REG - Metro Bank PLC - Preliminary Results for Full Year 2016 <Origin Href="QuoteRef">MTRO.L</Origin> - Part 2
22/02/2017 07:05
- Part 2: For the preceding part double click ID:nRSV4805Xa
At 1 January 2015 46,611 - 176 (1,001) (2,141) 43,645
Income statement 7,747 - 1,323 (860) (607) 7,603
Other comprehensive income 1,805 - - - - 1,805
At 31 December 2015 56,163 - 1,499 (1,861) (2,748) 53,053
5. Loans and advances to customers and banks
Total loans and advances to customers
31-Dec-2016 31-Dec-2015
£'000 £'000
Gross Loans and advances to customers 5,872,864 3,549,331
Less: allowance for impairment (7,494) (6,783)
Net Loans and advances to customers 5,865,370 3,542,548
Amounts include:
Repayable on demand or at short notice 49,215 38,385
Loans and advances to customers by category
31-Dec-2016 31-Dec-2015
£'000 £'000
Individual (retail customers):
Overdraft 66,088 49,701
Credit Cards 7,369 5,976
Term Loans 107,584 63,793
Mortgages 3,604,591 2,156,419
Corporate:
Overdraft 32,613 24,566
Credit Cards 1,681 887
Term Loans 1,874,104 1,111,239
Asset and Invoice Finance 164,295 122,644
Senior Secured Lending 14,539 14,106
Gross Loans and advances to customers 5,872,864 3,549,331
5. Loans and advances to customers and banks (continued)
Loan asset credit quality
All loans and advances are categorised as either 'neither past due nor
impaired', 'past due but not impaired', 'individually impaired', or
'collectively impaired'. For the purposes of the disclosures in the loan asset
credit quality section below:
- A loan is considered past due when the borrower has failed to make a
payment when due under the terms of the loan contract.
- The impairment allowance includes allowances against financial assets
that have been individually impaired and those subject to collective
impairment.
- Loans neither past due nor impaired and loans that are past due but not
impaired consist predominantly of corporate and retail loans that are
performing and whilst not individually impaired, may be subject to a
collective impairment allowance.
- Impaired loans that are individually assessed consist predominantly of
corporate loans that are past due and for which an individual allowance has
been raised.
- Portfolio impaired loans, which are not included in the categories above,
are a subset of collectively impaired loans and consist predominantly of
retail loans that are 90 days or more past due.
Credit quality of loans and advances to customers and banks
31 December 2016
Loans and advances to customers Loans and advance
£'000 to banks
£'000
Neither past due nor impaired 5,762,719 65,816
Past due but not impaired 88,811 -
Individually impaired 6,555 -
Portfolio impaired 14,779 -
Total 5,872,864 65,816
Less: allowance for impairment (7,494) -
Total 5,865,370 65,816
Individually impaired (1,825) -
Collectively impaired (5,669) -
Total (7,494) -
5. Loans and advances to customers and banks (continued)
31 December 2015
Loans and advances to customers Loans and advances
£'000 to banks
£'000
Neither past due nor impaired 3,473,856 64,248
Past due but not impaired 60,033 -
Individually impaired 4,562 -
Portfolio impaired 10,880 -
Total 3,549,331 64,248
Less: allowance for impairment (6,783) -
Total 3,542,548 64,248
Individually impaired (3,282) -
Collectively impaired (3,501) -
Total (6,783) -
31-Dec-2016 31-Dec-2015
£'000 £'000
Allowance for impairment at 1 January (6,783) (5,439)
Write offs 3,483 5,686
Balance sheet reclassification of operational loss provision 924 -
Increase in impairment allowance (5,118) (7,030)
Allowance for impairment at 31 December (7,494) (6,783)
Past due but not impaired
Late processing and other administrative delays on the side of the borrower
can lead to a financial asset being past due but not impaired. Gross amount of
loans and advances by class to customers that were past due but not impaired
were as follows:
5. Loans and advances to customers and banks (continued)
31 December 2016
Mortgages Corporate Other Total
£'000 £'000 £'000 £'000
Past due less than 6 days 15,994 45,237 958 62,189
Past due 7-30 days 5,859 14,710 1,984 22,553
Past due 31-60 days 2,051 96 631 2,778
Past due 61-90 days 599 60 461 1,120
Over 90 days - 171 - 171
Total 24,503 60,274 4,034 88,811
31 December 2015
Mortgages Corporate Other Total
£'000 £'000 £'000 £'000
Past due 6 days 8,151 18,520 264 26,935
Past due 7-30 days 15,977 12,014 1,498 29,489
Past due 31-60 days 1,223 425 427 2,075
Past due 61-90 days 745 189 265 1,199
Over 90 days - 335 - 335
Total 26,096 31,483 2,454 60,033
Residential mortgage lending
The table below stratifies credit exposures from mortgage loans and advances
to customer by ranges of loan-to-value (LTV) ratio. LTV is calculated as the
ratio of the gross amount of the loan to the value of the collateral. The
gross amounts exclude any impairment allowance. The valuation of the
collateral excludes any adjustments for obtaining and selling the collateral.
The value of the collateral for residential mortgage loans is based on the
collateral value at origination updated based on changes in house price
indices.
31-Dec-16 31-Dec-15
LTV ratio £'000 £'000
Less than 50% 1,121,993 594,444
51-70% 1,635,626 962,994
71-90% 756,025 495,921
91-100% 41,224 46,219
More than 100% 49,723 56,841
Total 3,604,591 2,156,419
Loans and advances to corporate customers
The general credit worthiness of a corporate customer tends to be the most
relevant indicator of credit quality of a loan extended to it. However,
collateral provides additional security and the Bank generally requests that
corporate borrowers provide it. The Bank may take collateral in the form of a
first charge over real estate, floating charges over all corporate assets and
other liens and guarantees.
5. Loans and advances to customers and banks (continued)
Concentrations of credit risk
The Bank monitors concentrations of credit risk by sector for commercial term
exposure. The Bank risk appetite is set at the beginning of every year and
monitored as part of the Board committee.
Industry Types - Commercial Concentration Concentration
31 December 2016 31 December 2015
£'000 (%) £'000 (%)
Real estate (rent, buy and sell) 1,064,194 57% 627,904 57%
Legal, Accountancy & Consultancy 276,164 15% 133,848 12%
Health & Social Work 177,931 10% 95,722 9%
Hospitality 95,600 5% 40,007 4%
Real estate (management of) 90,240 5% 46,707 4%
Construction 58,204 3% 39,116 4%
Retail 37,009 2% 80,030 7%
Investment & Unit Trusts 20,448 1% - -
Recreation, cultural & sport 8,643 - 6,859 1%
Real estate (development) 2,036 - - -
Education 1,484 - 3,289 0%
Other 42,151 2% 37,757 3%
1,874,104 100% 1,111,239 100%
Commercial exposures represent a growing part of the total lending portfolio.
The average debt-to-value ("DTV") of the commercial loan book is stable and
below 60%. The proportion of lending with DTV above 80% has been decreasing
over the last 4 years and is now stable at 6%. Collections performances
continue to improve. DTV is calculated as the ratio of the gross outstanding
amount of a loan to the indexed value of the collateral.
31-Dec-16 31-Dec-15
£'000 £'000
Total commercial lending 2,087,232 1,273,442
% of total lending 36% 36%
Average DTV 57% 57%
DTV > 80% 6% 6%
NPL (non-performing-loan) ratio* 0.1% 0.1%
* The non-performing-loan ratio is calculated as the ratio of the gross
outstanding amount of loans with more than three instalments unpaid to the
total gross outstanding amount.
6. Investment securities
Fair values of investment securities held at fair value Level 1 Level 2 Total
£'000 £'000 £'000
Recurring fair value measurements
As at 31 December 2016
Financial investments: available for sale 274,027 330,100 604,127
As at 31 December 2015
Financial investments: available for sale 189,309 174,498 363,807
The classification of a financial instrument is based on the lowest level
input that is significant to the fair value measurement in its entirety. The
two levels of the fair value hierarchy are defined below.
6. Investment securities (continued)
Quoted market prices - Level 1
Financial instruments are classified as Level 1 if their value is observable
in an active market. Such instruments are valued by reference to unadjusted
quoted prices for identical assets or liabilities in active markets where the
quoted price is readily available, and the price represents actual and
regularly occurring market transactions on an arm's length basis. An active
market is one in which transactions occur with sufficient volume and frequency
to provide pricing information on an ongoing basis.
Valuation technique using observable inputs - Level 2
Inputs other than quoted prices included within Level 1 that are observable
for the asset, either directly (as prices) or indirectly (derived from
prices).
Reclassifications between categories
On 31 May 2016, £25.4 million of financial assets classified as available for
sale were reclassified as held to maturity. On 22 November 2016, £14.9
million of financial assets classified as available for sale were reclassified
as held to maturity. The carrying amount (including accrued interest) and
fair value of the assets at 1 January 2016, 31 May 2016, 22 November 2016 and
31 December 2016 were as follows:
Carrying amount Fair value
£'000 £'000
At 31 December 2016 40,329 40,872
A fair value gain of £0.06 million was recognised with respect to the
reclassified assets in 2016; had these assets not been reclassified, a fair
value gain of £0.55 million would have been recognised in other comprehensive
income. The effective interest rates on available for sale assets
reclassified to held to maturity at 1 January 2016 and 31 December 2016 ranged
from 1.4% to 1.8%, with all cash flows expected to be recoverable.
At 31 December 2016, financial investments classified as held to maturity were
as follows:
Carrying amount Fair value
£'000 £'000
At 31 December 2016 2,622,588 2,651,136
At 31 December 2015 1,635,985 1,629,527
7. Property, plant and equipment
Leasehold improvements £'000 Freehold land and buildings £'000 Fixtures, fittings and equipment £'000 IT Hardware £'000 Total £'000
Cost or valuation
01-Jan-2016 156,238 8,273 17,400 27,439 209,350
Additions 46,444 44,672 3,417 3,295 97,828
Disposals - - - (3) (3)
Transfers (31,626) 31,626 - - -
31-Dec-2016 171,056 84,571 20,817 30,731 307,175
Accumulated depreciation
01-Jan-2016 17,110 - 7,920 19,063 44,093
Impairments 35 - 161 44 240
Charge for the year 6,800 1,000 2,834 5,054 15,688
Other write offs 413 - 22 29 464
Disposals - - - - -
Transfers (2,376) 2,376 - - -
31-Dec-2016 21,982 3,376 10,937 24,190 60,485
Net book value 149,074 81,195 9,880 6,541 246,690
8. Intangibles
Group Goodwill Customer contracts Software
Total
£'000 £'000 £'000 £'000
Cost or valuation
01-Jan-2016 4,140 600 56,745 61,485
Additions - - 45,053 45,053
Disposals - - (1) (1)
31-Dec-2016 4,140 600 101,797 106,537
Amortisation
01-Jan-2016 - 145 7,097 7,242
Impairments - - 75 75
Charge for the year - 60 6,631 6,691
Other write offs - - 14 14
31-Dec-2016 - 205 13,817 14,022
Net book value 4,140 395 87,980 92,515
Group Goodwill Customer contracts Software
Total
Cost or valuation £'000 £'000 £'000 £'000
01-Jan-2015 4,140 600 35,319 40,059
Additions - - 29,907 29,907
Impairment - - (8,481) (8,481)
31-Dec-2015 4,140 600 56,745 61,485
Amortisation
01-Jan-2015 - 85 5,305 5,390
Impairment - - (1,430) (1,430)
Charge for the year - 60 3,222 3,282
31-Dec-2015 - 145 7,097 7,242
Net book value 4,140 455 49,648 54,243
9. Share capital
As at 31 December 2016 the Group had 80.3 million A ordinary shares of 0.0001
pence (31 December 2015: 59.2m) in issue.
In March 2016, the bank issued 20.0 million A ordinary shares of 0.0001 pence
each, for consideration of £400 million. Related transaction costs of £5.2
million have been deducted from equity during the period.
Additionally during the year, the Group issued 1,132,142 A ordinary shares; of
which 900,818 relate to conversion of 1 million B ordinary shares, 152,130
relate to Executive share awards and 79,194 relate to the exercise of
previously awarded share options. These transactions contributed £3.6m to
share premium.
31-Dec-2016 31-Dec-2015
£'000 £'000
Called up ordinary share capital, issued and fully paid
At beginning of period - -
Issued - -
At end of period - -
31-Dec-2016 31-Dec-2015
£'000 £'000
Share premium account
At beginning of period 629,304 629,304
Issued 403,572 -
Costs of share issued (5,231) -
At end of period 1,027,645 629,304
10. Loss per share
Basic loss per share is calculated by dividing the loss attributable to
ordinary equity holders of Metro Bank by the weighted average number of
ordinary shares in issue during the period.
Diluted loss per share has been calculated based on the same loss attributable
to ordinary equity holders of Metro Bank and weighted average number of
ordinary shares in issue after the effect of adjustment for potential dilutive
ordinary shares, which comprise share options granted to colleagues. Potential
ordinary shares should only be treated as dilutive when their conversion to
ordinary shares results in a reduction in earnings per share or an increase in
loss per share. As Metro Bank has a loss attributable to ordinary equity
holders of Metro Bank in 2016 and 2015 for these years, the share options
would be antidilutive, as they would reduce the loss per share. Therefore,
they are disregarded in the calculation of dilutive earnings per share.
However, the share options could potentially be dilutive in the future.
2016 2015
£'000 £'000
Loss attributable to ordinary equity holders of Metro Bank (16,753) (49,197)
Weighted average number of ordinary shares in issue (000's) 76,791 59,208
Basic and diluted loss per share (pence) (22) (83)
11. Fair value of financial instruments
The fair values of financial instruments are based on market prices where
available, or are estimated using other valuation techniques. Where they are
short term in nature or re-price frequently, fair value approximates to
carrying value. Apart from investment securities all other assets and
liabilities are deemed to have a fair value hierarchy of level 3. Level 3 is
defined as - inputs for the asset or liability that are not based on
observable market data (unobservable inputs). This level includes equity
investments and debt instruments with significant unobservable components.
With
Quoted Using significant
market observable unobservable
Carrying price inputs inputs Total
Value Level 1 Level 2 Level 3 Fair Value
31-Dec-2016 £'000 £'000 £'000 £'000 £'000
Assets
Cash and balances with the Bank of England 434,612 434,612
Loans and advances to banks 65,816 65,816 65,816
Loans and advances to customers 5,865,370 6,093,436 6,093,436
Investment securities 3,226,715 877,226 2,378,037 3,255,263
Liabilities
Deposits from customers 7,950,579 7,946,687 7,946,687
Deposits from central banks 543,000 543,000 543,000
Repurchase agreements 653,091 653,091
31-Dec-2015
Assets
Cash and balances with the Bank of England 217,900 217,900
Loans and advances to banks 64,248 64,248 64,248
Loan and advances to customers 3,542,548 3,614,877 3,614,877
Investment securities 1,999,792 657,681 1,335,653 1,993,334
Liabilities
Deposits from customers 5,107,656 5,095,942 5,095,942
Repurchase agreements 561,778 561,778
For the cash and balances with the Bank of England and repurchase agreements,
the carrying value approximates to the fair value, and therefore no pricing
level has been identified for them above.
Information on how fair values are calculated for the financial assets and
liabilities noted above are explained below:
(a) Cash and balances with the Bank of England / Loans and advances to banks
Fair value is calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at the balance
sheet date. Fair values approximate carrying amounts as their balances are
generally short dated.
11. Fair value of financial instruments (continued)
(b) Loans and advances to customers
Fair value is calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at the balance
sheet date, adjusted for future credit losses and prepayments, if considered
material.
(c) Investment securities
The fair value of investment securities is based on either observed market
prices for those securities that have an active trading market (fair value
level 1 assets), or using observable inputs (in the case of fair value level 2
assets).
(d) Deposits from customers
Fair values are estimated using discounted cash flows, applying current rates
offered for deposits of similar remaining maturities. The fair value of a
deposit repayable on demand is approximated by its carrying value.
(e) Deposits from central banks / repurchase agreements
Fair values are estimated using discounted cash flows, applying current rates.
Fair values approximate carrying amounts as their balances are generally short
dated.
12. Related party transactions
Architecture, design and branding services are provided to the bank by
InterArch, Inc. ("InterArch") a firm which is owned by Shirley Hill, the wife
of Vernon W. Hill II the Non-Executive Chairman. The cost of these services
in the year was £3.2 million (2015: £2.3m). The balance owed to InterArch at
31 December 2016 was £0.4 million (31 December 2015: £0.2 million).
13. Post Balance Sheet Events
There have been no material post balance sheet events.
ENDS
About Metro Bank
Retail banking:
· 7 day 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.)
· Free coin counting at every store, for customers and non-customers
alike, with the Metro Bank Magic Money Machine
· A friendly welcome to dogs and their owners, with water bowls and dog
biscuits on hand for man's best frie-d - dogs rule at Metro Bank!
Business banking:
· The bank for entrepreneurs: Metro Bank offers tailored business banking
services including a full range of lending and cash management solutions
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
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