Metro Bank Holdings Plc · LSE:MTRO
Metro Bank — Metro Bk Hldgs — H1 2022 Earnings Presentation
23 slides from Metro Bank's earnings presentation, Jul 28, 2022
Slide 1: H1 2022 Results Presentation
H1 2022 RESULTS PRESENTATION 28 July 2022
Slide 2: Committed to being the UK's best Community Bank
Committed to being the UK’s best Community Bank Customer service remains at the heart of Driving continued customer growth what we do Customer recognition 1.8m 2.1m 2.4m 2.6m • We remain the highest rated high street bank for overall service quality for the 8th time running in the CMA’s latest 1H19
Slide 3: Monthly breakeven expected during Q1 2023
Monthly breakeven expected during Q1 2023 Balance sheet optimised to drive greater Monthly breakeven now expected returns on regulatory capital during Q1 20231 5% 1% 28% 26% 1H20 34% Margins and profitability metrics highlight the path to profitability 68% 38% 3.56% 3.14% 3.10% 3.19% 3.24% 2.89% 2.8
Slide 4: Continued progress on our Strategic Pillars
Continued progress on our Strategic Pillars Balance sheet Internal and Cost Infrastructure Revenue optimisation external comms Tight cost control Strategy through back office Investment in Meeting more Enhanced focus on Feb-20 efficiencies, Improve our integrated channels customer needs and risk-adj
Slide 5: Strategy continues to deliver improving financial KPIs
Strategy continues to deliver improving financial KPIs Customer Customer Liquidity MREL accounts deposits coverage ratio ratio £ 8% 0% 52 pps 3.4 pps 2.5m 2.6m 309% 2.4m 16.6b 16.4b 16.5b 281% 21.7% 257% 20.5% 18.3% 1H21 2H21 1H22 1H21 2H21 1H22 1H21 2H21 1H22 1H21 2H21 1H22 Net fee and Net interest
Slide 6: Favourable shift in deposit mix supports NIM
Favourable shift in deposit mix supports NIM Deposit mix Continued growth in non-interest bearing Fixed term: Fixed term: liabilities despite slower Store roll out Savings 9% savings 6% accounts accounts 7,770 Demand: Demand: 7,318 Savings 47% Savings 47% 6,749 accounts accounts 6,218 2H21 1H22 5,27
Slide 7: Lending demonstrates focus on risk adjusted returns
Lending demonstrates focus on risk adjusted returns Lending mix1 Continued yield improvement, generating higher return on regulatory capital £12.5b £12.5b £12.5b % 6% 7% 10% 12% 13% 12% 8.1% 7.8% 7.4% 7.6% 6.9% 7.3% 27% 26% 24% 6.2% 6.6% 5.5% 3.1% 3.1% 3.2% 3.2% 3.6% 55% 54% 54% 2.6% 2.6% 2.6% 2.8%
Slide 8: Revenue growth gaining momentum
Revenue growth gaining momentum NIM bridge Underlying net interest income bps Mortgage sale impact on LTD growth continues 5 (2) 15 (11) 11 £m 4 Adjusted for mortgage sale1 128 35% 31 128 135 117 30 173 32 151 162 181 115 128 134 97 85 105 1H20 2H20 1H21 2H21 1H22 1H20 2H20 1H21 2H21 Loan to Cost of
Slide 9: Cost efficiency improving with scale
Cost efficiency improving with scale Operating cost run-rate reduced Cost:Income ratio Mortgage sale and RateSetter RateSetter acquisition, costs acquisition meant lost revenue 275 integrated into BAU from 2H21 261 153% and increased cost 13 147% 8 139% 125% 253 262 272 266 113% 225 1H20 2H20 1H21 2
Slide 10: Expected credit losses and asset quality
Expected credit losses and asset quality Cost of Risk1 ECL coverage ratio2 1.33% 1.35% 1.36% 0.29% 0.24% 0.12% 1H21 2H21 1H22 1H21 2H21 1H22 Balance by IFRS9 stages • Provisions for new Consumer lending have increased in line with ECL Coverage Ratio portfolio growth and loan maturation profile. 0.5%
Slide 11: Robust capital management to conserve capital and balance lending growth
Robust capital management to conserve capital and balance lending growth for risk adjusted returns MREL ratio bridge (0.0%) (0.8%) (0.5%) 20.5% (0.3%) (0.1%) (0.5%) 18.3% 22.4 % CET1 CET1 12.6% 10.6% Dec-21 Annual Intangibles Profit & loss Profit & loss Quick fix ECL Lending Jun-22 operational risk
Slide 12: Significant opportunity for growth
Significant opportunity for growth Near Term Medium Term Well positioned for rising rates Rate sensitivity1 Year 1 Year 2 Treasury portfolio £9 billion with a repricing duration of <1.4 years +100bps c £2m c £30 Rate sensitivity analysis updated with further benefits expected +50bps c £1m c £15m Ful
Slide 13: Outlook and Guidance
Outlook and Guidance 2022 outlook re-affirmed Clear path to profitability Balance Higher growth than 2021 (2021: 2%), with • Momentum in balance sheet growth and mix sheet continued focus on mix improvement continues to improve • Further margin benefits from cost control and rate A 1.56% FY21 exit-N
Slide 14: Q&A
ETRO BANK Q&A
Slide 15: Appendix
ETRO BANK Appendix
Slide 16: Balance Sheet
Balance Sheet 30 Jun 31 Dec 30 Jun Change £m 2022 2021 2021 HoH YoY Loans and advances to customers 12,364 12,290 12,325 1% - Treasury assets1 9,036 9,142 9,474 (1%) (5%) Other assets2 1,155 1,155 1,214 - (5%) Total assets 22,555 22,587 23,013 - (2%) Deposits from customers 16,514 16,448 16,620 - (1
Slide 17: P&L
P&L Half year ended Change £m 30 Jun 31 Dec 30 Jun HoH YoY 2022 2021 2021 Net interest income 180.9 162.1 133.6 12% 35% Net fees and other income 55.3 54.8 46.7 1% 18% Net gains on sale of assets - 1.2 (0.5) (100%) 100% Total underlying revenue 236.2 218.1 179.8 8% 31% Operating costs (266.3) (271.6
Slide 18: Retail Mortgages 1/2
Retail Mortgages 1/2 Retail Mortgages portfolio Retail mortgages debt-to-value 36% 35% Average retail DTV: 56% 25% 25% 18% 18% 15% 16% 6% 5% 1% 1% 0% 0% 26% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% 1H22 £6.8b 2H21 1H22 74% ECL coverage ratio Balance by IFRS9 stage ECL Coverage Ratio Resident
Slide 19: Retail Mortgages 2/2
Retail Mortgages 2/2 Owner occupied retail mortgages Debt-to-value profile Repayment type 38% 37% 58% 59% Average owner occupied DTV: 55% 22% 22% 42% 41% 15% 16% 16% 16% 8% 7% 1% 1% 0% 0% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% Interest only Capital and interest 2H21 1H22 2H21 1H22 Retail b
Slide 20: Commercial Lending
Commercial Lending Commercial Lending portfolio Term Loans by Industry Sector £m 30 Jun 2022 31 Dec 2021 Real estate (PBTL) 853 950 Real estate (other term loans) 807 887 9%3% Hospitality 359 365 Health & Social Work 243 232 1H22 30% £4.5b 58% Legal, Accountancy & Consultancy 208 290 Other 523 498 E
Slide 21: Consumer Lending
Consumer Lending Consumer Lending portfolio ECL coverage ratio Non-performing loans 9% 7% 2.43% 2.53% 4.72% 4.41% 1H22 £1.3b 2H21 1H22 2H21 1H22 84% RateSetter Acquired Portfolio New Originations Legacy Term Loans, Overdrafts & Credit Card Balance by IFRS9 stage ECL Coverage Ratio • 84% of the Consu
Slide 22: Customer activity
Customer activity 160 Customer spending 140 activity1 tracking above pre-COVID levels 120 100 80 60 Store activity1 and in store 40 account openings near pre- COVID levels 20 - PRE-COVID Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Store Activity Store Account Opening Spending Acti
Slide 23: 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