Q1 highlights
- Deposit growth of £1,033m, up 41% year-on-year to £12.7b
- Net deposit growth per store per month of £6.3m ($8.8m) in Q1 2018 versus £5.9m ($8.3m) in Q4 2017, representing annualised deposit growth per store of £76m ($106m)
- Lending growth of £1,354m, up 69% year-on-year to £11.0b driven by strong organic growth and supplemented by the acquisition of a seasoned mortgage portfolio
- Increase in loan to deposit ratio to 86%. Asset quality remains strong; cost of risk at 0.09%
- Underlying profit before tax 1 at £10.0m ($14.0m), up 21% from £8.3m ($11.6m) in Q4 2017
- 88,000 increase in customer accounts to 1,305,000
- Launch of current account opening online with state of the art “selfie” ID&V
Note: All figures contained in this trading update are unaudited. All figures in US$ have been translated at a rate of $1.40 to the £.
| Quarter ending £ in millions | 31 March 2018 | 31 Dec 2017 | Change in Quarter | 31 March 2017 | Change in Year |
|---|---|---|---|---|---|
| Assets | £17,888 | £16,355 | 9% | £11,624 | 54% |
| Loans | £10,974 | £9,620 | 14% | £6,482 | 69% |
| Deposits | £12,702 | £11,669 | 9% | £9,010 | 41% |
| Loan to deposit ratio | 86% | 82% | 72% | ||
| Total revenue |
£91.8 | £84.6 | 9% | £61.9 | 48% |
| Underlying profit before tax 1 | £10.0 | £8.3 | 21% | £2.0 | 406% |
| Statutory profit before tax | £8.6 | £7.6 | 14% | £1.6 | 456% |
| Customer net interest margin |
2.24% | 2.21% | 3bp | 2.19% | 5bp |
| Net interest margin | 1.85% | 1.87% | (2bp) | 2.02% | (17bp) |
| Underying profit after tax per share - basic | 8.8p | 7.5p | 17% | 1.9p | 363% |
| Underying profit after tax per share - diluted | 8.6p | 7.4p | 16% | 1.8p | 378% |
1 Underlying profit before tax excludes costs associated with listing and the Listing Share Awards, the FSCS levy, impairment of property, plant equipment (“PPE”) and intangible assets, and costs relating to the RBS alternative remedies package application. Underlying profit after tax for the year also excludes the effect of changes in the tax rate on the deferred tax asset. Statutory Profit after tax is included in the Profit and Loss Account.
Craig Donaldson, Chief Executive Officer at Metro Bank said:
“Momentum in our growth continues. In the first quarter, we’ve seen a 69% growth in lending and 41% growth in deposits year-on-year and welcomed tens of thousands of new customer accounts. We will continue to find new ways to make our customers’ lives easier. Over the course of the year we will invest significantly in our digital offering to combine the best of fintech with our fanatical focus on service. Our artificial intelligence “Insights” tool will be launched this summer on our already award-winning mobile app. We’re extending the store footprint into thriving towns and cities in the West and Midlands while strengthening our presence on the South coast, with five stores already in build.
“Our commitment to deliver superior service to SMEs is stronger than ever. For too long, the big five banks have had an unhealthy stranglehold on the SME banking sector and businesses have been crying out for an alternative. In London and the South East – which accounts for 34% of the UK’s SME market – we are seeing thousands of businesses switch to us, proving that when there is a credible alternative to the incumbents, businesses vote with their feet.”
Vernon Hill, Chairman and Founder at Metro Bank, added:
“For its FANS and colleagues Metro Bank is the bank that keeps on giving. As well as strong deposit and lending growth, we’ve opened 88,000 new accounts in the last quarter alone, taking the number of accounts held with us to 1,305,000. Proving our unrelenting focus on service, our distinctive culture and combination of physical and digital services is a winning formula for the thousands who have chosen to join us. We’re delighted they’ve joined us and welcome them to the Revolution.”
Financial highlights for the Quarter Ended 31 March 2018
Summary
- Underlying profit before tax for the quarter to 31 March 2018 was a record £10.0m.
- The loan to deposit ratio increased to 86% (31 December 2017: 82%) bringing it in line with both our 2020 and 2023 targets.
- As of 31 March total assets were £17,888m, up from £16,355m at 31 December 2017 and £11,624m at 31 March 2017; representing 9% growth in the quarter and year-on-year growth of 54%.
- Current account deposits (largely non-interest bearing) increased 51% year-onyear and now comprise 31% of total deposits, up from 29% at 31 March 2017.
- Continue to progress towards our 2020 and 2023 targets.
Deposits
- As of 31 March total deposits were £12,702m, up from £11,669m at 31 December 2017 and £9,010m at 31 March 2017. This represents a 9% quarterly and 41% year-on-year growth. Deposits from Business and Commercial customers represent 53% of 31 March 2018 total deposits (31 December 2017: 53%).
- Deposit growth per store per month of £6.3m, up from £5.9m in Q4 2017.
- Comparative store deposit growth (a “like for like” measure of deposit growth using deposit numbers from stores that have been operating for more than a full year) is 39%.
| £ in millions | 31 March 2018 | 31 December 2017 | Change in Quarter | 31 March 2017 | Change in Year | |
|---|---|---|---|---|---|---|
| Demand: current accounts | £3,889 | £3,682 | 6% | £2,582 | 51% | |
| Demand: savings accounts | £5,886 | £5,303 | 11% | £4,224 | 39% | |
| Fixed term: savings accounts | £2,927 | £2,684 | 9% | £2,204 | 33% | |
| Deposits from customers | £12,702 | £11,669 | 9% | £9,010 | 41% | |
| Deposits from customers includes: | ||||||
| Deposits from retail customers | £5,999 | £5,476 | 10% | £4,464 | 34% | |
| Deposits from corporate customers | £6,703 | £6,193 | 8% | £4,546 | 47% |
- Cost of deposits in Q1 2018 was 56bp, up from 52bp in Q4 2017. This reflects the Bank of England base rate rise in November 2017.
Loans
- Total net loans as of 31 March were £10,974m, up from £9,620m at 31 December 2017 and £6,482m at 31 March 2017; an increase of 14% in the quarter and 69% year-on-year. Loans to commercial customers represent 32% of total lending as of 31 March 2018 (31 December 2017: 33%).
- Net loans increased by £1,354m in Q1 driven by organic lending and supplemented by the purchase of a portfolio of UK mortgages for total consideration of £523m. The purchased portfolio consists predominantly of seasoned mortgages and has a similar credit risk profile to our current loan book.
- Asset quality remains strong. Non-performing loans were 0.22% of the portfolio (31 December 2017: 0.27%). Cost of risk remained low at 0.09% at 31 March 2018 (31 December 2017: 0.14%).
| £ in millions | 31 March 2018 | 31 December 2017 | Change in Quarter | Change in Year | ||
|---|---|---|---|---|---|---|
| Gross loans and advances to customers | £11,013 | £9,635 | 14% | £6,491 | 70% | |
| Less: allowance for impairment 2 | £(39) | £(15) | 169% | £(9) | 331% | |
| Net loans and advances to customers | £10,974 | £9,620 | 14% | £6,482 | 69% | |
| Gross loans and advances to customers includes: | ||||||
| Commercial loans | £3,471 | £3,187 | 9% | £2,276 | 53% | |
| Residential mortgages | £7,310 | £6,231 | 17% | £4,023 | 82% | |
| Consumer and other loans and advances | £232 | £217 | 7% | £192 | 21% |
2 The allowance for impairment is calculated under IAS 39 at 31 March and 31 December 2017, and under IFRS 9 at 31 March 2018.
Profit and Loss Account
- Customer net interest margin improved to 2.24% (Q4 2017: 2.21%) driven by the increase in the loan to deposit ratio. Customer net interest margin plus fees increased from 2.71% in Q4 2017 to 2.72% in Q1 2018. Net interest margin decreased from 1.87% to 1.85% in the quarter due to a further £480m drawn from the Term Funding Scheme before it closed in February.
- Underlying profit before tax has grown to £10.0m compared to £2.0m in Q1 2017. Statutory profit before tax of £8.6m compares to £1.6m in Q1 2017.
- Improvement in underlying Cost:Income ratio to 87% from 94% in Q1 2017 driven by positive P&L “jaws”. Total revenue growth of 48% year-on-year continued to outstrip operating expense growth (up 36%) as we trend towards our c.60% target in 2020.
- Significant investment in technology, stores and colleagues will continue as we build the bank for the long term. We also expect to continue to incur costs associated with regulatory projects and our bid for the RBS alternative resolutions fund in 2018.
Capital
- Capital ratios remain robust. Common Equity Tier 1 Capital (“CET1”) as a percentage of risk weighted assets is 13.6%. Risk weighted assets at 31 March 2018 were £6,524m. The Regulatory Leverage ratio is 5.0%.
- We continue to assess appropriate capital to fund our growth and anticipate a Tier 2 debt issuance in 2018.
Customer Experience
- Added to our integrated service offering by launching current account opening online with state of the art “selfie” ID&V.
- Twelve store openings planned for 2018 beginning with the opening of our 56th store in Watford in May.
- Our bid for the RBS alternative remedies package application is progressing. This presents an opportunity for us to drive real choice for SMEs across the UK.
Metro Bank PLC
Summary Balance Sheet and Profit & Loss Account
(Unaudited)
|
Annual Growth Rate |
2018 | 2017 | ||
|---|---|---|---|---|
|
Balance Sheet |
31-Mar |
31-Dec |
31-Mar |
|
| £m |
£m |
£m |
||
|
Assets |
|
|
|
|
|
Loans and advances to customers |
69% |
10,974 |
9,620 |
6,482 |
|
Treasury assets 1 |
|
6,269 |
6,127 |
4,637 |
|
Other assets 2 |
|
645 |
608 |
505 |
|
Total assets |
54% |
17,888 |
16,355 |
11,624 |
|
Liabilities |
|
|
|
|
|
Deposits from customers |
41% |
12,702 |
11,669 |
9,010 |
|
Deposits from banks |
|
3,801 |
3,321 |
1,235 |
|
Other liabilities |
|
300 |
269 |
571 |
|
Total liabilities |
|
16,803 |
15,259 |
10,816 |
|
Total shareholder's equity |
|
1,085 |
1,096 |
808 |
|
Total equity and liabilities |
|
17,888 |
16,355 |
11,624 |
| Annual Growth Rate | 2018 | 2017 | ||
|---|---|---|---|---|
|
Profit and Loss Account |
Q1 |
Q4 |
Q1 |
|
| £'000 |
£'000 |
£'000 |
||
|
Net interest income |
|
74,991 |
69,296 |
50,446 |
|
Fee and other income |
|
14,108 |
13,831 |
10,892 |
|
Net gains on sale of securities |
|
2,660 |
1,435 |
598 |
|
Total revenue |
48% |
91,759 |
84,562 |
61,936 |
|
Operating expenses |
36% |
(79,513) |
(73,070) |
(58,403) |
|
Credit impairment charges |
|
(2,267) |
(3,236) |
(1,560) |
|
Underlying profit before tax |
406% |
9,979 |
8,256 |
1,973 |
|
Underlying taxation |
|
(2,220) |
(1,622) |
(485) |
|
Underlying profit after tax |
421% |
7,759 |
6,634 |
1,488 |
|
Listing Share Awards |
|
(316) |
(316) |
(353) |
|
FSCS levy (net of tax) |
|
- |
- |
(48) |
|
Impairment of property, plant & equipment and
intangible assets
|
(436) | (249) | - | |
|
Costs relating to RBS alternative remedies
package application
|
590) | (129) | - | |
|
Effect of changes in tax rate on deferred tax
asset
|
- | (2,974) | - | |
|
Statutory profit after tax
|
490% | 6,417 | 2,966 | 1,087 |
1 Comprises investment securities, cash & balances with the Bank of England, and loans and advances to banks
2 Comprises property, plant & equipment, intangible assets and other assets