Metro Bank Holdings Plc · LSE:MTRO
Metro Bank — Metro Bk Hldgs — H1 2024 Earnings Presentation
25 slides from Metro Bank's earnings presentation, Jul 31, 2024
Slide 1: H1 2024 Interim Results
H1 2024 Interim Results 31 July 2024
Slide 2: Agenda
Agenda Overview Daniel Frumkin, Chief Executive Officer Financial performance Cristina Alba Ochoa, Chief Financial Officer Strategy Daniel Frumkin, Chief Executive Officer
Slide 3: Upgraded Guidance
Upgraded Guidance Operational Profitability during Q4’24 Mortgage Sale Execution Completion[1] RoTE guidance increased 2025 2026 2027+ mid-to-upper mid-to-upper double digit single digit teens thereafter Driven by: Continued NIM expansion driven Continued cost discipline and by asset rotation and Co
Slide 4: Strategy remains unchanged
Strategy remains unchanged Delivering mid-to-high teen RoTE by 2027 Continued cost discipline with £80 million of annualised run-rate savings on track to be delivered by Q4’24 Cost Discipline Reduced colleague numbers by > 1,000 or c.22% of FTE Repositioned our store and call centre propositio
Slide 5: Significant progress across the last 9 months
Significant progress across the last 9 months Q4 2023 Q1 2024 Q2 2024 Q3 / Q4 2024 Streamlined and Strengthening and Successful launch of Creating a simpler, more refreshed our offering, deepening people- Capital package secured deposit campaign agile and efficient Bank through data driven people ba
Slide 6: Financial performance
Financial performance Cristina Alba Ochoa Chief Financial Officer
Slide 7: H1'24 results are on track, reflecting period of transition
H1’24 results are on track, reflecting period of transition Customer deposits Liquidity coverage ratio Total capital + MREL[1] Net fee and other income Feb’24: £16.5bn 332% 365% 22.0% 22.2% 68.6 15.5 15.6 15.7 214% 18.1% 63.3 62.0 H1 2023 H2 2023 H1 2024 H1 2023 H2 2023 H1 2024 H1 2023 H2 2023 H1 20
Slide 8: Cost initiatives on track
Cost initiatives on track Cost discipline Underlying operating expenses Total underlying operating expenses £m £272m Cost down £258m £255m 17 272 £17m or 6% 14 11 16 HoH 12 Occupancy expenses 266 267 28 15 19 23 Professional and other fees 258 24 26 255 23 Other (underlying) 30 30 29 Money transmiss
Slide 9: Treasury asset repricing provides tailwinds to RoTE
Treasury asset repricing provides tailwinds to RoTE Future benefit from Treasury asset repricing[1] Liquidity coverage ratio £0.5bn reinvested at £1bn reinvested at Cumulative impact = c.4.2%[2] = c.3.6%[2] = Annualised ROTE Annualised ROTE uplift Annualised ROTE uplift uplift of > c450 bps in of >c
Slide 10: Improving yields and returns on capital, with H1'24 exit momentum
Improving yields and returns on capital, with H1’24 exit momentum NIM bridge Improved yield and returns on capital 11.0% 11.4% Q1’24 NIM: Q2’24 NIM: 1.54% 1.74% 8.4% 7.5% 6.1% 4.9% 5.2% 4.5% 3.9% 3.4% 1H22 2H22 1H23 2H23 1H24 Lending income / Lending RWAs Lending yield Lending mix Pro forma impact o
Slide 11: Low-risk balance sheet supported by a robust capital position
Low-risk balance sheet supported by a robust capital position Continued capital accretion across H1’24 Provision levels remain appropriate[2] Impact of Mortgage 6 portfolio sale (post 199 (5) (4) 196 completion[1]) PMO/ PMA 23.4% Modelled 22.0% 22.2% MREL MREL 18.1% FY 2023 provision Portfolio Singl
Slide 12: Upgraded guidance
Upgraded guidance KPIs Updated Guidance Previous Guidance • Increased to mid-to-upper single digit in 2025, double digit in 2026 and mid-to-upper ROTE • Low-single digit in 2025, increasing to high-single digit in 2026 and low-mid teens thereafter teens thereafter • Continued NIM expansion driven by
Slide 13: Strategy
Strategy Daniel Frumkin Chief Executive Officer
Slide 14: Strategic pillars remain the roadmap for future growth
Strategic pillars remain the roadmap for future growth Balance Sheet Revenue Costs Infrastructure Communications Optimisation Delivered Enhanced digital self-service Launched first limited company £50 million of annualised run-rate £2.5 billion mortgage portfolio onboarding buy-to-let mortgage produ
Slide 15: Our strategic pivot is supported by existing products and capabilities
Our strategic pivot is supported by existing products and capabilities Strength and depth within our corporate and commercial full-service offering Corporate Team Regional commercial SME Real Estate Private Banking Partnerships Asset Finance Invoice Finance (Cash management) Caters for larger, more
Slide 16: Positioned for growing returns
Positioned for growing returns Strategic focus to deliver target positioning Delivering mid-to-upper teens RoTE by 2027 Risk-adjusted lending yield 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 0.0% Cost discipline 0.5% Target Positioning Asset rotation 1.0% Continue to reduce liquidity and improve cost of deposits
Slide 17: Q&A
Q&A Daniel Frumkin Chief Executive Officer Cristina Alba Ochoa Chief Financial Officer
Slide 18: Appendix
BANK Appendix
Slide 19: P&L
P&L £m 1H23 2H23 1H24 YoY HoH Net interest income 221 190 172 (22%) (10%) Net fees and other income 63 69 62 (2%) (10%) Net gains/(losses) on sale of assets 1 2 0 (88%) (95%) Total underlying revenue 285 261 234 (18.1%) (10%) Underlying operating costs (258) (272) (255) (1%) (6%) Expected credit los
Slide 20: Balance sheet highlights
Balance sheet £m 1H23 2H23 1H24 YoY HoH Loans and advances to customers Treasury assets 12,572 8,023 12,297 8,770 11,543 8,819 (8%) 10% Highlights (6%) 1% Other assets 1,152 1,178 1,127 (2%) (4%) Total assets 21,747 22,245 21,489 (1%) (3%) Deposits from customers 15,529 15,623 15,726 1% 1% Deposits
Slide 21: Retail mortgages – overview
Retail mortgages – overview[1] Retail mortgage portfolio New lending loan-to-value % Retail mortgages loan-to-value Average retail LTV: 61% at 1H24 vs 58% at FY23 31% 27% 18% 16% 22% 19% 21% 25% 25% 68% 63% 11% 7% 1H24 1% 2% 0% 0% £7.5bn FY23 1H24 < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% FY2
Slide 22: Retail mortgages – LTV and repayment type
Retail mortgages – LTV and repayment type[1] Owner Occupied Loan-to-value profile Owner Occupied Repayment type 67% 68% 34% 31% Average owner occupied LTV: 60% 18% 16% 18% 17% 19% 21% 33% 32% 13% 9% 2% 2% 0% 0% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% Interest only Capital and interest FY23
Slide 23: Commercial – overview
Commercial – overview Commercial lending portfolio Term loans by industry sector Commercial customer deposits 6% 30 Jun 31 Dec Industry sector (£m) 2024 2023 17% Real estate (PBTL) 365 465 38% 1H 2024 H1 2024 53% Real estate (other term loans) 440 509 £3.2bn £6.8bn 62% 24% Hospitality 395 368 Health
Slide 24: Macroeconomic scenarios feeding into provisioning models
Macroeconomic scenarios feeding into provisioning models 5% Application of scenarios and weighting 20% • Four probability weighted scenarios: Baseline (50%); Upside (20%), Downside (25%) and Severe Downside (5%) Upside 25% • Macroeconomic forecasts provided by Moody’s Analytics (as at Jun’24) Baseli
Slide 25: Statutory vs Underlying reconciliation
Statutory vs Underlying reconciliation Impair/WO's PPE/intangible Transformation Remediation Capital raise and Half year to 30 Jun 2024 Statutory basis assets Net C&I costs costs costs refinancing Underlying basis £’million £’million £’million £’million £’million £’million £’million Net interest inc