Metro Bank Holdings Plc · LSE:MTRO
Metro Bank — H1 2021 Earnings Presentation
25 slides from Metro Bank's earnings presentation, Jul 28, 2021
Slide 1: 1H21 Results Presentation
1H21 RESULTS PRESENTATION 28 July 2021
Slide 2: Agenda
Agenda 1 Overview Daniel Frumkin (CEO) 2 Financial results David Arden (CFO) 3 Operational & strategic update Daniel Frumkin (CEO) 4 Q&A Agenda 1
Slide 3: Overview
Overview Daniel Frumkin (CEO)
Slide 4: Delivering our strategy
Delivering our strategy Drivers of improved financial performance showing signs of progress: HoH Financial Performance1 Lending margin improving: accelerating pivot to higher yielding assets Cost of deposits reducing, with meaningful mix shift in deposits toward current Consumer accounts and i
Slide 5: Financial results
Financial results David Arden (CFO)
Slide 6: 1H 2021 Key performance indicators
1H 2021 Key performance indicators Customer Customer Liquidity Total capital accounts1 deposits coverage ratio + MREL ratio £ 7% 40bps 14% 83pp 2.4m 309% 22.4% 2.2m 16.1b 16.6b 21.7% 2.1m 15.6b 21.3% 226% 187% 1H20 2H20 1H21 1H20 2H20 1H21 1H20 2H20 1H21 1H20 2H20 1H21 Net fee and Net interest Under
Slide 7: Revenue and NIM
Revenue and NIM NIM bridge Fee and other income1 bps £m 8 (31) 10 50.2 46.6 13 13.7 36.1 14.0 128 128 12.7 15.5 LTD impact 13.1 includes mortgage 6.5 115 portfolio disposal 13.4 12.2 9.5 7.4 7.6 7.4 1H20 2H20 1H21 1H20 2H20 1H21 deposits Lending Lending deposit ratio Cost of yield mix Loan to Safe d
Slide 8: Operating costs
Operating costs Run the Bank1 Run the Bank (RTB) cost growth reflects cost focus 11 92 • RTB costs increased <2% on a like for like basis as shown below 16 22 £215m 111 6 20 3 215 24 206 Colleagues 2 Money transmission 3 H2 2020 BAU growth RateSetter H1 2021 Depreciation and amortisation IT Property
Slide 9: Deposits and lending
Deposits and lending Improved mix and deposit repricing delivered lower cost of deposits, while a focus on risk adjusted return on lending has increased average yields Deposit mix Balance sheet mix shift Net lending – flow (£b) 2H20 1H21 1.0 Fixed term: Demand: Demand: Fixed term: 15% current saving
Slide 10: Expected credit loss expense and asset quality
Expected credit loss expense and asset quality Some improvement in macroeconomic outlook but a cautious level of management overlay retained given continued uncertainty ECL expense and Cost of Risk ECL coverage ratio 1.30% 1.33% ECL expense (£m) Cost of Risk1 (%) Coverage Ratio2 (%) 0.96% 1H21 2H20
Slide 11: Capital
Capital Total capital + MREL ratio bridge Net ECL (0.3%) 1.9% 0.2% (0.1%) (0.1%) (0.5%) 22.4% 21.7% (1.8%) (0.2%) (0.1%) 22.4% CET1 CET1 15.0% 13.9% 1 Dec-20 Annual Intangibles RateSetter Profit & loss Profit & loss Quick Fix Lending volume Mortgage book Jun-21 operational risk investment and back b
Slide 12: P&L
P&L £m 1H21 2H20 Change Net interest income 133.6 134.1 - Net fees and other income 46.7 50.2 (7%) Net gains on sale of assets (0.5) 3.3 (>100%) Total underlying revenue 179.8 187.6 (4%) ‘Run the Bank’ costs (214.9) (206.3) 4% ‘Change the Bank’ costs (60.3) (55.0) 9% Operating costs (275.2) (261.3)
Slide 13: Balance Sheet
Balance Sheet Jun Dec £m Change 2021 2020 Loans and advances to customers 12,325 12,090 2% Treasury assets1 9,474 6,406 48% Other assets2 1,214 4,083 (70%) Total assets 23,013 22,579 2% Deposits from customers 16,620 16,072 3% Deposits from central banks 3,800 3,808 - Debt securities 596 600 (1%) Ot
Slide 14: Operational & strategic update
Operational & strategic update Daniel Frumkin (CEO)
Slide 15: Liability-led strategy supplemented by acceleration of asset mix shift
Liability-led strategy supplemented by acceleration of asset mix shift Driving risk adjusted return on regulatory capital An increased proportion of non-interest bearing current accounts and low-cost instant access deposits % of total deposits Consumer Acquired RateSetter platform finance >£300m
Slide 16: Delivering balance sheet optimisation through shifting the asset mix
Delivering balance sheet optimisation through shifting the asset mix Evolving mortgage products Accelerating consumer finance Enhanced existing mortgage offering to focus on risk Leveraging RateSetter capability to drive higher margin growth adjusted returns on regulatory capital Organic unsecured l
Slide 17: Reshaping the balance sheet for risk adjusted returns
Reshaping the balance sheet for risk adjusted returns December 2019 June 2021 Lending mix 2% 12% 6% 27% Retail mortgages Commerical £14.7b £12.3b 55% BBLS/CBILS 27% Consumer 71% Lending yield1 92bps 3.04% spread over base rate 2.12% Loan interest income/ 187bps 7.87% lending RWA1 6.00% Deposit mix 1
Slide 18: Q&A
Q&A Daniel Frumkin Chief Executive Officer David Arden Chief Financial Officer
Slide 19: Appendix
BANK Appendix
Slide 20: Retail mortgages
Retail mortgages Retail mortgage portfolio Retail mortgages debt-to-value Average retail DTV: 56% at 1H21 vs 56% at 2H20 34% 35% 18% 18% 20% 23% 22% 18% £1.8b 5% 5% 1% 1% 0% 0% 26% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% 2H20 1H21 £6.8b Mortgage payment deferrals Retail mortgages geographic
Slide 21: Retail mortgages
Retail mortgages Owner occupied retail mortgages Debt-to-value profile Repayment type 54% 56% 37% 37% 46% 44% Average owner occupied DTV: 56% 2H20 21% 19% 19% 17% 16% 17% 1H21 7% 7% 1% 2% 0% 0% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% Interest only Capital and interest 2H20 1H21 Retail buy-t
Slide 22: Commercial lending
Commercial lending Commercial lending portfolio Commercial lending industry sectors1 Industry sector (£m) 30 June 2021 31 Dec 2020 30 Jun 2020 £0.1b £0.3b Real estate (PBTL) 1,037 1,117 1,167 6% 3% Real estate (other term loans) 889 1,032 1,070 £1.6b Hospitality 370 376 323 Health & Social Work 226
Slide 23: Improving customer activity trends
Improving customer activity trends 1 140 1H20 2H20 1H21 120 100 80 60 40 20 0 All Store activity Spending activity 2 Appendix 22 (1) Activity levels shown as a percentage of pre-pandemic levels in 1st week commencing each month (2) Metro Bank customer activity only
Slide 24: YoY P&L
YoY P&L £m 1H21 1H20 Change Net interest income 133.6 116.2 15% Net fees and other income 46.7 36.1 29% Net gains on sale of assets (0.5) 1.0 (>100%) Total underlying revenue 179.8 153.3 17% ‘Run the Bank’ costs (214.9) (184.1) 17% ‘Change the Bank’ costs (60.3) (40.6) 50% Operating costs (275.2) (2
Slide 25: YoY Balance Sheet
YoY Balance Sheet Jun Jun £m 2021 2020 Change Loans and advances to customers 12,325 14,857 (17%) Treasury assets1 9,474 6,101 55% Other assets2 1,214 1,176 3% Total assets 23,013 22,134 4% Deposits from customers 16,620 15,577 7% Deposits from central banks 3,800 3,801 - Debt securities 596 599 (1%