Metro Bank Holdings Plc · LSE:MTRO
Metro Bank — Investor Presentation (October 2023)
20 slides from Metro Bank's investor presentation, October 2023
Slide 1: Unlocking Growth Capital Package Overview
Unlocking Growth Capital Package Overview October 2023
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, OR INTO, THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA
Slide 3: Strategic pillars have delivered
Strategic pillars have delivered Revenue Costs Infrastructure Communications Balance sheet +21% vs. 1H22 -3% vs. 1H22 Risk and resilience, Engaged colleagues; optimisation technology platforms brand recognition Structural advantage in risk-adjusted spreads FY22 – 1H23 Service-led model providing cor
Slide 4: UK's only full-service challenger bank with optionality for asset rotation
UK’s only full-service challenger bank with optionality for asset rotation Unsecured Credit cards/ Mortgages Commercial SME Asset finance Invoice Finance Auto finance personal loans overdrafts Product offering ✔✔✔ ✔✔ ✔ ✔✔ ✔✔ ✔✔✔ ✔ ✔ Scaleable ✔✔✔ ✔✔ ✔✔ ✔✔ ✔✔ ✔✔✔ ✔ ✔✔ Systems ✔✔✔ ✔✔ ✔✔ ✔ ✔✔ ✔✔✔ ✔ ✔✔
Slide 5: Deposit growth – other opportunities to increase market share over the medium term
Deposit growth – other opportunities to increase market share over the medium term Cash ISA Retail Easy Access Business Easy Access ~£310bn market1 with material growth expected ~£950bn market1 ~£280bn market1 Metro Bank market shares1 Metro Bank market shares1 Metro Bank market shares1 0.90% 0.90%
Slide 6: Executive Summary
Executive Summary • Secured £325m capital raise: £150m of new equity and £175m of new MREL issuance Capital Package • £600m debt refinancing Secured • In discussions regarding a sale of up to £3.0bn mortgage portfolio in Q4 2023 Significantly • Capital package takes Metro Bank out of the CRD IV Comb
Slide 7: Capital Package Overview
Capital Package Overview • £150m firm placing at 30p per share, underpinned by equity commitments from a number of existing shareholders and new investors • To complete in Q4 2023, subject to shareholder approval Equity raise • Spaldy Investments Limited, Metro Bank’s largest shareholder is contribu
Slide 8: The Capital Package is expected to deliver
The Capital Package is expected to deliver • Asset rotation towards specialist mortgages (with average LTVs assumed to be in-line or below current profile) and commercial lending Loan Growth • Loan book contraction in 2023E owing to the portfolio sale; double digit CAGR from 2024E to 2028E driven by
Slide 9: Timetable and Conditions of the Capital Package
Timetable and Conditions of the Capital Package • Publication of shareholder circular and prospectuses Timetable • Launch of consent solicitation process for the debt refinancing and documents for the new MREL raise in the coming weeks • Expected completion of the Capital Package in Q4 2023 • Subjec
Slide 10: Strategic pillars have delivered
Strategic pillars have delivered Revenue Costs Infrastructure Communications Balance sheet +21% vs. 1H22 -3% vs. 1H22 Risk and resilience, Engaged colleagues; optimisation technology platforms brand recognition Structural advantage in risk-adjusted spreads FY22 – 1H23 Service-led model providing cor
Slide 11: Q&A
Q&A
Slide 12: Appendix
Appendix
Slide 13: Committed to being the #1 community bank – the model works
Committed to being the #1 community bank – the model works Community focused We’re the best high street bank Strong colleague engagement for in-store service quality for the 10th time 95% of our Voice of the Colleague scores are First ever champion running1 above Glint Global Benchmark of women’s an
Slide 14: Service-led core deposit model advantaged through the cycle
Service-led core deposit model advantaged through the cycle Strong growth in customer numbers driving deposit balances Opportunity to further enhance growth Personal current accounts, ‘000 Business current accounts, ‘000 • Existing stores still growing +58% +42% • New Communities – 11 new stores in
Slide 15: Market-wide reductions in current account balances partially offset in June and July
Market-wide reductions in current account balances partially offset in June and July Customer acquisition remains strong Service-led core deposit franchise remains resilient Personal current account Business current account openings, ‘000 openings, ‘000 +207k new account openings in 1H23 +8% +20% +1
Slide 16: Lending managed for risk adjusted returns, with asset rotation upside potential
Lending managed for risk adjusted returns, with asset rotation upside potential Mortgages (59% of lending) – credit quality remains stable Commercial1 (30% of lending) – stable performance, growth opportunity Loans to customers, £bn New lending loan-to-value, % Deposits, £bn Average loan-to-value of
Slide 17: Retail mortgages – overview
Retail mortgages – overview Retail mortgage portfolio Retail mortgages loan-to-value Average retail LTV: 58% at 1H23 vs 56% at FY22 34% 30% 19% 17% 23% 23% 18% 21% £2.1bn 5% 7% 1% 2% 0% 0% 28% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% FY22 H123 £7.6bn ECL coverage ratio Balance by IFRS9 stage
Slide 18: Low risk Treasury Portfolio, with upside as fixed-rate position churn
Low risk Treasury Portfolio, with upside as fixed-rate position churn Portfolio composition and central bank eligibility Non-cash portfolio credit rating and Risk Weights £m £m 1% 2% 9% 12% Cash & Money Market Funds Government Bonds 16% 23% AAA Carrying Fair SSAs £m Δ 34% AA 1 value value 8% Covered
Slide 19: Commercial lending – overview
Commercial lending – overview Commercial lending portfolio Portfolio composition Excluding BBLS Segment 30 Jun 2023 31 Dec 2022 4% Term loans 55% 55% Balance by IFRS9 stage 12% CBILS, CLBILS & RLS 12% 13% 1.4% 1.1% 6.0% 5.9% 24.9% 27.5% ECL BBLS 17% 19% Coverage 85.8% 84.3% Asset & Invoice Finance1
Slide 20: Continued disciplined cost management despite inflation
Continued disciplined cost management despite inflation Continued cost discipline – costs down 3% both Y/Y and H/H Cost: income ratio continues to improve Underlying costs, £m Underlying cost: income ratio, % £266.3m £266.5m £258.2m 19 20 Other 113% 20 20 18 12 15 16 14 Professional fees 93% 25 24 2
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