Metro Bank Holdings Plc · LSE:MTRO
Metro Bank — Metro Bk Hldgs — FY2023 Earnings Presentation
27 slides from Metro Bank's earnings presentation, Mar 13, 2024
Slide 1: Full Year Results 2023
Full Year Results 2023 13 March 2024
Slide 2: Significant progress in 2023
Significant progress in 2023 Statutory profit before tax of £30.5 million, the first time since 2018 Deposits of £15.6 billion up 1% from June 2023, continued growth into 2024 with February deposits at c£16.5 billion Continued cost reduction despite inflationary pressures £50 million of annu
Slide 3: People-people banking remains at the heart of what we do
People-people banking remains at the heart of what we do Supporting local communities Award winning customer service and colleague engagement Stores remain at the heart of what we do Community #1 Service in store for Best Lender of the New locations planned covering SME hotspots banking Personal and
Slide 4: The service-led low-cost deposit franchise continues to show resilience
The service-led low-cost deposit franchise continues to show resilience Improved lending margin Resilient customer deposits Elevated liquidity position £b Feb 2024 4.9% Resilient through pandemic 4.5% 3.9% and cost of living crisis 3.4% 2.7% 2.6% 3.0% 3.1% 3.6% Customer 1.9% 1.3% 16.6 16.4 16.5 16.5
Slide 5: Financial performance
Financial performance Cristina Alba Ochoa Chief Financial Officer
Slide 6: Strong operating and financial performance in 2023
Strong operating and financial performance in 2023 Customer accounts Customer deposits Liquidity coverage ratio Total capital + MREL 3.0 million £15.6 billion 332% 22.0% 2.7m 3.0m 16.1b 16.4b 16.0b 15.6b 332% 22.4% 20.5% 22.0% 2.2m 2.5m 281% 17.7% 187% 213% 2020 2021 2022 2023 2020 2021 2022 2023 20
Slide 7: Secured the balance sheet with £325m capital raise and £600m debt refinancing
Secured the balance sheet with £325m capital raise and £600m debt refinancing Capital requirements met 2.2% (1.2%) 1.3% 0.4% (0.3%) 1.9% CRD IV 22.0% 21.2% Buffers 17.7% Beneficial for Minimum CET1 capital £150m new equity requirement CET1 16.7% CET1 £175m new MREL 10.3% 13.1% FY22 Equity MREL Tier
Slide 8: Customer deposits continue to provide low cost of funding
Customer deposits continue to provide low cost of funding Deposits by product Momentum continues in current account openings 4% Account openings (000’s) 13% 37% 2022 2023 49% £16.0b 47% £15.6b 106 PCA 86 90 98 97 84 50% 66 BCA 66 14 24 17 19 23 20 23 20 H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 H2 202
Slide 9: Customer lending in segments that deliver attractive risk adjusted returns
Customer lending in segments that deliver attractive risk adjusted returns Lending mix Fixed rate mortgage maturity and repricing1 £2,500 6.0% 7% 4.5% 4.2% 5.0% 10% £2,000 11% 3.5% 4.0% 11% £1,500 2.8% 2.9% 2022 2023 3.0% £1,000 19% 21% £13.3b 58% £12.5b 63% 2.0% £500 1.0% 1,600 1,802 740 1,965 931
Slide 10: Revenue improvement driven by asset rotation and fee income growth
Revenue improvement driven by asset rotation and fee income growth Net interest income Other income and fees £m Asset mix + £m NII CAGR 2020 – 2023 of 18% 856 repricing Fees CAGR 2020 – 2023 of 15% 132 118 564 18 102 17 444 Q4 deposit 426 406 404 412 86 Safe deposit boxes campaign 15 37 31 250 295 1
Slide 11: Disciplined approach to costs and actions taken limited cost inflation
Disciplined approach to costs and actions taken limited cost inflation Cost management has offset inflationary pressures Operating expenses down £3m YoY Total underlying operating expenses YoY cost reductions £m 547 £533m £530m 533 530 39 47 38 23 486 31 32 Other 49 49 Professional fees 62 60 Occupa
Slide 12: Highly liquid Treasury portfolio and asset repricing present revenue tailwinds
Highly liquid Treasury portfolio and asset repricing present revenue tailwinds Portfolio composition and central bank eligibility Liquidity coverage ratio 2% 13% 332% Sovereign bonds 281% 213% 2023 11% Residential mortgage-backed securities 187% 100% Covered bonds 44% Req. £8.8b 8% Multi-lateral dev
Slide 13: Positioning the bank for future growth
Positioning the bank for future growth £15 2023 Guidance £12.3 • Loan growth of mid-single digit CAGR from 2024 to 2028 Lending billion • Total blended risk weight density on a standardised basis (total RWA/ total assets) 35-45% £15.6 • Low-mid single digit reduction in 2024 to optimise cost of fund
Slide 14: Looking ahead
Looking ahead Daniel Frumkin Chief Executive Officer
Slide 15: Pivoting to underserved markets which play to our competitive strengths
Pivoting to underserved markets which play to our competitive strengths • The turnaround plan delivered scalable asset generating platforms primed for growth • Increasing capital allocation in these segments will enable us to serve more customers and deliver attractive risk adjusted returns SME / Co
Slide 16: Strategic pillars provide roadmap for further growth and efficiencies
Strategic pillars provide roadmap for further growth and efficiencies to deliver sustainable returns Balance Sheet Revenue Costs Infrastructure Communications Optimisation Delivered Improved digital Assets repricing into Disciplined approach Optimised for risk proposition Colleague engagement higher
Slide 17: 2023 performance positions Metro Bank for growth
2023 performance positions Metro Bank for growth Re-positioning the balance sheet for Structural funding advantage vs peers a higher risk adjusted return on regulatory capital Aligning convenience model with customer needs and focus on cost discipline to ensure every penny spent is value accretive
Slide 18: Q&A
Q&A Daniel Frumkin Chief Executive Officer Cristina Alba Ochoa Chief Financial Officer
Slide 19: Appendix
BAR Appendix
Slide 20: P&L
P&L £m FY23 FY22 YoY 2H23 1H23 HoH Net interest income 411.9 404.2 2% 190.4 221.5 (14%) Net fees and other income 131.9 117.9 12% 68.6 63.3 (8%) Net gains/(losses) on sale of assets 2.7 - 100% 1.9 0.8 >100% Total underlying revenue 546.5 522.1 5% 260.9 285.6 (9%) Underlying operating costs (530.2) (
Slide 21: Balance sheet highlights
Balance sheet £m FY23 FY22 YoY 1H23 HoH Loans and advances to customers 12,297 13,102 (6%) 12,572 (2%) Treasury assets 8,770 7,870 11% 8,023 9% Highlights Other assets 1,178 1,147 3% 1,152 2% Total assets 22,245 22,119 1% 21,747 2% Deposits from customers 15,623 16,014 (2%) 15,529 1% Deposits from c
Slide 22: Retail mortgages – overview
Retail mortgages – overview Retail mortgage portfolio New lending loan-to-value Retail mortgages loan-to-value % 34% 31% Average retail LTV: 58% at FY23 vs 56% at FY22 69% 23% 22% 25% 19% 18% 18% 21% 63% 5% 7% 2023 1% 1% 0% 0% £7.8bn FY 22 FY 23 < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% FY22
Slide 23: Retail mortgages – LTV and repayment type
Retail mortgages – LTV and repayment type Owner Occupied Loan-to-value profile Owner Occupied Repayment type 64% 67% 36% 34% Average owner occupied LTV: 57% 36% 17% 18% 20% 18% 18% 19% 33% 7% 9% 2% 2% 0% 0% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% Interest only Capital and interest FY22 FY23
Slide 24: Commercial – overview
Commercial – overview Commercial lending portfolio Term loans by industry sector Commercial customer deposits 5% 31 Dec 31 Dec Industry sector (£m) 14% 2023 2022 2023 Real estate (PBTL) 465 731 2023 43% £3.4bn 53% Real estate (other term loans) 509 683 57% £6.7bn 28% Hospitality 368 372 Health & Soc
Slide 25: Macroeconomic scenarios and provisioning
Macroeconomic scenarios and provisioning Application of scenarios and weighting 5% 20% • Four probability weighted scenarios: Baseline (50%); Upside (20%), Downside (25%) and Severe Downside (5%) Upside 25% • Macroeconomic forecasts provided by Moody’s Analytics (December 2023) Baseline • House Pric
Slide 26: Statutory vs Underlying reconciliation
Statutory vs Underlying reconciliation Impairment and Net Holding Capital raise Year ended 31 December 2023 Statutory write-off of PPE Transformation Underlying C&I company and £m basis and intangible costs basis costs insertion refinancing assets Net interest income 411.9 - - - - - 411.9 Net fee an
Slide 27: Disclaimer
Disclaimer Basis of preparation Forward-looking statements This presentation has been prepared by Metro Bank Holdings plc (the “Company”) and is the This presentation and subsequent discussions may contain forward-looking statements. responsibility of the Company. It was prepared for the purpose of,