Metro Bank Holdings Plc · LSE:MTRO
Metro Bank — H1 2018 Earnings Presentation
26 slides from Metro Bank's earnings presentation, Jul 25, 2018
Slide 1: Join the Revolution: 1H18 Results
JOIN THE REVOLUTION 1H18 Results, 25 July 2018 1
Slide 2: The Metro Bank revolution
the Metro Bank revolution Metro Bank is the revolution in British Banking • A full service retail & commercial bank • Britain’s first new High Street bank in over 100 years • Founded by Vernon W. Hill, II, founder of Commerce Bancorp (CBH) in the US Key highlights • Unique customer-service led model
Slide 3: It's all about building the brand
it’s all about building the brand Legendary Brands (Experiences) Emotional Brands (Feelings) Basic Brands (Brand Promise) 3
Slide 4: Creating fans: model, culture, execution
and creating fans Model Value Differentiating + Culture Unique + Execution Fanatical = 4
Slide 5: The Metro Bank model
the Metro Bank model • Growth retailers NOT bankers • Unique deposit driven/retail focus • Customers will trade lower rates for a better RETAIL EXPERIENCE • Great business creates FANS NOT CUSTOMERS • Growth is essential to success & value • Become a power retailer 5
Slide 6: The Metro Bank culture
the Metro Bank culture • Create a culture to match your model • Culture must be very clear & pervasive “Buy in or opt out” • Hire for attitude, train for skills • Over-train • Over-reinforce • Make everyone an owner 6
Slide 7: With fanatical execution
with fanatical execution • Believe in your model • Over-invest in facilities & people Best Current Account Provider for Branch Service • Demand 100% execution Highly Commended Most Trusted Financial Provider • One person to say YES, Most Trusted Current Account two to say NO Provider Most Trusted Cu
Slide 8: No stupid rules
no stupid rules 7 Day store banking Instant account opening Free pens in store or online Instant debit/credit card Free coin counting Block and unblock printing in store card on mobile app 8
Slide 9: Delivers a unique culture and model to create fans
delivers a unique culture and model to create fans Brand Recognition(1) and NPS(2) Customer Accounts 1,418 c.80% (‘000) 67% 1,217 88 88% 80% 82% 77% 915 70% 66% 655 447 275 41729 42247 42582 42947 43312 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Jun-18 Sep-13 Mar-14 Aug-15 Jul-16 Jul-17 Jul-18 % Net promote
Slide 10: Which drives our loan, deposit and asset growth
which drives our loan, deposit and asset growth 25000 56 20000 Average annual 48 growth rate 15000 Loans 77% 41 10000 36 Deposits 54% Assets 62% 5000 Number of stores 0 30/06/2015 30/06/2016 30/06/2017 30/06/2018 Loans £2.2bn £4.6bn £7.8bn £12.0bn Deposits £3.8bn £6.6bn £9.8bn £13.7bn Assets £4.6bn
Slide 11: Disruptive experience integrated across all channels
with a disruptive experience integrated across all channels and continuously evolving The integration of our store network combined with our digital offering gives customers the channel of choice at their convenience at any point on the customer journey. Stores Co-located contact centres Online Bank
Slide 12: Including our growing network
including our growing network ) 12
Slide 13: Uniquely branded state-of-the-art stores
with our uniquely branded state-of-the-art stores Luton Brighton Wimbledon 13
Slide 14: Safe deposit boxes providing regular reliable income
with safe deposit boxes providing regular reliable income Stores open more than 1 year safe deposit box income covers 80% of base store rent 14
Slide 15: Ealing: how store contribution grows
with Ealing an example of how store contribution grows Y1 Y2 Y3 Y4 Y5 £’000 May-14 May-15 May-16 May-17 May-18 Number of customer accounts 10,399 17,603 24,949 31,870 38,784 Deposits 44,581 153,232 226,255 290,347 402,444 Average deposit growth per month £3.7m £9.1m £6.1m £5.3m £9.3m Total income(1)
Slide 16: Strong average deposit growth per store
with strong average deposit growth per store 2017 2018(1) £76m £74m 2016 $99m 2015 $101m £68m 2014 £64m $90m average $85m £59m $78m £7.4 £6.6 £6.6 £6.3 £6.3 £6.2 £6.1 £5.9 £5.7 £5.6 £5.5 £5.5 £5.3 £5.0 £4.8 £4.3 £4.1 £4.0 deposits per store per month (m) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 17: Increasing store contribution and performance
increasing store contribution and performance Annual cohorts start and grow faster(1) Avg Store Deposits £’m Months open 1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 2010 2011 2012 2013 2014 2015 2016 2017 Store contribution increases for new and existing stores (quarterly) Positive contri
Slide 18: Winning low cost sticky deposits
as we continue to win low cost sticky deposits £13.7bn £11.7bn 47% • Current account growth of 41% YoY, now 31% of deposits £8.0bn • Annual deposit growth of 40% 56% - Retail 34% growth - Commercial 45% growth £5.1bn • Deposit mix: commercial 54% and retail 46% 78% • Cost of deposits of 0.57% in H1
Slide 19: Simple, liquid, deposit-funded balance sheet
leading to a simple, liquid, predominantly deposit- funded balance sheet FY Annual H1 2018 (£’m) H1 2017 (£’m) Growth Loans and advances to customers • With an 87% loan to deposit ratio 12,013 7,750 55% at 30 June 2018, the balance sheet is intrinsically liquid, with no Treasury assets(1) 6,453 4,82
Slide 20: Growing our lending at low risk
enabling us to grow our lending at low risk High loan growth at low risk increasing our LTD ratio • Strong organic momentum in Net customer loans (bn) £12.0 lending across all asset classes Loan to deposit ratio £9.6 64% • 87% loan to deposit ratio in H1 2018, increasing from 66% £5.9 82% in FY 2017
Slide 21: 8 quarters of increasing profitability
driving strong results with 8 quarters of increasing profitability Our Progress HY Underlying (loss)/profit before tax (1) H1 2018 H1 2017 Change Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 Customer accounts 1,418k 1,045k +36% £14.1m Customer deposits £13.7bn £9.8
Slide 22: Generating increasing returns
generating increasing returns Annual H1 2018 (£’m) H1 2017 (£’m) Growth Net interest income 156.3 107.4 46% Fees and other income 28.9 22.3 29% • H1 2018 pre-tax profits up 301% Net gains on sale of securities 4.6 1.3 254% over H1 2017 to £24.1m Total revenue 189.8 131.1 45% • Annual operating costs
Slide 23: Robust capital position underpins further growth
which underpins further growth from a continued robust capital position • Track record of prudently Minimum Capital Pro-Forma pre-funding growth through Requirement Total Capital Total Capital successful capital raises June ‘18 June ‘18 June ‘18 • c.£300m equity raise strengthens the balance sheet a
Slide 24: Significant further growth in deposits and lending
which enables significant further growth in both deposits and lending £50-55bn Loans £42.5-49.5bn Deposits £27.5bn £23.4-24.8bn £13.7bn £11.7bn £12.0bn £9.6bn £8.0bn £5.1bn £5.9bn £2.9bn £3.5bn £1.6bn £200m £600m £800m £1.3bn 2012 2013 2014 2015 2016 2017 H1 2018 2020 2023 Targets 24
Slide 25: Progress towards our mid-term targets
as we progress towards our mid-term targets Our Targets 2020 2023 Current(2) Targets Targets Deposits £13.7bn c.£27.5bn £50-55bn Stores 56 c.100 140-160 Monthly deposit growth /store £6.2m £5.5–6.5m £5.5-6.5m Loan to Deposit Ratio 87% 85-90% 85-90% Customer NIM + Fees(1) 2.68% c.3% c.3% Cost:Income
Slide 26: Disclaimer
disclaimer IMPORTANT: YOU MUST READ THE FOLLOWING. The following applies to this document (the “Information”). To the extent available, the industry, market and competitive position data contained in this presentation come from official or third party sources. Third party industry publications, stud