Thank you, António, and good morning, everyone. I'll give my usual overview of the financial performance and position of the business. Beginning with the P&L. As you've just heard, we've made further significant progress on our strategy in the first 6 months, and this is reflected in the group's financial performance. Underlying profit increased 32%, GBP 3.8 billion, with movements in total income more than offset by 6% reduction in underlying costs, excluding FSCS timing effects and a 58% improvement in impairments. Excluding SJP from last year's numbers, income was up 4%, while underlying profit was up 58%, with underlying jaws a positive 8%. Statutory profit before tax for the group was GBP 863 million, and include simplification costs, TSB builds and dual running costs, as well as legacy and other items such as the ECN exchange that we flagged in Q1. Statutory profit after tax was GBP 699 million with effective tax rate of 19%, largely reflecting the impact of tax-exempt disposals predominantly swept in the first quarter. Looking at P&L in more detail, and starting with net interest income. NII was up 12% on prior year at GBP 5.8 billion. As in the first quarter, this was driven by better deposit pricing, lower wholesale funding costs and loan growth in key segments, partly offset by expected asset pricing headwinds and run-off reductions. In Q2, we'll also have the accounting benefit of the ECN exchange, which boosted income by around GBP 100 million in the quarter. The net interest margin for the first half is 2.40%, is 39 basis points higher than first half of 2013, and 17 basis points higher than the second 6 months. In the second quarter, the margin strengthened to 2.48%, mainly due to a 10-basis-point benefit from the ECN exchanges. Looking forward, we would…

So I'll go first. I may touch on some that second question as well. Yes, we did. We've said that based on our bottom-up analysis that we think in a requirement of around 11% on a steady-state basis was the number we should be shooting for. That remains the position around this, still some uncertainties out there. Steady-state, I think as I said before, if you struck the numbers today, you'd probably slightly higher number because there's some de-risking in the things like the pension scheme that well underway. But we just want to complete that and get credit for that. And similarly, it won't surprise you to know that when I look under stress conditions for PPI have to hold some capital for that, but that will -- I will journey through that, I'll get through that, and we think around 11 is still about the right number to talk about. In terms of where we go and in terms of discussions to come, obviously, the discussion of the PRA, when we talk about dividend, they will look at a number of things, they will look at statutory profit, they will look at capital position and capital generation. And I think they will also look, well, they will also look at your second point about stress tests in terms of our resilience. What I think this first half numbers demonstrate is that we go into those discussions in a good position. We generated a statutory profit, as I said in the presentation, and as you picked up on, I expect statutory profits for the full year to be significantly in excess of the half-year position, and I'd accordingly, expect the capital position to continue to improve. So -- and on the stress tests, I suppose, we submitted our numbers on the 15th of July, and we feel in a good position in terms of the data that we submitted. So I get into these discussions with confidence. I think they reflect the bank in a good position and good capital-generative. We await the outcome when we see how those conversations develop, but we go in a good position. António Mota de Sousa Horta-Osório: Tom?

It's Tom Rayner from Exane BNP Paribas. Can I just have a couple of questions on your guidance, please? Just on the AQR of 35 basis points, obviously, implies a pickup in the second half. So just to get a feel for whether the second half is a sort of base to move forward from. And on the stable margin, in the second half, really why do you think it's going to be stable? And on Slide 9, if you focus on that sort of left-hand chart, maybe you could explain in line with the different drivers because it certainly looks as if a further margin improvement would flow through naturally into the second half, but I wonder if you could comment on both of those, please.

You're right. When you look at the margin evolution, Tom, over the last few quarters, we came in, what it was Q4 2.28%, 2.29%, 2.32% in Q1, 2.48% in Q2. Within that 2.48%, there's about 10 basis points of ECN pickup. So if I strip that out, there's sort of 5 or 6 basis points, which you've seen in the last couple of quarters. It's a similar thing Q2 to Q1, as we saw Q1 to sort of Q4. On the saving side, I've got about 4, 5 basis points of benefits coming through. And that's just shaving a few basis points here, whether it's on the fixed or whether it's on the instant access that we're benefiting from, and that drives about 4 or 5 basis points. There's a bit of benefit from wholesale funding, but I'm down in the 1 or 2 basis points. And going against that, I've got some asset pricing headwinds of 1 or 2 basis points. I think the guidance that we've given is appropriate. There may be some limited more upside in terms of liabilities. There was also in terms of where that asset pricing moves. There's a potential for that to pick up. The bank will naturally benefit as we continue to cleanse and run-off things like the run-off book in terms of the overall available margin. But we think the guidance accurately reflects what was seen on sort of an underlying basis and some of the headwinds that might be out there. António Mota de Sousa Horta-Osório: Yes. On the AQR, the trend is very positive compared with the previous year, quarter 1 was 35, quarter 2 is 26. So average of the year is -- in the first half is 30. And we are guiding for a 35 for the…

[indiscernible] just on the coverage ratio. The increase we've seen, is that mechanical, just driven by mix? Or is there any sort of decision there to increase the coverage? Could you just explain the... António Mota de Sousa Horta-Osório: Well, it's a combination of things. So it, in part, is because we are decreasing the impaired loans and therefore, some of the provisions that we have in IBNR, the weight of IBNRs in impaired loan increases and some of things [indiscernible] mix as well. So -- but I think it's a good reflection that the improvements in the AQR is not a consequence of releases and new releases of provisions in the ownership [ph].

Because the coverage have decreased. And just one point, Tom, which I think is quite important within this competitive advantage that we are trying to build, both in terms of a low-risk strategy, low cost of equity and simply the cost to income position. On your question about margin, and I have said this in several times in different occasions we have been here together, I think it's important to mention that this is part of a deliberate build-up over time of what I think is a competitive advantage in the way we manage our multibrand, multichannel approach in terms of pricing. Because as I've said to many of you individually, we do this on a weekly basis, we manage not each of them separately, assets and liabilities, but we manage them together. And what we really focus on, having a core loan-to-deposit ratio of 100%. What we really focus on is on the difference of the 2. We manage them on a weekly basis at the highest level of the organization. And the fact that we have multibrand and multichannel simultaneous approach enables us to serve customers better according to their differentiated needs, and this is especially relevant, as I said many times, in a low interest rate environment. Manus, please. I see that you are eager to -- something.

It's Manus Costello from Autonomous. I had a couple questions, please. António, you mentioned the growth of your international online deposit base. I wondered if you could update us on what size the German deposit base is at the moment and whether you have any indications of what you might do with that. Would you think about growing international assets particularly, and Consumer Finance might be an interesting growth area internationally, I wondered. And secondly, I think for George, a question not so much on NIM as on the interest-earning assets. I get very confused exactly how you calculate your interest-earning assets. Because if I look at your gross loan balance in the first half, it averaged GBP 508 billion, but your interest-earning assets were only GBP 489 billion. And I would imagine it would be higher, especially given that you got GBP 50 billion of liquid assets, which are coming to there. And the reason I ask is just for us, for forecasting perspective, we're trying to work out when interest-earning assets are going to go up. And it's very difficult to do that if we don't know how that calculated. António Mota de Sousa Horta-Osório: That's a fair question. I think I will give some time for George to think about that while I answer your first question. And look, on the first question, maybe you did not get exactly what I said on the presentation. We are not increasing the online deposit business. We are shrinking it. What I try to mention in the -- in my speech was, given that we have, as you know, for some time, 100% old core loan to deposit ratio. As the noncore decreases eventually to 0, the group loan-to-deposit ratio, which is now 109%, will turn to 100%. In that…

Thanks [ph] for giving me some time. It didn't help. Let's see if we could be more helpful after this in terms of the calculation of the different trends, and we'll try and come back and be more helpful.

[indiscernible] generally [ph] then. When are interest-earning assets going to start going up? António Mota de Sousa Horta-Osório: Okay, yes. And that's partly [ph] strategically, Manus, I think, apart from the technical point. Strategically, I think you should think about the following. We have, as I said, on Q1 results, to clarify that out, we have a closed book of mortgages, which is now part of our normal bank because they are our customers, they have our current accounts. They have our credit cards. We see this on a customer approach. So we move, as you know, our self -- old self-certified book into the normal bank. It's seasoning very well. It's performing well. There's no issues with the book. But that book is a closed book in the sense that we don't do, for several years now, self-certified mortgages. So you have to consider, in terms of your calculation that, that closed book is shrinking as it matures over time. The rest of our mortgages will grow in net terms, as I have said many times, and since September '13 now with the market. So we grew them by 2% in the first half, and you should expect our mortgages, in net terms, to continue to grow with the market. The second point is, as I also mentioned in my speech, the large corporates. We do -- we never targeted large corporate growth because that is not in our point of strategic key success factor. What we target in large corporate in the commercial division is the client's share of wallet, which may be a loan, as it may be a debt [ph] capital markets issue. And in this quarter, both through much better conditions in debt capital markets, with lower interest rates, as you know, and also because…

It's Andrew Coombs from Citi. Three questions from me please. Just firstly, you mentioned that you were happy with your total capital ratio. You said you've thought the regulator would end up around 20%. So it implies you're happy with your levels of AT1 and Tier 2 outstanding. But perhaps you could comment on the GLAP [ph] proposals and what that means for your senior debt that you need to hold on top of the AT1 and Tier 2. Second question would then be on the Club Lloyds PCA. Clearly, it's quite an attractive headline level, 4% on up to a GBP 5,000 balance. But perhaps, you could give us an idea of how the average cost of that product compares to your existing deposit balance. And then, the final question would just be the Consumer Finance division. Thank you for breaking that out. And as you referred to, very strong growth there in the loan balance. But it does seem to have come at a bit of a cost. The NIM is down 15 basis points in that division half-and-half. So just interested to know what you're seeing there in terms of pricing, and also if it's a volume-led strategy over a margin strategy there at the moment? António Mota de Sousa Horta-Osório: Okay. Thanks a lot for your 3 questions. I think George will take the first one. I'll take the second and third.

Yes, on the total capital, yes, we do think -- first, to start off with -- we are in group position and have a total capital ratio of around about -- at the 20%, as António mentioned. In terms of where that finally ends up, in terms of what's decided on Australia, et cetera, later on this year, we watch with interest, but we do start from a good place. In terms of composition, yes, we have a number of options from that and whether we end up having to hold senior with the ability to Berlin or whether we just stick with sub, I mean, those are all questions for future. But also, it's something you look at obviously is the point of entry onto the bank and again, what time period one has got to actually be able have to move that debt to the PRA's preferred entry point, which is likely to be a single entry for us. So I mean, I'm not going to give you anything particular about what I expect to see in terms of senior or sub composition of that [ph] tower. We're in a good space in terms of total. From an optimum perspective, we will have to do some reorientating of that debt as we move to the PRA's preferred source of issuance. But I see that all -- that's sort of perfectly reasonable within BAU over the next couple of years. António Mota de Sousa Horta-Osório: Okay. On questions 2 and 3, relating to Club Lloyds, which we are really very excited about because it's going very well, both for new and for existing customers. I think you should see Club Lloyds in the context of a segmentation strategy. So throughout the Lloyds brand, we are now segmenting. And Club…

Yes. And I mean, on Scotland, I mean, I think, as we've said previously and we'll say again, it's a matter for the Scottish people. And we look with interest in terms of how they vote on the 18th of September, with the outcome on the 19th. As a bank, we have looked at various contingency plans, and we feel comfortable with those plans. Should they vote -- the Scots vote yes for separation, et cetera, should they vote -- should it lead to single currencies out of EU, et cetera, there will be disruption, but we feel comfortable in the sort of time period and the transitional arrangements that will be in place that will be able to affect the necessary actions in a sort of ordered way. So it will be upheaval. There'll be an element of disruption, but we feel we'll be able to manage with it. António Mota de Sousa Horta-Osório: All right. On your second question, we have -- I mean, we are, at heart, a retail and a commercial bank. And within the Commercial division, as you correctly said, we have a small activity of capital markets and financial markets, which is basically orientated at serving other customers in terms of the needs they have on foreign exchange, in terms of debt capital markets, credit products, et cetera. As you can see from the numbers we've reported, this is small in the sense that our RWAs on the division continue to go down. And this shows that the change in RWA, through the new methodology, a new regulation that is impacting wholesale and universal banks is not a factor for us because we really, number one, work on it on a customer approach, so we serve our customers in terms of their needs. In that sense, we have some of these activities I told you, but quite small. And altogether, and also because our large corporates have gone down in the half, as I have previously answered, our RWAs on the division went down and will continue to be tightly monitored. That's why the RWAs have improved so much and the division in a tight -- a very -- in very tight conditions in the market. In terms of income, as I said, is performing ahead of the plan, in terms of the target that was set last year for a 2.0% or above written on RWAs. We are now at 1.96% in very difficult conditions on the markets. And I am quite pleased, as I said, about the performance of the Commercial division.

It's Claire Kane from RBC. I've got 3 follow-up questions, please. The first is related to the capital composition. Can you give us an update on when you expect to find out about the eligibility on the residual ECNs? And is it fair to assume that once you get to the all-clear that they are no longer recognized, you can redeem these and you would not need to issue any AT1 in their place? And then, my second question is on your guidance for capital generation. You previously said you thought you could do 2.5 percentage points through to the end of 2015, and you've done 0.8 so far, even with GBP 3 billion of below-the-line items. So is it may be time to update the guidance on that? And my final question, really, is on the provision coverage. I think we could see that there's high coverage ratios in Ireland. You have GBP 6 billion of balance sheet provisions there. Can you talk us through the trends you're seeing and whether likely it is for provision relief in Ireland? And can we maybe expect that you have to wait for those assets to be disposed of first? António Mota de Sousa Horta-Osório: Thank you, Claire. So George will take the first 2 ones, and Juan will answer you the third one.

Yes. So in terms of eligibility, yes, we obviously have not seen anything that constitutes as either capital disqualifying event. Came close to it in terms of the stress test assumptions that came out, but that was not categoric. It is still our firm belief that it is likely that the ECNs will not apply as we move forward. I can't give you the date in which I expect that event to occur, but it's still my strong presumption that they will cease to apply. In terms of what we do with them at that point, I should confirm that I won't be moving them into AT1s. But in terms of whether it's redemption or moving into some instrument, it sort of goes back to the earlier question in terms of GLAC and total capital stack. They do count towards that overall 20%, and I would expect to be staying around about that 20% level. So if I was purely to redeem my dropdowns, so it's more likely it's going to be turning to something else, but it will not be AT1s. On capital, yes, you're right, as I said, we previously disclosed that we thought that capital generation would be about 2.5% for this year and next year, and then 1.5% for 2 thereafter. And when we said the 2.5%, we were -- say there are certainties when we sort of look at that number. And those certainties included things like strong underlying profit generation, which we know is going to come through. When we gave that amount as well, we also knew there was some uncertainties out there. Some those are past. For example, the capital cost of doing the ECN conversion, we knew that lay ahead of us. Some of them, such as things like the TSB,…

It's Edward Firth here from Macquarie. I just got a couple of questions. I guess, the first is back on the margin because I'm quite struck by your reasonably optimistic outlook on that. And I guess, if one looks at the broader context, we've got -- and now it looks like some sort of competition commission investigation into the SME market. We've got people looking at the personal current account market. The FCA are talking about pricing on savings. You got a lot of new entrants coming in who are all talking about growing market share. So I'm not going to much talk about looking to this year, but as we look out into the next 2 or 3 years, it seems to me there's a lot of reason why one might expect some of those -- some of that pressure to come through in the overall margins. So just sort of some comment from you about how you think that is going to play out in terms of the business and the wider market over the next year or 2? Do you want my second question as well or... António Mota de Sousa Horta-Osório: Yes, please.

Again, the second question is just on the restructuring charges as a whole. Because again, I was sort of struck [ph] looking at the -- listening to TSB this morning, that they're talking about what GBP 79 million of profits, and you're talking of over GBP 200 million. And I can see where the difference is in terms of -- mathematically. But as we look into next year and this restructuring program is now finished, what sort of assurances can you give us that we will not just going to have and load more restructuring charges next year? António Mota de Sousa Horta-Osório: Right. Well, George will take the second question, although I think we have already said publicly that's below the line restructuring that we'll finish this year, but George will elaborate on it. On the first question, I don't think we gave any -- I did not mention any optimistic guidance in terms of a margin. I mean, unless you find the 2.45% optimistic. I basically elaborated on the loan growth, but not exactly on margin. What I said, that we have a competitive advantage on managing margin, and that will happen either up or down. So competitive advantages versus the sector, but I was not trying to be optimistic, unless, I repeat, you consider 2.45% optimistic, which, as George said, only implies that we keep margin where it is now. I had said last year that as the bank was turning into a growth phase, we would no longer -- you should no longer expect significant margin uplift as were targeting market share growth in all divisions, and I added that it is normally not a very good recipe to try to gain market share and margin at the same time. In spite of this, and although…

Yes, yes, I'll give you a 1-year view. Yes. So as you've seen in the results of the half year, we continue to have a number of below-the-line items as we have the last couple of years. Some of those were enforced upon us, such as the TSB build costs, some of it is our choice in terms of the Simplification, which has been a great success in terms of driving down the results. As I said in my presentation, in terms of the shape -- actually, if I start with this year, I would expect a number of those to not repeat during the second half of 2014 or at least reduce. So ECN charge won't repeat. I would see a reduction in the Simplification. I think we got a couple of hundred million spend as that completes. TSB, I would say, have ongoing running costs but are no longer building, so there may be a couple of hundred million there in terms of TSB for the second 6 months. So you'll see a reduction and a nonrepeat. And then, as we go to next year, to repeat what António said on the outset of your question, you're into a clean year. So absolutely, there is no intention for perpetuating restructuring charges below the line, so there's no further Simplification charges below the line. TSB build costs have gone. And so at that point, you are seeing the full weight, the full impact of that underlying profit that will come through, flow through into the statutory profit obviously and then into the capital position. António Mota de Sousa Horta-Osório: Other questions? Please, Chris.

It's Chris Manners from Morgan Stanley. Just 3 questions, if I may. Firstly, just on the leverage ratio. You've got 4.5% currently. We've got a consultation out there. I mean, do you think you actually got excess leverage ratio there? Or do you think it could be tipping towards more like a sort of 5%? And just where -- how high do you think the leverage ratio should go in the U.K.? Second point, I don't know if I missed it, but did you put the Pillar 2A requirement out in the document, the x [ph] obviously, that require interest, and just help us realize where -- exactly how much of that was capital that's all you have. And the third one was on interest rate sensitivity. Obviously, interest rates should be going up towards the end of this year or start of next. In the annual report, it looks like your interest rate sensitivity has been -- still quite -- a lot reduced, but that looks like a static analysis. So how should we think about interest rate sensitivity for Lloyds if the Bank of England starts hiking? António Mota de Sousa Horta-Osório: I'll take the first one, and George will answer to you to the number two and number three. Now on the leverage ratio, I mean, as I said, the consultation paper is just out. And given it is a consultation paper and it is very recent, I think it's too early to speculate about what that would imply in terms of specific numbers. What is clear for me is that the 3% will increase. That is clear for me, and it was already clear, as you know, from previous discussions we have had. And therefore, we have prepared our strategy well ahead in order to have…

Yes. And on the other -- in your second and third questions, no, you didn't miss the P2A. It's not buried in there, if you [ph] like that. We haven't disclosed them. We haven't disclosed for a couple of reasons. One, as you probably know, the PRA are going through consultation in terms of disclosure. I know a number of our peers do. But again, through consultation, at the moment, on this subject. And secondly, we have a submission that's working its way through the PRA on this, on the Pillar 2A. So my expectation would be that we will be disclosing by the end of the year, when sort of the PRA have decided and once we've had our submission looked at and reviewed. So that's reasons for not now. And then in terms of interest rate sensitivity, I mean, the bank is essentially set up not to be too much hostage to interest rate movements. So my -- our expectation, because of things like pass-through to customers and because of our position and things like the structural hedge is that for the first sort of -- first, 225 basis point movement, for example, you will see relatively little, if any, movement upon reported earnings. And it's only when you get sort of subsequent to that when you start seeing sort of net benefits come through. So in the early days, in the early moves, because we're passing through, because of our setup, you are not going to see a big impact on earnings. António Mota de Sousa Horta-Osório: Can I have the microphone here in the second row, please? Here in the second row, please. Thank you.

It's Mike Trippitt at Numis. Can I -- I just want to ask a follow-up on the margin question. I mean, there's obviously a hefty sort of GBP 1 billion benefit in net interest income that's come from liability mix and spread. And obviously, I think we understand what's happening and what has happened in the retail deposit market. But I guess, you've also benefited from wholesale funding reduction and refinancing. And I'm just wondering if you could help quantify that and give any guidance and whether you think there's further benefit to come in H2 from that reduction and refinancing and wholesale.

I mean, the answer is yes. We've seen a couple of basis points come through, and I would probably expect a sort of repeat to that as we move into second half thereafter. Again, there's some of that more expensive -- also funding continues to roll off. It will be increasing. It will be a continued support of the net interest margin. So as I said, it helped despite a couple of basis points in Q1, a couple of basis points in Q2 to a continuation of that. You're not seeing a vast amount of refinancing in terms of the second half, but what you will probably just see is a steady support as the set of the older financing rolls off. António Mota de Sousa Horta-Osório: And Mike, I would just add on top of what you said on the retail market, that our overall cost of funding going down is also a function of the commercial division, whereas, as I told you, our Transaction Banking deposits. And so our relationship core part of the Commercial division, Transaction Banking deposits are going up not more than 11%, and the fact that our rating has been upgraded, our credit default swap level is now around only 60 basis points. That has -- it had a very big impact as well on the funding cost in the Commercial division. We are attracting deposits from corporates in a very healthy way. And fourth, so to your point, George, is this one. The fourth point is, as I mentioned, online deposits, which are also managing downwards, given that we have, if you want in a sense, excess deposits and given it is not a relationship brand, we manage them for value as well, as I mentioned in the beginning. So you should consider those factors as well. Any more questions? Please. Can we have the microphone up there? Sorry. Thank you very much.

It's Fahed from Redburn. Just another question about PPI and then just thinking about litigation and legacy issues. On the PPI, you've let your utilization rate go up to 78%, I think, now. And I think you've always been in the kind of high 60s, low 70s. The only peer you've disclosed is on the low 70s. So considering the kind of pre-2005 claims that seem to be coming through now, why were you confident in doing that? And on the second question as well, just thinking about your kind of significant ahead comment on statutory profits. I mean, they're still kind of -- interim [ph] is selling out there, PPI still seems to be increasing and the FX charge could come through this year as well. So how do you get confident or how do we get confident that you will be significantly ahead? And I appreciate that the things you can control won't be coming through, but there are things -- a lot of things you can't control out there.

Okay. I'm not sure about the stats in terms of utilization and the history. I mean, when you look at the unutilized balance on PPI, with the actions we've taken at the half year now, that takes it to GBP 2.3 billion, which is actually a similar number to where we came into this year. And I think the outlook, as we look now, is actually slightly different. And the reason for that -- let me explain. First up, the GBP 600 million we've taken, about 2/3 of that relates to basically reactive complaints that have come in, together with associated expenses of dealing with that, that and the 1/3 to the PBR. On the reactive, as we've disclosed to Q1, complaints are running slightly higher. They came down in Q2, down 7%, but it's still slightly ahead of our forecast that we've reprojected that. And on the PBR, the past book reviews, as I've said, we're getting slightly high response rate from certain cohorts and slightly more policies. What -- when you look at the spend, the cash spend on PBR, we currently spend about GBP 200 million per month and have done for a while. When you look at the 3 elements of that, they are on slightly different trajectories, which I think is important. So if you take those 3 elements of PBR, remediation activity and the reactive complaints, PBR, as we disclosed, with -- essentially through the mailings, we've mailed, 95%, as I said in my presentation. And we would expect cash payments out with regards to PBR to basically cease in the sort of first quarter of next year. So I can see the end of the tunnel with regards to past book reviews. Remediation, we're going to both embrace it and we're going to…