and covers compliance with Lloyds’ code of business responsibility and SME charter. Such compliance is monitored

through various businesses as usual governance committees. In addition to this a qualifying sample of eligible loans is distributed to the front line to attest

compliance.

The remaining population is filtered to ensure compliance with our Tier 3 criteria, which, in the case of this KPI, identifies lending to SMEs in the most economically

disadvantaged areas. This KPI relates to lending in the 30% most economically disadvantaged areas of the UK. To determine all loans eligible, the post code for

each loan is mapped to the Index of Multiple Deprivation and the bottom 30% of postcodes are used to create this KPI.

Source Lending activity has been sourced from our core systems.

Hire Purchase Agreements has been sourced from our Commercial Finance Team.

The most economically disadvantaged area has been defined using the Index of multiple deprivation (“IMD”) published by the Office for National Statistics (”ONS”).

Total amount of lending to Small and Medium sized enterprises (“SMEs”) in the most

economically disadvantaged areas


17

Definition This Key Performance Indicator (“KPI”) monitors the amount of lending to Healthcare Providers within the most economically disadvantaged areas of the

UK.

Scope The KPI applies to all lending across the UK.


Units Total amount of Lending (£) drawn during the above mentioned period.

Method

The total amount of new lending drawn during the above period by SME customers.

This Key Performance Indicator (“KPI”) monitors the amount of lending to Healthcare Providers within the most economically disadvantaged areas of the UK.

The KPI applies to all lending across post code areas within the UK.


Total amount of Lending drawn during the abovementioned period.


Lending from our systems (“ACBS” and “CAP”) covering both fixed and floating rate lending as well as Hire Purchase Agreements sourced from our Commercial

Finance team has been retrieved and filtered to ensure compliance with Tier 1 and Tier 2 Criteria. All data is considered and where data quality is an issue such

loans are suspended pending further analysis.





compliance.

The remaining population is filtered to ensure compliance with our Tier 3 criteria.

This KPI relates to lending in

a. The 30% most economically disadvantaged areas of the UK. To determine all loans eligible, the post code for each loan is mapped to the Index of Multiple

Deprivation, and the bottom ranked 30% of the postcodes are used.

b. Healthcare Providers. To determine qualifying Healthcare Providers, SIC codes have been used covering sectors within the Human Health and Social

Work.



The most economically disadvantaged area has been defined using the Index of multiple deprivation (“IMD”) published by the Office for National Statistics (”ONS”).

The 2007 SIC Codes for Human Health and Social Work have been used.

Section Q: Human Health and Social Work Activities

Division 86: Human Health Activities

Division 87: Residential Care Activities

Division 88: Social work Activities without accommodation

Total amount of lending to Healthcare Providers in the most disadvantaged areas


18

Total amount of lending to participants of the Regional Growth Fund

Definition This Key Performance Indicator (“KPI”) monitors the amount of lending awarded to recipients of the Regional Growth Fund (“RGF”).

Scope The KPI applies to all lending that meets the criteria of the Department for Business, Innovation & Skills scheme. Grants are awarded to qualifying companies for

asset purchases by SMEs that lack sufficient deposit to meet Lloyd’s normal lending requirements.

London is excluded from the RGF and only 8% of allocated grants can be in the South East England so as to promote employment in areas where it is most required.

Lloyds can contribute up to 20% of the value of assets purchased by qualifying SMEs.


Units Total amount of Lending drawn during the above mentioned period.

Method



Finance team has been retrieved and filtered to ensure compliance with Tier 1 and Tier 2 Criteria. All data is considered and where data quality is an issue such loans

are suspended pending further analysis.




through various businesses as usual governance committees. In addition to this a qualifying sample of eligible loans is distributions to the front line to attest

compliance.

The remaining population is filtered to ensure compliance with our Tier 3 criteria.

This KPI relates to two types of lending

a. Outright lending for asset purchases that have been approved for grants. These loans are booked to core systems, ACBS and CAP.

b. Assets purchased through Hire Purchase Agreements. These loans are appended to the dataset as lending administered throughout Commercial Finance

Teams.

The above qualifying drawn loans are mapped to the SME inventory sourced from core systems or appended (in the case of Hire Purchase Agreements) following

confirmation that such lending has taken place by our Commercial Finance Team.

Source Lending activity has been sourced from our core system or confirmed by Commercial Finance.


A complete view of RGF activity is received from the Specialist Business Lending Unit. This covers both types of lending mentioned above.


19

Total amount of lending to small scale renewable energy projects

Definition This Key Performance Indicator (“KPI”) monitors the amount of lending to small scale renewable energy projects.

Scope The KPI applies to all lending related to small renewable energy projects.

Lloyds provide loans to help SMEs in the agricultural sector to undertake small-scale renewable energy projects including (but not restricted to) wind, solar, hydro and

anaerobic digestion.


Units Total amount of Lending drawn during the abovementioned period.

Method The total amount of new lending drawn during the above period by SME customers.


Finance team has been retrieved and filtered to ensure compliance with Tier 1 and Tier 2 Criteria. All data is considered and where data quality is an issue such

loans are suspended pending further analysis.





compliance. The remaining population is filtered to ensure compliance with our Tier 3 criteria.

The above qualifying drawn loans from the data provided by the SME Banking Credit team are mapped to the SME inventory sourced from core systems, to enable

qualifying loans to be clearly attributed to the bond.



A summary view of qualifying SME activity received from the SME banking credit team.


20

Tier 1: Exclusionary Criteria

Exclusionary Criteria SIC 2007 Code Description

Alcohol 46342 Wholesale of wine, beer, spirits and other alcoholic beverages

Alcohol 11010 Distilling, rectifying and blending of spirits

Gambling 92000 Gambling and betting activities

Tobacco 01150 Growing Tobacco

Tobacco 12000 Manufacture of tobacco products

Tobacco 46350 Wholesale of tobacco products

Tobacco 47260 Retail sale of tobacco products in specialised store

Military Weapons 30400 Manufacture of military fighting vehicles

Military Weapons 25400 Manufacture of weapons and ammunition

Payday Lending 64999 Financial Intermediation

Payday Lending 64929 Other Credit Granting

Payday Lending 64921 Specialist consumer credit grantors

Fossil Fuels 05101 Deep coal mines

Fossil Fuels 05102 Open cast coal mines

Fossil Fuels 05200 Mining of lignite

Fossil Fuels 06100 Extraction of crude petroleum

Fossil Fuels 06200 Extraction of natural gas

Fossil Fuels 08920 Extraction of peat

Fossil Fuels 20110 Manufacture of industrial gases

Fossil Fuels 19100 Manufacture of coke oven products

Palm Oil 01260 Oil Palm Growing

Palm Oil 10410 Palm Oil Production/Refining

APPENDIX B

PwC Assurance Report

Independent Limited Assurance Report to the Directors of Lloyds Banking Group plc

The Board of Directors of Lloyds Banking Group plc (“LBG”) engaged us to provide limited assurance on the information described below and set out in LBG’s QuarterlyInvestor Report, Statement of Allocation as at 31 December 2014.

Our conclusion

Based on the procedures we have performed and the evidence we have obtained,

nothing has come to our attention that causes us to believe that the Selected

Information as at 31 December 2014 has not been prepared, in all material respects, in

accordance with the Reporting Criteria.

This conclusion is to be read in the context of what we say in the remainder of our report.

Selected Information

The scope of our work was limited to assurance over the information marked with the symbol in

LBG’s Quarterly Investor Report, Statement of Allocation as at 31 December 2014 (the “Selected

Information”).

The Selected Information and the Reporting Criteria against which it was assessed are summarised in

the table below. Our assurance does not extend to information in respect of earlier periods or to any

other information included in the Quarterly Investor Report, Statement of Allocation as at 31

December 2014.

Selected Information Reporting Criteria

Total eligible loans allocatedAppendix A - page 15*

Total allocated to 30% mosteconomically disadvantaged areas

Appendix A - page 16*

Total allocated to heath careproviders located within the 30%most economically disadvantagedareas


Total lending to customers whohave been awarded grants throughthe regional growth fund


Total allocated to small scalerenewable energy projects


* Pages referred to in the table above refer to the Reporting Criteria as set out on pages 14 to 20 of

LBG’s Quarterly Investor Report, Statement of Allocation as at 31 December 2014.

Professional standards applied and level of assurance

We performed a limited assurance engagement in accordance with International Standard on

Assurance Engagements 3000 ‘Assurance Engagements other than Audits and Reviews of Historical

Financial Information’ issued by the International Auditing and Assurance Standards Board. A

limited assurance engagement is substantially less in scope than a reasonable assurance engagement

in relation to both the risk assessment procedures, including an understanding of internal control,

and the procedures performed in response to the assessed risks.

Our Independence and Quality Control

We applied the Institute of Chartered Accountants in England and Wales (ICAEW) Code of Ethics,

which includes independence and other requirements founded on fundamental principles of

integrity, objectivity, professional competence and due care, confidentiality and professional

behaviour.

We apply International Standard on Quality Control (UK & Ireland) 1 and accordingly maintain a

comprehensive system of quality control including documented policies and procedures regarding

compliance with ethical requirements, professional standards and applicable legal and regulatory

requirements

Understanding reporting and measurement methodologies

The Selected Information needs to be read and understood together with the Reporting Criteria,

which LBG is solely responsible for selecting and applying. The absence of a significant body of

established practice on which to draw to evaluate and measure non-financial information allows for

different, but acceptable, measurement techniques and can affect comparability between entities and

over time. The Reporting Criteria used for the reporting of the Selected Information are as at 10

March 2015.

Work done

We are required to plan and perform our work in order to consider the risk of material misstatement

of the Selected Information. In doing so, we:

• made enquiries of LBG’s management and those with responsibility for the Quarterly Investor

Report, Statement of Allocation as at 31 December 2014;

• evaluated the design of the key structures, systems, processes and controls for managing, recording

and reporting the Selected Information. This included analysing a limited number of loans,

selected on the basis of our risk assessment, to understand the key processes and controls for

reporting the Selected Information;

• performed limited substantive testing on a selective basis of the Selected Information in relation to

a limited number of loans to check that data had been appropriately measured, recorded, collated

and reported; and

• considered the disclosure and presentation of the Selected Information.

Independent Limited Assurance Report to the Directors of Lloyds Banking Group plc

The Board of Directors of Lloyds Banking Group plc (“LBG”) engaged us to provide limited assurance on the information described below and set out in LBG’s QuarterlyInvestor Report, Statement of Allocation as at 31 December 2014.

LBG’s responsibilities

The Directors of LBG are responsible for:

• designing, implementing and maintaining internal controls over information relevant to the

preparation of the Selected Information that is free from material misstatement, whether due to

fraud or error;

• establishing objective Reporting Criteria for preparing the Selected Information;

• measuring and reporting the Selected Information based on the Reporting Criteria; and

• the content of the Quarterly Investor Report, Statement of Allocation as at 31 December 2014.

Our responsibilities

We are responsible for:

• planning and performing the engagement to obtain limited assurance about whether the Selected

Information is free from material misstatement, whether due to fraud or error;

• forming an independent conclusion, based on the procedures we have performed and the evidence

we have obtained; and

• reporting our conclusion to the Directors of LBG.

This report, including our conclusions, has been prepared solely for the Board of Directors of LBG in

accordance with the agreement between us dated 21 January 2015, to assist the Directors in reporting

LBG’s performance and activities. We permit this report to be disclosed in the Quarterly Investor

Report, Statement of Allocation as at 31 December 2014 to assist the Directors in responding to their

governance responsibilities by obtaining an independent assurance report in connection with the

Selected Information. To the fullest extent permitted by law, we do not accept or assume

responsibility to anyone other than the Board of Directors and LBG for our work or this report except

where terms are expressly agreed between us in writing.

PricewaterhouseCoopers LLP

Chartered Accountants

London

10 March 2015

IMPORTANT INFORMATION

24

This presentation, its contents and any related communication (altogether, the “Presentation”): (i) does not constitute or form part of any offer to sell or an invitation to

subscribe for, hold or purchase any securities or any other investment; (ii) shall not form the basis of or be relied on in connection with any transaction, contract or

commitment whatsoever; (iii) is provided for information purposes only and is not intended to form, and should not form, the basis of any investment decision; (iv) is

not and should not be treated as investment research, a research recommendation, an opinion or advice; (v) is confidential and has been prepared by, and is subject to

the copyright of, Lloyds Bank plc or its affiliates (together, “Lloyds Bank”); (vi) is based on public information, and is in summary form and therefore may not be

complete; (vii) may refer to future events which may or may not be within the control of Lloyds Bank, and its group companies, and its or their directors, officers,

employees, associates and agents (altogether, “Lloyds Persons”), and no representation or warranty, express or implied, is made as to whether or not such an event

will occur; (viii) is subject to change at any time and Lloyds Bank is under no obligation to inform any person of any such change; (ix) may only be sent to recipients

who may lawfully receive it in accordance with applicable law, regulation and rule of regulatory body (“Laws”); and (x) is not being distributed to and must not be

passed on to the general public in the U.K., and may only be distributed in the U.K. to persons who are investment professionals within the meaning of Article 19 of the

Financial Services and Markets Act 2000 (Financial Promotion) order 2005 (the “Order”), or are persons falling within Article 49(2)(a) to (d) of the Order (all such

persons being “Relevant Persons”), is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons.

Securities services offered in the United States are offered by Lloyds Securities Inc. (“LSI”), a broker-dealer registered with the U.S. Securities and Exchange

Commission and a member of the U.S. Financial Industry Regulatory Authority. LSI services are provided only in the United States.

Lloyds Bank has exercised reasonable care in preparing this Presentation (and in confirming that where any information or opinion in this Presentation is from or

based on a third party source, that the source is accurate and reliable), however, no representation or warranty, express or implied, is made as to the accuracy,

reliability or completeness of the facts contained in this Presentation by Lloyds Persons. This Presentation may refer to future events which may or may not be within

the control of Lloyds Persons, and no representation or warranty, express or implied, is made as to whether or not such an event will occur. To the fullest extent

permitted by Laws, Lloyds Persons accept no responsibility for and shall have no liability for any loss (including without limitation direct, indirect, consequential and

loss of profit), damages, or for any liability to a third party however arising in relation to this Presentation (including without limitation in relation to any projection,

analysis, assumption and opinion in this Presentation). Lloyds Bank reserves the right to terminate discussions with any recipient in its sole and absolute discretion at

any time and without notice.

By accessing, viewing, attending or reading this Presentation, and by not immediately returning or deleting it, or leaving, you confirm and represent that: (a) you

understand and agree to the contents of this important notice; (b) you are a person that may lawfully receive this Presentation in accordance with Laws applicable to

you including those of the jurisdiction in which you are located; (c) if you are not located in the U.S., you are not a U.S. Person, as defined in SEC Rule 902 of

Regulation S under the U.S. Securities Act 1933, as amended; (d) if you are located in the U.K., you are a Relevant Person; (e) you consent to delivery of this document

by electronic transmission; (f) you have or will conduct your own independent enquiries and obtain professional legal, regulatory, tax and accounting advice as

appropriate in relation to the contents of this Presentation; (g) any transaction which you may subsequently enter into will only be on the basis of your enquiries and

advice, your own knowledge and experience, and on the basis of the documents that relate specifically to that transaction; (h) you will keep this Presentation strictly

confidential and will not transmit or distribute this Presentation, or any reproduction or translation it, in whole or in part, of this Presentation, to any person without

Lloyds Bank’s prior written consent; and (g) you will not use this Presentation to the detriment of Lloyds Bank or for any matter other than in relation to the transaction

contemplated in this Presentation.

Lloyds Bank may engage in transactions in a manner inconsistent with any opinion in this Presentation. Lloyds Bank trades or may trade as principal in the securities

or related derivatives included in this Presentation (“Relevant Securities”), and may have proprietary positions in, and/or may make markets in, Relevant Securities.

Lloyds Persons may have an interest in any securities or financial product mentioned in this Presentation.

Lloyds Bank and Lloyds Bank Commercial Banking are trading names of Lloyds Bank plc. Lloyds Bank and Lloyds Bank Commercial Banking are trading names of

Bank of Scotland 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 & 169628, respectively.

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