Metro Bank Holdings Plc · LSE:MTRO
Metro Bank — Metro Bk Hldgs — FY2022 Earnings Presentation
30 slides from Metro Bank's earnings presentation, Mar 2, 2023
Slide 1: Metro Bank PLC Full Year 2022 Results
Metro Bank PLC Full Year 2022 Results 2 March 2023
Slide 2: Overview
Overview Daniel Frumkin Chief Executive Officer
Slide 3: Turnaround complete
Turnaround complete Profitable on an underlying basis for Q4 2022 1 Enhanced stability and 2 Transformed financial 3 Created diversified resilience performance growth opportunities Significant investment in control Repositioned balance sheet driving environment NIM accretion +117bps Scalable and dyn
Slide 4: Emerged from the turnaround as a stronger bank
Emerged from the turnaround as a stronger bank Strategic priority Delivers Key outcomes • Investment in digital and automation reduced store and Amaze Direct headcount • Disciplined cost growth • Selected store closures, new stores build cost reduced 40%, purchased freehold to increase flexibility C
Slide 5: Metro Bank post turnaround
Metro Bank post turnaround Great Colleagues • 95% of our Voice of the Colleague scores are above Glint Global Benchmark1 who are engaged • All scores are better or at par with our 2021 results Best in class • #1 on the high street for the 10th time running2 Underlying service profitability Deep comm
Slide 6: Financial Review
Financial Review James Hopkinson Chief Financial Officer
Slide 7: Momentum underpinning profitability
Momentum underpinning profitability £m 2022 2021 YoY Other income and fees up 16% Net interest income 404.2 295.7 37% Net fees and other income 117.9 101.5 16% Other income and fees, £m Net gains on sale of assets - 0.7 - Total underlying revenue 522.1 397.9 31% +16% Operating costs (532.8) (546.8)
Slide 8: Disciplined expense management despite inflation
Disciplined expense management despite inflation Cost run-rate controlled despite inflationary pressures Cost: Income ratio continues to improve Underlying costs, £m Underlying cost: income ratio, £m Mortgage sale and RateSetter -3% acquisition meant lost revenue 153% and increased cost 275 272 125%
Slide 9: Balance sheet transformed to provide optionality and resilience
Balance sheet transformed to provide optionality and resilience £m 2022 2021 YoY Dynamic lending mix optimised for returns Loans and advances to customers 13,102 12,290 7% Treasury assets 7,870 9,142 (14%) Loans and advances to customers Other assets 1,147 1,156 (1%) 2021 2022 Total assets 22,119 22
Slide 10: Disciplined lending growth
Disciplined lending growth Mortgages – strong growth, stable credit performance Unsecured – improving credit metrics New lending volumes, £b New lending loan-to-value Average borrower salary, £k Lending within top 4 bands1 -4pps +22pps +83% +30% 73% 47% 2.2 69% 52 40 1.2 25% 2021 2022 2021 2022 4Q20
Slide 11: Capital remained above regulatory minima
Capital remained above regulatory minima Regulatory capital MREL, % 20.5% 18.3% 0.2% 0.2% (0.1%) (0.1%) (0.8%) 17.7% As at Minimum Minimum Position 31 Dec 2022 excl. buffers2 incl. buffers3 CET1 10.3% 4.8% 8.3% Tier 1 10.3% 6.4% 9.9% CET1 CET1 CET1 12.6% Total Capital 13.4% 8.5% 12.0% 10.6% 10.3% MR
Slide 12: 2023 is a transitional year
2023 is a transitional year 2022 2023 NIM 1.92% NIM accretion limited by fewer anticipated base rate moves Lending yield 3.67% Continue optimising mix for maximum risk adjusted return on regulatory capital Pricing will reflect rate environment and competitive pressures, expect strong account acquisi
Slide 13: Financial highlights
Financial highlights Profitable on an underlying basis for Q4 2022 Revenue driven by repositioned balance sheet and fees Costs well controlled despite ongoing inflationary pressures Remain appropriately provisioned and watchful of the macroeconomic environment Targeting sustainable profitable growth
Slide 14: Transitional Year
Transitional Year Daniel Frumkin Chief Executive Officer
Slide 15: The path forward
The path forward • Service-led to create FANS #1 on the high street for the 10th time running1 - Multi-channel with stores at the heart Our service - Great culture brought to life by engaged colleagues • A full service bank differentiator - Only disruptor offering a full service banking solution rem
Slide 16: Building a sustainably profitable business
Building a sustainably profitable business Creating FANS Franchise continues to grow Structurally advantaged Personal Current Accounts, ‘000 Mortgage applications and yield, £bn Return on regulatory capital, % 8.8% 1,270 3.8 7.9% 7.4% 7.5% 924 +35% 6.5% +11% CAGR 5.8% 6.1% 5.8% 1.6 CAGR 2.30% 3.12%
Slide 17: Stores a key driver of sustainable growth
Stores a key driver of sustainable growth What we’ve done Where we are now and where we will be Increasing our direct ownership of store portfolio, now 38% freehold1 vs. 25% on 1 Jan 2020 ~90% of digital accounts opened are within 20 miles of a store2 What we’ve got planned 11 new stores in th
Slide 18: Strategic optionality
Strategic optionality Account growth Product growth Fee growth Continuing growth of existing New communities Digital offering stores Asset generation capabilities Balance sheet optimisation Optimisation of the capital Mortgages, Commercial, Asset finance, Invoice finance, SME, Unsecured, Auto financ
Slide 19: The repositioned model works
The repositioned model works A Bank designed for customers, colleagues and communities Built a structural advantage in risk-adjusted spreads Risk-adjusted lending yield1 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% Service-led model providing core deposits 0.0% H H Metro Bank 0.2% 2022 Diversified asset base drivi
Slide 20: Q&A
Q&A
Slide 21: Appendix
Appendix
Slide 22: Retail mortgages – overview
Retail mortgages – overview Retail mortgage portfolio Retail mortgages loan-to-value Average retail LTV: 56% at FY22 vs 55% at FY21 36% 34% 24% 23% 18% 19% 15% 18% £2.2b 6% 5% 1% 1% 0% 0% 28% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% FY21 FY22 £7.7b ECL coverage ratio Balance by IFRS9 stage 7
Slide 23: Retail mortgages – LTV and repayment type
Retail mortgages – LTV and repayment type Owner occupied retail mortgages Loan-to-value profile Repayment type 58% 64% 38% 36% Average owner occupied LTV: 55.4% 42% 22% 20% 36% 15%17% 16% 18% 8% 7% 1% 2% 0% 0% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% Interest only Capital and interest FY21 F
Slide 24: Commercial lending – overview (1/2)
Commercial lending – overview (1/2) Commercial lending portfolio Portfolio composition Segment 31 Dec 2022 31 Dec 2021 3% 10% Term loans 55% 57% CBILS, CLBILS & RLS 13% 7% BBLS 19% 26% Asset & Invoice Finance1 10% 7% Overdrafts & credit cards 3% 3% £4.2b 55% 32% Term loans by industry sector2 Indust
Slide 25: Commercial lending (excluding BBLS) – overview (2/2)
Commercial lending (excluding BBLS) – overview (2/2) ECL coverage ratio1 Balance by IFRS9 stage1 CRE balances3 £m ECL 0.9% 1.4% 3.8% 6.0% 32.7% 24.9% -18% Coverage Ratio 2.78% 2.58% 79.0% 85.8% 837 683 16.7% 11.2% 4.3% 2.9% 2021 2022 FY21 FY22 Stage 1 Stage 2 Stage 3 FY21 FY22 PBTL balances3 Arrears
Slide 26: Consumer lending – overview
Consumer lending – overview Consumer Lending portfolio • Average salary increased from £40k in Q4 2020 to £52k in Q4 2022 4% • Almost 50% of originations in 2022 were in our top 4 risk buckets 6% • Fastest growing cohort in 2022 was in top rated bucket (now over 25% of the portfolio up from ~20% in
Slide 27: Macroeconomic scenarios and provisioning
Macroeconomic scenarios and provisioning Application of scenarios and weighting 5% 20% Upside 25% • 4 probability weighted scenarios: Baseline (50%); Upside (20%), Downside (25%) and Severe Baseline Downside (5%) • Macroeconomic projections provided by Moody’s Analytics (December’22) Downside • Hous
Slide 28: Increasing returns from a low risk Treasury Portfolio and rising rates
Increasing returns from a low risk Treasury Portfolio and rising rates Portfolio composition, £m Non-cash portfolio credit rating Asset backed securities, Covered 168 bonds, 694 Multi-lateral development bonds, AA, 1,987 32% RMBS, 1,133 £7,870m £5,914m AAA, 68% Government Cash, 1,956 bonds, 1,932 Lo
Slide 29: Reconciliation between statutory and underlying metrics
Reconciliation between statutory and underlying metrics Remediation Impairment and Holding Year ended 31 December 2022 Statutory Net BCR Transformation costs incl. FCA write-off of PPE company Underlying basis £m basis costs costs investigation and and intangible assets insertion OFAC Net interest i
Slide 30: Disclaimer
Disclaimer Forward-looking statements This presentation and subsequent discussions may contain forward-looking statements. Forward-looking statements are not historical facts but are based on certain assumptions and subjective judgements of management regarding our present and future business strate