Metro Bank PLC Q1 Trading Update (3242D)

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RNS Number : 3242D

Metro Bank PLC

26 April 2017

Metro Bank PLC

Q1 Trading Update 2017

April 26, 2017

METRO BANK REPORTS 33% QUARTERLY GROWTH IN UNDERLYING PROFIT BEFORE TAX AND RECORD GBP1.1 BILLION INCREASE IN DEPOSITS

Metro Bank PLC (LSE: MTRO) has delivered a strong trading performance in the first quarter of 2017.

 
      Q1 Highlights 
 
        *    Record deposit growth in the quarter which exceeded 
             GBP1bn for the first time. 
 
 
        *    Deposits up 13% quarter-on-quarter to GBP9.0b 
             ($11.4b) whilst cost of deposits dropped from 66bp in 
             Q4 2016 to 61bp in Q1 2017. 
 
 
        *    Record net deposit growth per store per month of 
             GBP7.4m ($9.3m) in Q1 2017 versus GBP5.0m ($6.3m) in 
             Q4 2016. Annualised this represents deposit growth 
             per store of GBP89m ($112m). 
 
 
        *    Lending up 11%, quarter-on-quarter to GBP6.5b ($8.2b) 
 
 
        *    Underlying profit before tax(1) at GBP2.0m (GBP1.5m 
             in Q4 2016). 
 
 
        *    Record 72,000 increase in customer accounts to 
             987,000. 
------------------------------------------------------------------ 
 

Note: All figures contained in this trading update are unaudited. All figures in US$ have been translated at a rate of $1.26 to the GBP.

(1) Underlying profit/(loss) before tax excludes listing related costs, FSCS levy and impairment of property, plant & equipment and intangible assets. The statutory profit after tax in the quarter is set out in the profit and loss account.

 
 Quarter ending                                               31          31         Change         31       Change 
  GBP in millions                                             Mar         Dec       in Quarter      Mar        in 
                                                              2017        2016                      2016      Year 
 
 Assets                                                    GBP11,624   GBP10,057       16%       GBP7,388     57% 
 Loans                                                     GBP6,482    GBP5,865        11%       GBP4,129     57% 
 Deposits                                                  GBP9,010    GBP7,951        13%       GBP5,898     53% 
 Loan to Deposit ratio                                        72%         74%                       69% 
 
 Underlying Profit/(Loss) before tax                        GBP2.0      GBP1.5         33%       (GBP9.6)m    n/a 
 Total Revenue                                              GBP61.9     GBP57.6        7%         GBP37.7     64% 
 Net interest margin                                         2.02%       2.03%                     1.96% 
 
 Underlying Profit/(Loss) after tax per share - basic        1.9p        1.6p          19%        (13.0)p     n/a 
 Underlying Profit/(Loss) after tax per share - diluted      1.8p        1.6p          13%        (13.0)p     n/a 
--------------------------------------------------------  ----------  ----------  ------------  ----------  ------- 
 

Craig Donaldson, Chief Executive Officer at Metro Bank said:

"This is another great quarter for Metro Bank, and the results are a testament to the strength of the model and our focus on the integration of stores and technology to create FANS. We have now delivered three consecutive quarters of profitability and for the first time have exceeded GBP1 billion net growth in deposits in a single quarter whilst also reducing the cost of those deposits. We have seen double digit growth in lending (11%) and attracted an additional 72,000 accounts, taking us to 987,000 customer accounts across the bank.

"We continue to grow the business, and remain on track to open a further ten stores before the year end. Our business continues to deliver across all areas - Retail, Business, Commercial and Private - and our model, culture and focus on creating FANS remains a compelling alternative for consumers and businesses alike."

Vernon Hill, Chairman and Founder at Metro Bank, added:

"What a superb start to the year for Metro Bank. This quarter saw improved performance on every level, across every measure and best of all, we saw many more FANS opening accounts. Our combination of great online and mobile banking and an exceptional in store experience is making a positive difference to our customers. Metro Bank remains a revolution in British banking, championing the right of every customer to receive service and convenience tailored to their needs."

Highlights for the Quarter Ended 31 March 2017

 
 --   As of 31 March total assets were GBP11,624m, up from GBP10,057m 
       at 31 December 2016 and GBP7,388m at 31 March 2016; representing 
       16% growth in the quarter and year-on-year growth of 57%. 
 --   The loan to deposit ratio increased year-on-year to 72% 
       (31 March 2016: 69%). 
 --   Record net deposit growth per store per month of GBP7.4m 
       ($9.3m) in Q1 2017 versus GBP5.0m ($6.3m) in Q4 2016, and 
       GBP6.6m ($8.3m) in Q1 2016 due to an exceptionally strong 
       quarter. This represents annualised deposit growth per store 
       of GBP89m ($112m). 
 --   Comparative store deposit growth (a measure of deposit growth 
       using deposit numbers from stores that have been operating 
       for more than a full year) is 50%. 
 --   As of 31 March total deposits were GBP9,010m, up from GBP7,951m 
       at 31 December 2016 and GBP5,898m at 31 March 2016; representing 
       13% growth in the quarter and year-on-year growth of 53%. 
       Deposits for the first quarter grew by GBP1.1bn. Deposits 
       from commercial customers represent 50% of 31 March 2017 
       total deposits (31 December 2016: 50%). 
 
 
 GBP in millions              31 Mar      31 Dec       Change       31 Mar     Change 
                                2017        2016      in Quarter     2016      in Year 
 
 Demand: non-interest 
  bearing                    GBP2,582    GBP2,282        13%       GBP1,587     63% 
 Demand: interest bearing    GBP4,224    GBP3,513        20%       GBP2,476     71% 
 Fixed term                  GBP2,204    GBP2,156        2%        GBP1,835     20% 
                            ----------  ----------  ------------  ---------  --------- 
 Deposits from customers     GBP9,010    GBP7,951        13%       GBP5,898     53% 
                            ----------  ----------  ------------  ---------  --------- 
 
 Deposits from customers 
  includes: 
 Deposits from retail 
  customers                  GBP4,464    GBP3,945        13%       GBP2,775     61% 
 Deposits from corporate 
  customers                  GBP4,546    GBP4,006        13%       GBP3,123     46% 
                            ----------  ----------  ------------  ---------  --------- 
 
 
 
 --   Cost of deposits in Q1 was 61bps, a reduction from 66bps 
       in Q4 2016. This reflects management actions with regards 
       to deposit re-pricing, and strong growth in current accounts. 
 --   Total net loans as of 31 March were GBP6,482m, up from GBP5,865m 
       at 31 December 2016 and GBP4,129m at 31 March 2016; an increase 
       of 11% in the quarter and 57% year-on-year. Loans to commercial 
       customers represent 35% of total lending as of 31 March 
       2017 (31 December 2016: 36%). 
 
 
 GBP in millions                    31 Mar       31 Dec        Change       31 Mar     Change 
                                      2017         2016       in Quarter     2016      in Year 
 
 Gross Loans and advances 
  to customers                      GBP6,491      GBP5,872           11%   GBP4,136        57% 
 Less: allowance for impairment       GBP(9)        GBP(7)           29%     GBP(7)        28% 
 Net Loans and advances 
  to customers                      GBP6,482      GBP5,865           11%   GBP4,129        57% 
 
 Gross loans and advances 
  to customers includes: 
 Commercial loans                   GBP2,276      GBP2,087            9%   GBP1,428        59% 
 Residential mortgages              GBP4,023      GBP3,604           12%   GBP2,566        57% 
 Consumer and other loans 
  and advances                        GBP192        GBP181            6%     GBP142        35% 
                                  ----------  ------------  ------------  ---------  --------- 
 
 
 --   Asset quality remains strong. Non-performing loans were 
       0.18% of the portfolio and the loan loss reserve as a percentage 
       of non-performing loans was 77% at 31 March 2017. Cost of 
       risk remained low and stable in Q1 2017 at 0.11% compared 
       to 0.11% in Q4 2016 and 0.10% for the full year to 31 December 
       2016. 
 --   Capital ratios remain robust and well above regulatory requirements. 
       Common Equity Tier 1 Capital ("CET1") as a percentage of 
       risk weighted assets is 15.9%. The Regulatory Leverage ratio 
       is 5.6%. A move towards the advanced risk based (AIRB) approach 
       in the medium term presents the opportunity to achieve greater 
       capital efficiency. 
 --   Customer acquisition continues to be strong. Customer accounts 
       have increased from 915,000 on 31 December 2016 to 987,000 
       at 31 March 2017; a record quarterly net increase of 72,000 
       accounts. This represents an increase of 8% in the quarter 
       and 38% year-on-year. 
 --   Underlying profit before tax has improved by 33% quarter-on-quarter 
       to GBP2.0m from GBP1.5m in Q4 2016 (compared to a loss of 
       GBP9.6m in Q1 2016). 
 --   Our positive P&L "jaws" continued with Total Revenue up 
       64% year-on-year and Operating expenses up 26%. 
 --   We will strengthen our network with a further ten new stores 
       in 2017 as we continue to in-fill and expand our reach. 
 

We remain confident in our ability to deliver a full year of profitability in 2017 and to achieve our 2020 guidance. Our disruptive model continues to go from strength to strength.

Metro Bank PLC

Balance Sheet and Profit & Loss Account

(Unaudited)

 
                                    Annual     2017         2016 
                                     Growth 
                                      Rate 
 Balance Sheet                                31-Mar   31-Dec   31-Mar 
                                               GBP'm    GBP'm    GBP'm 
 Assets 
 Loans and advances to customers      57%      6,482    5,865    4,129 
 Treasury assets(1)                            4,637    3,727    2,906 
 Other assets(2)                                 505      465      353 
                                             -------  -------  ------- 
 Total assets                         57%     11,624   10,057    7,388 
                                             -------  -------  ------- 
 
 Liabilities 
 Deposits from customers              53%      9,010    7,951    5,898 
 Deposits from banks                           1,235      543        - 
 Other liabilities                               571      759      691 
                                             -------  -------  ------- 
 Total liabilities                            10,816    9,253    6,589 
                                             -------  -------  ------- 
 Total shareholder's equity                      808      804      799 
                                             -------  -------  ------- 
 Total equity and liabilities                 11,624   10,057    7,388 
                                             -------  -------  ------- 
 
 
 
                                    Annual      2017            2016 
                                     Growth 
                                      Rate 
 Profit & Loss Account                           Q1         Q4         Q1 
                                               GBP'000    GBP'000    GBP'000 
 
 Net interest income                            50,446     46,651     30,507 
 Fee and other income                           10,892     10,470      7,240 
 Net gains on sale of securities                   598        525         40 
                                             ---------  ---------  --------- 
 Total revenue                        64%       61,936     57,646     37,787 
 
 Operating expenses                   26%     (58,403)   (54,585)   (46,236) 
 Credit impairment charges                     (1,560)    (1,577)    (1,113) 
 
 Underlying profit/(loss) before 
  tax                                 n/a        1,973      1,484    (9,562) 
 
 Underlying taxation                             (485)      (285)      1,617 
 
 Underlying profit/(loss) after 
  tax                                 n/a        1,488      1,199    (7,945) 
 
 Listing and related costs                       (353)      (568)    (3,107) 
 FSCS levy (net of tax)                           (48)          -          - 
 Statutory profit/(loss) after 
  tax                                 n/a        1,087        631   (11,052) 
                                             ---------  ---------  --------- 
 
 

(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

Analyst and investor call

An analyst and investor call will be held as follows:

Date: Wednesday 26(th) April 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: 61414746#

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 Press Office

Tina Coates

[phone]

[e-mail]

Metro Bank PLC Investor Relations

Jo Roberts

[phone]

[e-mail]

Martin Pengelley/ Latika Shah

Tulchan Communications

[phone]

[e-mail]

ENDS

About Metro Bank

Retail banking:

 
 --   7 days a week store banking (8am-8pm Monday to Friday, 8am-6pm 
       Saturday, 11am-5pm Sunday and bank holidays), 362 days of 
       the year. 
 --   The ultimate in new account opening convenience, with a 
       rapid opening procedure and on the spot bank cards and cheque 
       books (Account Opening conditions apply. All Metro Bank 
       products are subject to status and approval.) 
 --   Offering customers their channel of choice - with real time 
       processing enabling real time fulfilment. 
 --   All stores offer free coin counting, for customers and non-customers 
       alike, with the Metro Bank Magic Money Machine(TM), as well 
       as Safe Deposit Boxes of varying sizes for customers to 
       store their valuables. 
 --   A friendly welcome to dogs and their owners, with water 
       bowls and dog biscuits on hand for man's best friend - dogs 
       rule at Metro Bank! 
 

Business and Commercial banking:

 
 --   Metro Bank offers tailored business banking services including 
       a full range of lending and cash management solutions, with 
       customers supported by locally-based relationship, product 
       and credit teams 
 --   A dedicated team of relationship managers provide industry-specific 
       guidance, with sector experts covering healthcare; hospitality 
       and leisure; property; charities and not-for-profit; inwards 
       investment; and financial services 
 --   Forward thinking combined with traditional banking values 
       gives customers a single point of contact to support them 
       with all their banking needs 
 --   Simple and transparent lending means customers have direct 
       access to the bank's underwriters 
 

Private banking:

 
 --   Private by name, personal by nature: Metro Bank Private 
       Banking provides bespoke banking solutions for customers' 
       personal and commercial interests 
 

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.

We're 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.

Forward looking statements

This announcement may include statements that are, or may be deemed to be, forward-looking statements. Forward-looking statements typically use terms such as "believes", "projects", "anticipates", "expects", "intends", "plans", "may", "will", "would", "could" or "should" or similar terminology. Any forward-looking statements in this announcement are based on the Company's current expectations and, by their nature, forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control, that could cause the Company's actual results and performance to differ materially from any expected future results or performance expressed or implied by any forward-looking statements. As a result, you are cautioned not to place undue reliance on such forward-looking statements. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, expressed or implied, is made regarding future performance.

No assurances can be given that the forward-looking statements in this announcement will be realised. The Company undertakes no obligation to release the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement and the Company disclaims any such obligation.

This information is provided by RNS

The company news service from the London Stock Exchange

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April 26, 2017 02:00 ET (06:00 GMT)