Metro Bank Holdings Plc · LSE:MTRO
Metro Bank — FY2021 Earnings Presentation
24 slides from Metro Bank's earnings presentation, Feb 23, 2022
Slide 1: FY21 Results Presentation
FY21 RESULTS PRESENTATION 23 February 2022
Slide 2: Key achievements: 2 years into turnaround plan
Key achievements: 2 years into turnaround plan Continued, relentless focus on Shifting the balance sheet mix to deliver Concluded a number of significant customer service higher yields and lower cost of deposits outstanding issues Recognised by customers Lending Deposits Balance sheet actions taken
Slide 3: Near term focus on path to profitability
Near term focus on path to profitability Containing cost growth Recovering from COVID 19 On-going execution Headcount BAU RTB cost Operations Roll-out new products and services 3% 3% Maintained customer focus throughout Digital lending to SMEs YoY1 YoY Community bank Auto lending CTB spend D
Slide 4: 2021 Key performance indicators
2021 Key performance indicators Customer Customer Liquidity Total capital accounts1 deposits coverage ratio + MREL ratio £ 190bps 14% 2% 94pp 2.5m 22.4% 16.1b 16.4b 281% 2.2m 20.5% 187% 2020 2021 2020 2021 2020 2021 2020 2021 Net fee and Net interest Underlying Statutory other income margin loss bef
Slide 5: Capital
Capital Total capital + MREL ratio bridge Net ECL (0.4%) 2.0% (0.1%) 0.1% (0.3%) (0.1%) 22.4% (3.1%) 22.4% 20.5% (0.3%) (0.1%) CET1 15.0% CET1 12.6% 1 Dec-20 Annual Intangibles RateSetter Profit & loss Profit & loss Quick Fix Lending volume Mortgage book Dec-21 operational risk investment and back b
Slide 6: Progress across all strategic pillars
Progress across all strategic pillars 1 2 3 4 5 Balance sheet Internal and Costs Infrastructure Revenue optimisation external comms Tight cost control through back office Investment in Meeting more Enhanced focus on efficiencies, Improve our integrated channels customer needs and risk-adjusted retur
Slide 7: Improving revenue and NIM reflect balance sheet shift
Improving revenue and NIM reflect balance sheet shift NIM bridge Fee and other income bps £m 3 101.5 5 4 151 11 86.3 31.9 (31) 8 - 26.4 128 10 128 54.8 29.1 46.7 115 13 22.0 17.9 14.0 22.9 25.5 13.1 16.0 LTD impact includes mortgage portfolio 12.2 13.3 disposal 15.0 15.0 7.4 7.6 deposit ratio Invest
Slide 8: Operating cost discipline
Operating cost discipline Total underlying costs reduced 1% HoH Total underlying spend by category1 23 21 10 (1%) Colleagues 2 32 Depreciation and amortisation 47 218 Change Money transmission 3 486 547 275 272 £547m IT 46 Property 4 Regulatory and professional Marketing, printing and postage 70 Oth
Slide 9: Expected credit loss expense and asset quality
Expected credit loss expense and asset quality There continues to be volatility in economic scenarios so we are maintaining a cautions approach to releasing overlays. ECL coverage ratio2 Cost of Risk1 1.30% 1.35% 0.86 0.18 0.08 FY20 FY21 2019 2020 2021 Balance by IFRS9 stages ECL Coverage 0.3% 0.5%
Slide 10: Favourable deposit mix
Favourable deposit mix Deposit mix shift Favourably positioned for rising rate environment 2020 2021 Fixed term: savings 21% Demand: Fixed term: 9% Demand: current 44% Year 1 Year 2 current 39% savings accounts accounts accounts accounts +100bps c.£4m c.£32m 65bps 24bps COD1 COD1 +50bps c.£2m c.£16m
Slide 11: Reposition the balance sheet to drive revenue
Reposition the balance sheet to drive revenue Unsecured lending Specialist mortgages as a proportion of all mortgages1 organic origination monthly £m completions 100 80 82% RateSetter 60 acquired 55% 40 20 19% 17% 20% 0 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 2017 2018 2019 20
Slide 12: Generating higher returns from our regulatory capital
Generating higher returns from our regulatory capital Lending book: return on capital Treasury portfolio: headwind from Loan to deposit ratio: AIRB will momentum rate environment now turning release balance sheet potential Loan interest income less £COD Investment income Loan to deposit ratio /Lendi
Slide 13: Year-on-year profitability
Year-on-year profitability Underlying loss before tax £m 15 (4) (171) 106 (272) (57) 104 (65) 2020 Mortgage Costs ECL NII Fees Net gains 2021 sale (net)1 on sale 2 £121m net interest income and fee increase YoY NII increase driven by improving lending mix and lower cost of deposits Fee income
Slide 14: Opportunities for growth
Opportunities for growth Underlying loss before tax £m External catalysts Breakeven AIRB Rate rises Growth Continued momentum potential from current strategy 2022 and Asset mix shift beyond Fee growth 8 Cost efficiencies c.35 NIM expansion (171) 7 2021 Fraud Q4 Annualised Strategic opportunities Rep
Slide 15: Supported by our customer focused culture
Supported by our customer focused culture Our unique culture and colleagues… Diverse Engaged colleagues, embedded in our communities Local focus Our colleagues reflect the Surpass Glassdoor Across our network: communities we serve benchmarks3 7days “fair and consistent in their approach. No Only ban
Slide 16: Outlook
Outlook Building momentum 2H21 vs 1H21 Finished the year stronger Looking ahead to 2022 Higher growth than 2021, with +23bps 2021 Balance sheet continued focus on mix Annual Q4 improvement NIM uplift average Strong exit-NIM holds us in good stead for 2022 with Cost of continued focus on lending mix
Slide 17: Q&A
BANK Q&A
Slide 18: Appendix
BANK Appendix
Slide 19: Balance Sheet
Balance Sheet Dec Jun Dec Change £m 2021 2021 2020 HoH YoY Loans and advances to customers 12,290 12,325 12,090 - 2% Treasury assets1 9,142 9,474 6,406 (4%) 43% Other assets2 1,155 1,214 4,083 (5%) (72%) Total assets 22,587 23,013 22,579 (2%) - Deposits from customers 16,448 16,620 16,072 (1%) 2% De
Slide 20: YoY P&L
YoY P&L Dec 2021 Dec 2020 Change £m Total Ex-disposal Net interest income 295.7 250.3 18% 56% Net fees and other income 101.5 86.3 18% Net gains on sale of assets 0.7 4.3 (84%) Total underlying revenue 397.9 340.9 17% 42% ‘Run the Bank’ costs (435.5) (390.4) 12% ‘Change the Bank’ costs (111.3) (95.6
Slide 21: HoH P&L
HoH P&L £m 2H21 1H21 Change Net interest income 162.1 133.6 21% Net fees and other income 54.8 46.7 17% Net gains on sale of assets 1.2 (0.5) (>100%) Total underlying revenue 218.1 179.8 21% ‘Run the Bank’ costs (220.6) (214.9) 3% ‘Change the Bank’ costs (51.0) (60.3) (15%) Operating costs (271.6) (
Slide 22: Retail mortgages
Retail mortgages Retail mortgage portfolio Retail mortgages debt-to-value Average retail DTV: 55% at FY21 vs 56% at FY20 34% 36% 24% 22% 18% 18% 20% 15% £1.7b 6% 5% 1% 1% 0% 0% 25% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% FY20 FY21 £6.7b ECL coverage ratio Balance by IFRS9 stage ECL 75% Cove
Slide 23: Retail mortgages
Retail mortgages Owner occupied retail mortgages Debt-to-value profile Repayment type 58% 37% 38% 54% 46% Average owner occupied DTV: 54.9% 42% 22% 21% 17% 15% 17% 16% 7% 8% 1% 1% 0% 0% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% Interest only Capital and interest FY20 FY21 FY20 FY21 Retail buy
Slide 24: Commercial lending
Commercial lending Commercial lending industry sectors1 Commercial lending portfolio Industry sector (£m) 31 Dec 2021 31 Dec 2020 £0.2b Real estate (PBTL) 950 1,117 £0.3b Real estate (other term loans) 887 1,032 7% 3% Hospitality 365 376 Health & Social Work 232 248 Legal, Accountancy & Consultancy