TIDMMTRO
RNS Number : 5172U
Metro Bank PLC
25 October 2017
Metro Bank PLC
Q3 Trading Update 2017
October 25, 2017
METRO BANK REPORTS RECORD CUSTOMER GROWTH AND 77% INCREASE IN
QUARTER ON QUARTER PROFIT
Metro Bank PLC (LSE: MTRO) has delivered a strong trading
performance in the third quarter of 2017.
Q3 Highlights
* Deposits from customers up GBP955m, 10%
quarter-on-quarter to GBP10.8b ($14.4b), whilst the
cost of deposits reduced from 53bp in Q2 2017 to 50bp
in Q3 2017.
* Lending up GBP858m, 11% quarter-on-quarter to GBP8.6b
($11.5b) and a 1% increase in the loan to deposit
ratio to 80%.
* Underlying profit before tax(1) at GBP7.2m, a 77%
increase from GBP4.0m in Q2 2017. Year to date
underlying profit before tax(1) is GBP13.2m versus
GBP12.4m loss 2016.
* A record quarterly growth of 79,000 customer accounts
to 1,124,000, up 33% year-on-year.
* Successful cash placing of 8m ordinary shares in July
raising gross proceeds of GBP278m at no discount to
market price.
* We celebrated our seventh birthday and the opening of
our 50(th) store in Peterborough.
-------------------------------------------------------------
Note: All figures contained in this trading update are
unaudited. All figures in US$ have been translated at a rate of
$1.34 to the GBP.
Quarter ending 30 30 Change 30 Change
GBP in millions Sept Jun In Quarter Sept 2016 In
2017 2017 Year
Assets GBP14,574 GBP13,094 11% GBP9,005 62%
Loans GBP8,608 GBP7,750 11% GBP5,193 66%
Deposits GBP10,760 GBP9,805 10% GBP7,297 47%
Loan to Deposit ratio 80% 79% 71%
Underlying Profit before
tax(1) GBP7.2 GBP4.0 77% GBP0.6 1,161%
Total Revenue GBP78.1 GBP69.2 13% GBP53.4 46%
Net interest margin 1.94% 1.92% 1.95%
Customer Deposit net interest
margin(2) 2.22% 2.15% 2.08%
Underlying Profit after tax
per share - basic 6.3p 3.7p 70% 0.0p n/a
Underlying Profit after tax
per share -diluted 6.2p 3.6p 72% 0.0p n/a
------------------------------- ---------- ---------- ------------ ----------- -------
(1) Underlying profit after tax excludes listing and related
costs, the FSCS levy and impairment of property, plant &
equipment and intangible assets. Statutory Profit after tax is
included in the Profit and Loss Account.
(2) The Bank has added Customer Deposit NIM to the range of
reported KPIs. Customer Deposit NIM is based on the key driver of
the business - the generation of low cost sticky deposits. It
eliminates the distortions created by items such as TFS drawings
and provides a real measure of how effectively the customer
deposits are being put to work. As such it best reflects our
business model and the long term prospects of the business. As TFS
unwinds (repayments are due four years from drawdown) the simple
NIM calculation will move closer to the long term Customer Deposit
NIM.
Craig Donaldson, Chief Executive Officer at Metro Bank said:
"In Q3 deposits and lending saw double digit growth, the cost of
deposits reduced, and the loan to deposit ratio increased to 80%
for the first time. We also welcomed a record 79,000 new Business
and Personal customer accounts. All of which helped to deliver our
fifth quarter of underlying profitability, and an underlying profit
before tax of GBP7.2 million, up 77% from the last quarter.
"We continued to support the SME sector, the backbone of British
business, and are on track to meet our January pledge to lend
GBP1bn of net lending to businesses during 2017. We also opened the
doors of our 50(th) store, and by the end of the year our store
network will extend further north, east and west, and we will have
strengthened our Greater London presence. "
Vernon Hill, Chairman and Founder at Metro Bank, added:
"Metro Bank continues to win FANS, attract deposits, lend to
consumers and businesses, and generate profits that are re-invested
for the benefit of our customers. We are the Revolution in British
banking, offering real choice to consumers and businesses. Our
store model, combined with easy to use online and mobile banking
services and UK based contact centres, show that consumers and
businesses are crying out for a bank built around them. As we take
the revolution to the high streets of Swindon, Canterbury and
Peterborough, we are giving those urban communities and businesses
a real alternative and a reason to love their bank at last."
Highlights for the Third Quarter Ended 30 September 2017
Summary
-- The loan to deposit ratio increased to 80% (30 June 2017:
79%; 30 September 2016: 71%) as momentum in our lending
continues.
-- As of 30 September total assets were GBP14,574m, up from
GBP13,094m at 30 June 2017 and GBP9,005m at 30 September
2016; representing 11% growth in the quarter and year-on-year
growth of 62%.
-- Net interest margin of 1.94% for the quarter up from 1.92%
driven by the increase in loan to deposit ratio. Customer
Deposit NIM (eliminating the distortions caused by the Bank's
drawings from the Bank of England Term Funding Scheme) of
2.22% up from 2.15% quarter on quarter and 2.16% for full
year 2016.
Deposits
-- As of 30 September total deposits were GBP10,760m, up from
GBP9,805m at 30 June 2017 and GBP7,297m at 30 September
2016; representing 10% growth in the quarter and year-on-year
growth of 47%. Deposits from Business customers represent
53% of 30 September 2017 total deposits (30 June 2017: 52%).
-- Cost of deposits in Q3 was 50bps, a reduction from 53bps
in Q2 2017. This reflects the continued strong growth in
non-interest bearing liabilities (current accounts).
-- Net deposit growth per store per month of GBP6.6m ($8.8m)
in Q3 2017 versus GBP5.5m ($7.4m) in Q2 2017, and GBP5.6m
($7.5m) in Q3 2016, exceeding our guidance owing to strong
growth across the entire network with a particularly strong
quarter for business deposits. Annualised this represents
GBP78m ($105m) growth per store.
-- 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 42%.
GBP in millions 30 30 Change 30 Change
Sept Jun In Sept In
2017 2017 Quarter 2016 Year
Demand: non-interest
bearing GBP3,274 GBP2,998 9% GBP2,019 62%
Demand: interest bearing GBP5,113 GBP4,715 8% GBP3,167 61%
Fixed term GBP2,373 GBP2,092 13% GBP2,111 12%
----------- ---------- --------- --------- -------
Deposits from customers GBP10,760 GBP9,805 10% GBP7,297 47%
----------- ---------- --------- --------- -------
Deposits from customers
includes:
Deposits from retail
customers GBP5,108 GBP4,750 8% GBP3,537 44%
Deposits from corporate
customers GBP5,652 GBP5,055 12% GBP3,760 50%
----------- ---------- --------- --------- -------
Lending
-- Total loans as of 30 September were GBP8,608m, up from GBP7,750m
at 30 June 2017 and GBP5,193m at 30 September 2016; an increase
of 66% year-on-year, and an 11% increase in the quarter.
Loans to commercial customers represent 34% of total lending
as of 30 September 2017 (30 June 2017: 34%).
-- Asset quality remains strong. Non-performing loans were
0.33% of the portfolio. Year-to-date cost of risk remained
stable at 0.10% at 30 September 2017.
GBP in millions 30 30 Change 30 Change
Sept Jun In Sept In
2017 2017 Quarter 2016 Year
Gross Loans and advances
to customers GBP8,620 GBP7,760 11% GBP5,202 66%
Less: allowance for impairment GBP(12) GBP(10) 12% GBP(9) 32%
Net Loans and advances
to customers GBP8,608 GBP7,750 11% GBP5,193 66%
Gross loans and advances
to customers includes:
Commercial loans GBP2,909 GBP2,611 11% GBP1,824 59%
Residential mortgages GBP5,503 GBP4,948 11% GBP3,202 72%
Consumer and other loans
and advances GBP208 GBP201 4% GBP176 18%
---------- ---------- --------- --------- -------
Growth
-- Record customer acquisition. Customer accounts have increased
from 1,045,000 on 30 June 2017 to 1,124,000 at 30 September
2017; a record quarterly net increase of 79,000 accounts.
This represents an increase of 33% year-on-year and an 8%
increase in the quarter.
-- Capital ratios remain robust and well above regulatory requirements.
Common Equity Tier 1 Capital ("CET1") as a percentage of
risk weighted assets is 17.4%. Risk weighted assets at 30
September were GBP5,174m. Regulatory Leverage ratio is 6.2%.
-- Underlying profit before tax has grown 77% quarter-on-quarter
to GBP7.2m (compared to GBP4.0m in Q2 2017). Statutory profit
before tax of GBP6.7m has grown 131% compared to GBP2.9m
in Q2 2017.
-- We opened our 50(th) store in Peterborough on 29 September.
A further five stores will open this year, including Luton
(Store 51) on 27 October.
Outlook
-- We look forward to opening twelve stores next year, including
expanding into Birmingham and Bristol.
-- Our AIRB waiver application for residential mortgages will
be submitted in Q4 2017 as planned.
-- The Williams & Glyn alternative remedies package presents
an opportunity to deliver real choice for SMEs and we are
preparing our bid for the funds to accelerate our reach
and offering to serve more UK businesses.
-- We remain on track to deliver our first full year of profitability
in 2017 and reiterate our 2020 guidance.
Metro Bank PLC
Summary Balance Sheet and Profit & Loss Account
(Unaudited)
Annual
Growth
Rate 2017 2016
Balance Sheet 30-Sep 30-Jun 30-Sep
GBP'm GBP'm GBP'm
Assets
Loans and advances to customers 66% 8,608 7,750 5,193
Treasury assets(3) 5,393 4,827 3,400
Other assets(4) 573 517 412
------- ------- -----------
Total assets 62% 14,574 13,094 9,005
------- ------- -----------
Liabilities
Deposits from customers 47% 10,760 9,805 7,297
Deposits from banks 2,123 1,823 -
Other liabilities 598 654 901
------- ------- -----------
Total liabilities 13,481 12,282 8,198
------- ------- -----------
Total shareholder's equity 1,093 812 807
------- ------- -----------
Total equity and liabilities 14,574 13,094 9,005
------- ------- -----------
(3) Comprises investment securities, cash & balances with
the Bank of England, and loans and advances to banks
(4) Comprises property, plant & equipment, intangible assets
and other assets
Annual 2017 2016
Growth
Rate
Profit & Loss Account Q3 Q2 Q3
GBP'000 GBP'000 GBP'000
Net interest income 64,244 56,996 40,926
Fee and other income 12,915 11,440 9,197
Net gains on sale of securities 925 733 3,265
--------- --------- ---------
Total revenue 46% 78,084 69,169 53,388
Operating expenses 34% (69,605) (63,040) (52,078)
Credit impairment charges (1,328) (2,098) (743)
Underlying profit before tax n/a 7,151 4,031 567
Underlying taxation (1,900) (1,071) (352)
Underlying profit after tax n/a 5,251 2,960 215
Listing and related costs (316) (391) (693)
FSCS levy (net of tax) 176 (554) 370
Impairment of property, plant
& equipment and intangible
assets (390) - (308)
Statutory profit/(loss) after
tax n/a 4,721 2,015 (416)
--------- --------- ---------
Analyst and investor call
An analyst and investor call will be held as follows:
Date: Wednesday October 25 2017
Time: 2.00pm (BST)
From the UK dial: 0808 237 0030 (Toll Free)
From the US dial: 866 928 7517 (Toll Free)
Participant Pin: 81472834#
URL for other international dial in numbers:
http://events.arkadin.com/ev/docs/NE_FEL_Events_International_Access_List.pdf
An operator will assist you in joining the call.
For more information, please contact:
Metro Bank PLC Investor Relations
Jo Roberts
+44 (0) 20 3402 8900
jo.roberts@metrobank.plc.uk
Metro Bank PLC Media Relations
Tina Coates
+44 (0) 7811 246016
tina.coates@metrobank.plc.uk
Martin Pengelley/ Latika Shah
Tulchan Communications
+44(0)20 7353 4200
metrobank@tulchangroup.com
ENDS
About Metro Bank
Metro Bank is the revolution in British banking. It is
celebrated for its exceptional customer experience and its trusted
products, and was awarded 'Most Trusted Financial Provider' at the
Moneywise Customer Service Awards 2017, as well as 'Best Financial
Provider' at the Evening Standard Business Awards 2017 and 'Bank of
the Year' at the CityAM Awards 2016.
Offering retail, business, commercial and private banking
services, it prides itself on using technology to give customers
the choice to bank however, whenever and wherever they choose.
Whether that's through its growing network of stores open seven
days a week, from early in the morning to late at night, 362 days a
year; on the phone through its UK-based 24/7 contact centres manned
by people not machines; or online through its internet banking or
award-winning mobile app.
The bank employs over 2,800 colleagues and is headquartered in
Holborn, London.
Metro Bank PLC. Registered in England and Wales. Company number:
6419578. Registered office: One Southampton Row, London, WC1B 5HA.
'Metrobank' is the registered trade mark 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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