HIGHLIGHTS FOR THE THREE MONTHS ENDED 31 MARCH 2018

Strong financial performance with significant increase in profit and returns on a statutory and underlying basis

·     Statutory profit before tax of £1.6 billion, 23 per cent higher, with return on tangible equity increasing to 12.3 per cent, reflecting improved underlying profit and lower below the line items

·     Net income at £4.3 billion, 4 per cent higher, with net interest margin increasing to 2.93 per cent

·     Cost:income ratio further improved to 47.8 per cent with positive jaws of 9 per cent

·     Asset quality remains strong with an asset quality ratio of 23 basis points

·     Balance sheet strength maintained with strong CET1 capital increase of 50 basis points in the quarter and CET1 ratio of 14.4 per cent pre 2018 dividend accrual¹

·     Tangible net assets per share higher at 52.3 pence², driven by strong statutory profit

·     Strong start to the year with no change to the financial targets for 2018

GROUP CHIEF EXECUTIVE'S STATEMENT

In the first three months of 2018 we have again delivered strong financial performance with increased profits and returns, a significantly reduced gap between underlying and statutory profit and a strong increase in capital. These results continue to demonstrate the strength of our business model. In March, following our 2017 results and dividends announcement, we commenced our share buyback programme of up to £1 billion.

The UK economy continues to be resilient, benefiting from low unemployment and continued GDP growth. Asset quality remains strong with no deterioration seen across the portfolio. We expect the economy to continue to perform along these lines during 2018.

In February we announced our ambitious strategy to transform the Group into a digitised, simple, low risk, customer focused UK financial services provider. We have made a strong start to 2018 and have begun implementing the strategic initiatives which will further digitise the Group, enhance customer propositions, maximise our capabilities as an integrated financial service provider and transform the way we work.

António Horta-Osório

 Group Chief Executive