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RNS Number : 9909E
Metro Bank PLC
02 November 2022
Metro Bank PLC (LSE: MTRO LN)
2 November 2022
Third Quarter 2022 Trading Update
-- Profitable on both an underlying and statutory basis for
September, ahead of previous guidance
-- September performance is encouraging given it is driven by
margin improvement and cost discipline
-- Active balance sheet management and prevailing interest rates supported exit NIM of 2.04%
-- Expect NIM to improve through 2023 given evolving balance
sheet composition, base rate increases and deposit pricing
discipline
-- The pace of NIM improvements will be impacted by capital constraints limiting lending growth
30 30 Change 30 Change
GBP in millions September June from September from
2022 2022 H1 2022 2021 Q3 2021
Assets GBP22,553 GBP22,555 0% GBP22,767 (1%)
Loans GBP12,830 GBP12,364 4% GBP12,315 4%
Deposits GBP16,371 GBP16,514 (1%) GBP16,412 0%
Loan to deposit ratio 78% 75% 3pp 75% 3pp
----------------------- ----------- ---------- --------- ----------- ---------
For the month of September the Bank recorded a profit on both an
underlying and statutory basis, ahead of expectations, driven by
assertive balance sheet action, strong NIM expansion to 2.04% and
continued cost discipline.
Q3 total deposits of GBP16,371 million were broadly flat
reflecting ongoing close management of deposits . The Bank
continues to attract low-cost high-quality deposits, evidenced by
growth in the underlying deposit franchise (low-cost demand current
and savings accounts) now 96% of the deposit base, offset by a
targeted reduction in higher-cost fixed term deposits.
Q3 total net loans of GBP12,830 million increased 4% both QoQ
and YoY, with a continued mix shift in line with strategy.
Residential mortgages and consumer unsecured lending grew,
partially offset by repayments of government-backed lending and
reduction in Commercial real estate lending. The Bank is
appropriately positioned, with a loan to deposit ratio of 78% and
55% of the loan portfolio being Residential mortgages. Over 90% of
the Retail mortgage portfolio is fixed, with an average repricing
duration of 2.1 years, and the average DTV of 56% remains stable.
In aggregate only 5% of Retail mortgages now have a DTV of over
80%.
Margin metrics Q3 2022 Q2 2022 Change Q3 2021 Change
from from
Q2 2022 Q3 2021
Lending yield 3.66% 3.56% 10bps 3.10% 56bps
Cost of deposits 0.19% 0.15% 4bps 0.20% (1bps)
Net interest margin 1.98% 1.81% 17bps 1.46% 52bps
--------------------- -------- -------- --------- -------- ---------
ECL Charge of GBP10 million in the quarter. There has been no
deterioration in early warning indicators and no signs of stress or
increased delinquency across the customer base. The Bank continues
to monitor all of its portfolios closely and remains watchful of
changes in economic conditions that may impact provisioning, such
as material movements in unemployment from its current historically
low point. Post model adjustments and overlays continue to be more
than 24% of total provision stock.
Following a profitable month in September and positive
underlying business momentum, going forward, the main driver of
capital consumption is likely to be loan related RWA growth, which
is currently being assertively managed to ensure the Bank continues
to operate within buffers and remains above regulatory capital
minima. Although mindful of the macro environment, minimum
regulatory capital requirements are expected to be met without
needing to take any market-dependent balance sheet action. The Bank
will continue to review market-dependent options to manage
regulatory capital and MREL and enhance its medium-term earnings
potential, such as loan sales and securitisations as well as MREL
qualifying debt issuance should market conditions be attractive.
Management continues to engage with key stakeholders around the
Tier 2 instrument. In all cases the goal is to create a more
efficient balance sheet. Additionally, the Bank's AIRB application
continues to progress.
Daniel Frumkin, Chief Executive Officer at Metro Bank, said:
"I am really pleased to see the business return to profit in
September on both an underlying and statutory basis. This
performance reflects our tight control of both costs and risk,
close management of our deposit franchise and lending channels, and
the supportive prevailing interest rate environment, all of which
help build a balance sheet that delivers sufficient margin to cover
costs. Whilst we remain watchful of economic conditions and
continue to monitor our credit metrics closely, our book remains in
good health. The underlying potential of our business is
encouraging and, though the tight capital position currently
constrains RWA growth, the business still seeks to grow margins
with ongoing optimisation and discipline. We remain focused on
generating a sustainable business supported by the commitment and
engagement of our tremendous colleagues who continue to be there
for our customers and communities."
For more information, please contact:
Metro Bank PLC Investor Relations
Jo Roberts
+44 (0) 20 3402 8900
IR@metrobank.plc.uk
Metro Bank PLC Media Relations
Mona Patel
+44 (0) 7815 506845
pressoffice@metrobank.plc.uk
Teneo
Charles Armitstead / Haya Herbert Burns
+44 (0)7703 330269 / +44 (0) 7342 031051
Metrobank@teneo.com
ENDS
About Metro Bank
Metro Bank services 2.6 million customer accounts and is
celebrated for its exceptional customer experience. It is the
highest rated high street bank for overall service quality for
personal customers and the best bank for service in-store for
personal and business customers, in the Competition and Market
Authority's Service Quality Survey in August 2022. This year it has
been awarded "Best Mortgage Provider of the Year" in 2022 MoneyAge
Mortgage Awards, "Best Business Credit Card" in 2022 Moneynet
Personal Finance Awards and "Best Current Account for Overseas Use"
by Forbes 2022 and accredited as Most Loved Workplace 2022. It was
"Banking Brand of The Year" at the Moneynet Personal Finance Awards
2021 and received the Gold Award in the Armed Forces Covenant's
Employer Recognition Scheme 2021.
The community bank offers retail, business, commercial and
private banking services, and prides itself on giving customers the
choice to bank however, whenever and wherever they choose, and
supporting the customers and communities it serves. Whether that's
through its network of 76 stores open seven days a week, 362 days a
year; on the phone through its UK-based contact centres; or online
through its internet banking or award-winning mobile app, the bank
offers customers real choice.
Metro Bank PLC. Registered in England and Wales. Company number:
6419578. Registered office: One Southampton Row, London, WC1B 5HA.
'Metrobank' is the registered trademark of Metro Bank PLC.
It is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and Prudential
Regulation Authority. Most relevant deposits are protected by the
Financial Services Compensation Scheme. For further information
about the Scheme refer to the FSCS website www.fscs.org.uk . All
Metro Bank products are subject to status and approval.
Metro Bank PLC is an independent UK bank - it is not affiliated
with any other bank or organisation (including the METRO newspaper
or its publishers) anywhere in the world. Please refer to Metro
Bank using the full name.
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END
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November 02, 2022 03:01 ET (07:01 GMT)
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