Metro Bank Holdings Plc · LSE:MTRO
Metro Bank — Metro Bk Hldgs — FY2024 Earnings Presentation
32 slides from Metro Bank's earnings presentation, Feb 27, 2025
Slide 1: Full Year Results 2024
Full Year Results 2024 27 February 2025
Slide 2: Agenda
Agenda Overview Daniel Frumkin, Chief Executive Officer Financial performance Marc Page, Chief Financial Officer Strategy Daniel Frumkin, Chief Executive Officer Q&A Daniel Frumkin, Chief Executive Officer Marc Page, Chief Financial Officer
Slide 3: Transformational year proves ability to deliver ambitious guidance
Transformational year proves ability to deliver ambitious guidance Delivered strong growth Outperformed 2024 Guidance Proved competitive advantage momentum Exit NIM of 2.65% 71% YoY growth in new Corporate/ Local relationship-led service model • vs guidance of 2.50% Commercial/ SME loan originations
Slide 4: Delivered significant strategic progress in 2024
Delivered significant strategic progress in 2024 Cost Discipline Cost of Deposits Asset Rotation Delivered significant cost actions Managed down excess deposits Completed two portfolio sales £80 million of annualised run-rate Run-off of expensive tactical £2.5 billion mortgage portfolio sale savings
Slide 5: Guidance building to best-in-class performance
Guidance building to best-in-class performance Bold RoTE guidance confirmed 2025 2026 2027+ Mid-to-upper Mid-to-upper Double digit single digit teens thereafter Driven by: Continued NIM expansion driven Continued cost discipline and by asset rotation and CoD control 2025 costs 4-5% lower than 2024 E
Slide 6: Financial performance
Financial performance Marc Page Chief Financial Officer
Slide 7: Delivering against guidance and returning to underlying profitability in H2'24
Delivering against guidance and returning to underlying profitability in H2’24 Reduced assets Improved capital position Lowered cost of funds Improved NIM Feb’24 2.29% Dec’24 Dec’24 2.65% 22.0% 22.2% 23.0% 1.40% Feb’24 1.52% 18.1% 21.8 22.2 21.5 2.18% 17.6 1.72% 2.14% 2.22% 13.1% 12.9% 1.85% 1.64% 1
Slide 8: Continued cost discipline, with £80m annualised run-rate savings delivered in 2024
Continued cost discipline, with £80m annualised run-rate savings delivered in 2024 Total underlying operating expenses Operating model transformation £533m £530m Reduced on-shore headcount by ~1,500 (33%) within 12 months £510m 39 47 54 2024 Entry rate1 Q2’24 Q3’24 2024 Exit rate2 257 242 4,458 3,53
Slide 9: Strong growth in Corporate and Commercial lending in line with strategy
Strong growth in Corporate and Commercial lending in line with strategy Continued improvements in lending mix[1] YoY gross new Commercial lending grew by 71% Growth focus £7.8bn £0.7bn £0.5bn £4.5bn £0.4bn £3.3bn £0.3bn £2.4bn Pro-forma for asset sale £1.2bn £0.2bn £0.9bn £0.7bn Commercial and Consu
Slide 10: Active asset rotation to maximise risk adjusted returns
Active asset rotation to maximise risk adjusted returns Targeted Mortgage mix shift to optimise returns New Commercial originations >3.5% over base rate drive YoY improvements in yield £1.6bn (£2.5bn) Average gross Average gross yield: 7.5% yield: 3.2% £1.2bn £7.8bn 5.5% (£0.3bn) (£0.3bn) (£1.8bn) 8
Slide 11: Relationship deposit mix provides enduring pricing advantages
Relationship deposit mix provides enduring pricing advantages NIBLs remain double the market average [1] SME deposit growth is replacing tactical Retail run off to deliver strong LCR at 337% (Loans to deposits 62%) 2% 2% 3% 3% 6% 13% 12% 8% 16% 19% 16% 17% 48% 49% 48% 41% 49% 11% FY 2023 46% 12% FY
Slide 12: NIM improvement driven by effective asset and liability management
NIM improvement driven by effective asset and liability management Strong NIM expansion Future benefit from Treasury asset repricing[2] Dec’24 2.65% 1,20 0 3.5 % 0.37% 2.22% 0.23% Feb’24 310 bps (0.08%) 290 bps 3.0 % 0.29% 1,00 0 1.82% 1.52% 260 bps 0.26% 1.64% 2.5 % 800 2.0 % (0.67%) 600 £1,015m 1.
Slide 13: Strong Guidance Confirmed
Strong Guidance Confirmed 2025 2026 2027 2028 Exit NIMs to be between Exit NIMs to be between Exit NIMs to be between NIM 3.00%-3.25% 3.60%-4.00% 4.00%-4.50% 4%-5% year-on-year Cost-to-income to be Cost-to-income to be Cost-to-income to be Costs cost reduction between 75%-70% between 65%-60% between
Slide 14: Strategy
Strategy Daniel Frumkin Chief Executive Officer
Slide 15: Strategic pillars remain the roadmap for continued future growth
Strategic pillars remain the roadmap for continued future growth Balance Sheet Revenue Costs Infrastructure Communications Optimisation Delivered Launched ‘Relationship Banking’ £80 million of annualised run-rate Improve AIDA (AI agent) to allow brand positioning and visual savings delivered in 2024
Slide 16: Strategic pillars remain the roadmap for continued future growth
Strategic pillars remain the roadmap for continued future growth Revenue Costs Balance Sheet Optimisation Infrastructure Comms Delivered Improve AIDA (AI agent) to allow more time to service customers £2.5 billion mortgage portfolio sale, with TFSME Rolled out new mortgage platform / new products re
Slide 17: Uniquely positioned to serve Corporate, Commercial and SME customers
Uniquely positioned to serve Corporate, Commercial and SME customers Local relationship-led service model unrivalled by larger banks Breadth of services a key differentiator to challenger banks Strong expertise in Local, service-led relationship banking model A sophisticated suite of lending and dep
Slide 18: Stores remain a pivotal enabler of future growth on both sides of the balance sheet
Stores remain a pivotal enabler of future growth on both sides of the balance sheet Stores are a key brand differentiator Digital halo effect Stores provide a hub for business / commercial teams and Stores are enabling online as well as offline sales and their contribution customers alike, providing
Slide 19: Why Metro Bank wins
Why Metro Bank wins Structurally advantaged to deliver best-in-class risk adjusted returns Risk-adjusted lending Local relationship led service model 0.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 0.5% Target Positioning Generating low-cost deposits 1.0% Metro Bank Cost of deposits 1.5% FY'24 Metro 2.0% Metro B
Slide 20: Q&A
Q&A Daniel Frumkin, Chief Executive Officer Marc Page, Chief Financial Officer
Slide 21: Appendices
Appendices
Slide 22: P&L
P&L £m FY24 FY23 YoY H2 2024 H1 2024 HoH Net interest income 377.9 411.9 (8)% 206.0 171.9 20% Net fees and other income 125.4 131.9 (5)% 63.4 62.0 2% Net gaines/(losses) on sale of assets 0.2 2.7 (93)% 0.1 0.1 0% Total underlying revenue 503.5 546.5 (8)% 269.5 234.0 15% Underlying operating costs (5
Slide 23: Balance sheet
Balance sheet £m FY24 FY23 YoY H1 2024 HoH Loans and advances to customers 9,013 12,297 (27)% 11,543 (22)% Treasury assets 7,301 8,770 (17)% 8,819 (17)% Other assets 1,268 1,178 8% 1,127 11% Total assets 17,582 22,245 (21)% 21,489 (18)% Deposits from customers 14,458 15,623 (7)% 15,726 (8)% Deposits
Slide 24: Guidance Modelling Inputs
Guidance Modelling Inputs • Mortgage lending originations > 200bps above prevailing reference rate SWAP from H1’25 NIM • Commercial lending originations continuing at > 350bps above prevailing Bank of England base rate • Benefit from fixed rate treasury and mortgage maturities across 2025-2028 • Yea
Slide 25: Summary capital and liquidity metrics
Summary capital and liquidity metrics Updated capital requirements from 1st FY24 pro-forma for FY24 April 2025 unsecured asset sale FY24 H124 FY23 Available own funds (amounts) 1 Common Equity Tier 1 (CET1) capital 819 808 937 985 2 Tier 1 capital 819 808 937 985 3 Total capital 969 958 1,087 1,135
Slide 26: Balance sheet optimisation supported by strong capital position
Balance sheet optimisation supported by strong capital position Robust capital position Impact of Consumer • Year-on-year MREL ratio improved to 23.0% at FY 2024, up 100bps from 22.0%, portfolio sale (post reflecting ongoing focus on capital management completion[1]) • On a pro forma basis ( post co
Slide 27: Asset quality
Asset quality ECL Expense (including write-offs) Movement in loan loss provision4 199 6 (9) (5) ECL Expense1 (£m) Cost of Risk2 (%) Coverage Ratio3 (%) 191 FY23 FY24 FY23 FY24 FY23 FY24 PMA Retail Mortgages (1) (2) (0.01) (0.03) 0.24% 0.29% Commercial Lending (11) (0) (0.30) (0.01) 2.11% 2.04% Model
Slide 28: Retail mortgages – overview
Retail mortgages – overview Retail mortgage portfolio New lending loan-to-value Retail mortgages loan-to-value Average retail LTV: 59% at FY24 vs 58% at FY23 31%30% 29% 25% 69% 22% 20% 21% 18% 16% FY24 63% 7% 8% £5.1bn 1% 1% 0% 0% 71% FY23 FY24 < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% FY23 F
Slide 29: Retail mortgages – LTV and repayment type
Retail mortgages – LTV and repayment type Owner Occupied Loan-to-value profile Owner Occupied Repayment type 67% 64% 34% 35% Average owner occupied LTV: 57% 18% 19% 21% 33% 36% 16% 18% 16% 9% 11% 2% 1% 0% 0% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% Interest only Capital and interest (1) FY23
Slide 30: Commercial – overview
Commercial – overview Commercial lending portfolio Term loans by industry sector Commercial customer deposits 7% 31 Dec 31 Dec Industry sector (£m) 2024 2023 17% 33% Real estate (PBTL) 283 465 FY24 Real estate (other term loans) 413 509 FY24 £3.3bn 56% Hospitality 442 368 £6.9bn 20% 67% Health & Soc
Slide 31: Macroeconomic scenarios used for IFRS9 provisioning assessment
Macroeconomic scenarios used for IFRS9 provisioning assessment 5% Application of scenarios and weighting 20% Upside • Four probability weighted scenarios: Baseline (50%); Upside (20%), Downside (25%) and Severe 25% Baseline Downside (5%) Downside • Macroeconomic forecasts provided by Moody’s Analyti
Slide 32: Statutory to Underlying reconciliation
Statutory to Underlying reconciliation Impair/WO's Year ended 31 December 2024 Statutory Transformation Remediation Mortgage Capital raise and Underlying PPE/intangible Net C&I costs £’million basis costs costs sale refinancing basis assets Net interest income 377.9 - - - - - - 377.9 Net fee and com