Metro Bank Holdings Plc · LSE:MTRO
Metro Bank — FY2020 Earnings Presentation
30 slides from Metro Bank's earnings presentation, Feb 24, 2021
Slide 1: FY 2020 Results Presentation
FY 2020 RESULTS PRESENTATION 24 February 2021
Slide 2: Agenda
Agenda 1 Overview Daniel Frumkin (CEO) 2 Financial results David Arden (CFO) 3 Strategic update Daniel Frumkin (CEO) 4 Q&A Agenda 1
Slide 3: Overview
Overview Daniel Frumkin (CEO)
Slide 4: Executing the strategy in unprecedented times
Executing the strategy in unprecedented times Our strengths External challenges Internal challenges Customer-centric culture • Lower for longer rate • Negative operating jaws Differentiated customer proposition environment presents • Existing stores consumed capital and are a fixed cost income chall
Slide 5: Supporting our customers, colleagues and communities
Supporting our customers, colleagues and communities Customers Colleagues Communities • 100% of store network remained • Additional COVID-19 leave • Colleagues given 5 days to open throughout the pandemic granted with enhanced sick AMAZE to volunteer / support in leave benefits local communities • C
Slide 6: Financial results
Financial results David Arden (CFO)
Slide 7: Key performance indicators
Key performance indicators Customer Customer Liquidity Total capital accounts deposits coverage ratio + MREL ratio (2019: £14.5b) 134% (2019: 197%) (2019: 22.1%) 2.3% (2019: 2.0m) 10% 11% 1 1 2.2m £16.1b 331% 24.4% 187% non-proforma 22.4% non-proforma Net fee and Net interest Underlying Statutory ot
Slide 8: Revenue, Lending mix, Cost of deposits
Revenue 1 NIM Bridge Net fee and other income (bps) (£m) 90.4 (11) 86.3 140 2 (16) 26 (7) 29.4 6 26.4 128 50.2 (12) 16.3 22.0 140 115 36.1 13.7 31.4 12.7 12.5 22.9 115 9.5 16.4 6.5 13.3 15.0 2H19 1H20 2H20 Lending mix Loan to deposit Loan to deposit Lending yield Cost of deposits Lending yield Cost
Slide 9: Operating costs
Operating costs 1 Run the Bank Run the Bank cost growth reflects continued cost discipline Colleagues 2 12 12 Money transmission3 • Run the Bank costs increased 1% on a like for like basis as shown below 17 34 Depreciation and amortisation • Property strategy accelerated with exit of central London
Slide 10: Expected credit loss expense
Expected credit loss expense ECL expense and Cost of Risk Neutral macroeconomic outlook provision movement in H2 reflects: ECL expense (£m) Cost of Risk1 (%) Improvement in modelled macro scenarios vs H1 1H20 2H20 Change 1H20 2H20 Change Offset by: Retail Mortgages 32 (8) (40) 0.66 (0.18) (0.84) Inc
Slide 11: Asset quality and lending overview
Asset quality and lending overview Lending portfolio Active payment deferrals2 Non-performing loans £0.2b £1.5b 21% 6.13% 2% 5.74% 12% £3.6b 1 2.48% £12.2b 1% 1.70% 2.06% 2.10% 30% 56% 0.96% 0.39% Jun-20 Jul-20 Mar-20 Aug-20 Sep-20 Nov-20 Dec-20 Oct-20 Apr-20 May-20 £6.9b Retail Commercial Consumer
Slide 12: High quality and liquid balance sheet
High quality and liquid balance sheet Less competitive FTD pricing expected to reduce excess liquidity going forward 88% of treasury assets LCR eligible Primarily deposit-funded balance sheet Approach to TFS and TFSME £0.2b £0.8b £3.0b £0.6b • TFSME regime introduced in Cash Retail deposits £3.8b £9
Slide 13: Deposits
Deposits Continued growth in high quality personal and SME deposits structurally reduces the COD, balances funded by BBLS may be transient Deposits by customer type Favourable mix shift to 39% current accounts (£b) 16.1 FY19 FY20 11% 14.5 21% 2.7 32% 29% 2.5 39% 1.6 Fixed term: 1.8 16% growth Fixed
Slide 14: Capital
Capital Total capital + MREL ratio bridge 2.0% 2.0% Net ECL (0.6%) 1.8% (0.4%) (1.1%) 24.4% 22.1% 0.8% 0.9% 1.0% 22.4% (3.1%) (1.6%) CET1 CET1 CET1 15.6% 15.0% 16.3% Dec-19 Annual Intangibles Profit & loss Profit & loss Quick Fix EBA Quick Fix Lending Mortgage Dec-20 Mortgage Pro forma operational i
Slide 15: P&L
P&L £m Dec 2020 Dec 2019 Change The P&L gained momentum in the second half with a Net interest income 250.3 308.1 (19%) loss of £88m compared to £183m in the first, driven by Net fees and other income 86.3 90.4 (5%) lower cost of deposits and recovering customer activity Net gains on sale of assets
Slide 16: Balance Sheet
Balance Sheet £m Dec 2020 Dec 2019 Change Loans and advances to customers 12,090 14,681 (18%) Treasury assets1 6,406 5,554 15% • Strong deposit growth, lower new business Other assets2 4,083 1,165 >100% volume (ex-BBLS and CBILS) and the mortgage portfolio sale reduced LTD to Total assets 22,579 21,
Slide 17: Strategic update
Strategic update Daniel Frumkin (CEO)
Slide 18: Powering profitable growth by meeting more customer needs
Powering profitable growth by meeting more customer needs 1 Continued Bank of the Year Banking Brand of the Year #1 High Street Bank Money Age 2020 MoneyNet 2021 CMA February 2021 customer excellence Opportunity to deepen customer relationships Initiatives Enablers Enhance store Digital features and
Slide 19: Accelerated asset-led strategy due to changing environment
Accelerated asset-led strategy due to changing environment Treasury yields reduced significantly since Feb’20 Deposit mix and pricing supports NIM accretion RMBS AAA Yield 1.03% 0.71% 1.35% 0.49% 0.40% 0.08% Feb-20 May-20 Aug-20 Nov-20 Feb-21 2018 2019 2020 Jan-21 1 Year FTD Average Rate spread vs.
Slide 20: Costs and Infrastructure
Costs and Infrastructure: Containing growth in ‘Run the Bank’ costs and investing in infrastructure to enable efficient scaling Cost Infrastructure • ‘Run the Bank’ cost growth of 1% on a like for like1 • RateSetter platform integrated and originating basis unsecured consumer lending • Accelerated p
Slide 21: Revenue and Balance sheet optimisation
Revenue and Balance sheet optimisation: Shifting asset mix and enhancing customer proposition to achieve higher return on capital Balance sheet optimisation Revenue • Launched BBLS and CBILS government backed • £3bn residential mortgage portfolio disposal with loans including BBLS top-ups an average
Slide 22: Customer activity trends throughout the pandemic
Customer activity trends throughout the pandemic The lockdown impact is clear with reduced store and customer spending activity that recovers post-lockdown – the latest lockdown saw a lower impact than the first Lockdown Lockdown Lockdown #1 #2 #3 120 110 1 Spending activity 100 Card transactions fo
Slide 23: Summary
Summary • Strategic pillars set out in February 2020 remain unchanged, swift action taken to accelerate asset mix shift • Sale of £3bn residential mortgage portfolio at premium • RateSetter backbook increases yield with increased exposure to unsecured consumer lending • RateSetter platform acquisiti
Slide 24: Q&A
Q&A Daniel Frumkin Chief Executive Officer David Arden Chief Financial Officer
Slide 25: Appendix
BANK Appendix
Slide 26: Retail mortgages
Retail mortgages Retail mortgage portfolio Retail mortgages debt-to-value Average retail DTV: 56% vs 59% at 1H20 34% 30% 23% 22% 17% 18% 19% 20% 11% 5% £1.8b 0% 1% 0% 0% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% 27% 1H20 2H20 £6.9b Retail mortgages repayment type Retail mortgages geographical
Slide 27: Retail mortgages
Retail mortgages Owner occupied retail mortgages Debt-to-value profile Repayment type 69% 37% 31% Average owner occupied DTV: 53% 54% 46% 22% 21% 1H20 16% 17% 17% 17% 31% 14% 2H20 7% 0% 1% 0% 0% < 50% 51-60% 61-70% 71-80% 81-90% 91-100% > 100% Interest only Capital and interest 1H20 2H20 Retail buy-
Slide 28: Commercial lending
Commercial lending Commercial lending portfolio Commercial lending industry sectors1 £0.1b Industry sector (£m) 31 Dec 2020 30 Jun 2020 30 Dec 2019 £0.3b Real estate (PBTL) 1,117 1,167 1,219 5% 3% Real estate (other term loans) 1,032 1,070 1,155 £1.5b Hospitality 376 323 308 Health & Social Work 248
Slide 29: P&L HoH
P&L HoH £m 2H20 1H20 Change Net interest income 134.1 116.2 15% Net fees and other income 50.2 36.1 39% Net gains on sale of assets 3.3 1.0 >100% Total underlying revenue 187.6 153.3 22% ‘Run the Bank’ costs (206.3) (184.1) 12% ‘Change the Bank’ costs (55.0) (40.6) 35% Operating costs (261.3) (224.7
Slide 30: Balance Sheet HoH
Balance Sheet HoH Dec £m 2020 1H20 Change Loans and advances to customers 12,090 14,857 (19%) Treasury assets1 6,406 6,101 5% Other assets2 4,083 1,176 >100% Total assets 22,579 22,134 2% Deposits from customers 16,072 15,577 3% Deposits from central banks 3,808 3,801 - Debt securities 600 599 - Oth