REG - Metro Bank PLC - Q3 Trading Update 2017 <Origin Href="QuoteRef">MTRO.L</Origin>

Metro Bank HoldingsAnnouncement

25/10/2017 07:02

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 955m, 10% quarter-on-quarter to 10.8b ($14.4b), whilst the cost of deposits reduced from 53bp in Q2 2017 to 50bp in Q3 2017. 
 Lending up 858m, 11% quarter-on-quarter to 8.6b ($11.5b) and a 1% increase in the loan to deposit ratio to 80%.
 Underlying profit before tax1 at 7.2m, a 77% increase from 4.0m in Q2 2017. Year to date underlying profit before tax1 is 13.2m versus 12.4m loss 2016. 
 A record quarterly growth of 79,000 customer accounts to 1,124,000, up 33% year-on-year.
 Successful cash placing of 8m ordinary shares in July raising gross proceeds of 278m at no discount to market price.
 We celebrated our seventh birthday and the opening of our 50th store in Peterborough.
Note: All figures contained in this trading update are unaudited. All figures in US$ have been translated at a rate of $1.34 to the . 
Quarter ending
 in millions
30
Sept 2017
30
Jun
2017
Change
In Quarter
30
Sept 2016
Change
In
Year
Assets
14,574
13,094
11%
9,005
62%
Loans
8,608
7,750
11%
5,193
66%
Deposits
10,760
9,805
10%
7,297
47%
Loan to Deposit ratio
80%
79%
71%
Underlying Profit before tax1
7.2
4.0
77%
0.6
1,161%
Total Revenue
78.1
69.2
13%
53.4
46%
Net interest margin
1.94%
1.92%
1.95%
Customer Deposit net interest margin2
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
1Underlying 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.
2The 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 7.2 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 1bn of net lending to businesses during 2017. We also opened the doors of our 50th 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 14,574m, up from 13,094m at 30 June 2017 and 9,005m 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 10,760m, up from 9,805m at 30 June 2017 and 7,297m 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 6.6m ($8.8m) in Q3 2017 versus 5.5m ($7.4m) in Q2 2017, and 5.6m ($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 78m ($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%.
 in millions
30
Sept
2017
30
Jun
2017
Change
In
Quarter
30
Sept
2016
Change
In
Year
Demand: non-interest bearing
3,274
2,998
9%
2,019
62%
Demand: interest bearing
5,113
4,715
8%
3,167
61%
Fixed term
2,373
2,092
13%
2,111
12%
Deposits from customers
10,760
9,805
10%
7,297
47%
Deposits from customers includes:
Deposits from retail customers
5,108
4,750
8%
3,537
44%
Deposits from corporate customers
5,652
5,055
12%
3,760
50%
Lending
 
Total loans as of 30 September were 8,608m, up from 7,750m at 30 June 2017 and 5,193m 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. 
 in millions
30
Sept
2017
30
Jun
2017
Change
In
Quarter
30
Sept
2016
Change
In
Year
Gross Loans and advances to customers
8,620
7,760
11%
5,202
66%
Less: allowance for impairment
(12)
(10)
12%
(9)
32%
Net Loans and advances to customers
8,608
7,750
11%
5,193
66%
Gross loans and advances to customers includes:
Commercial loans
2,909
2,611
11%
1,824
59%
Residential mortgages
5,503
4,948
11%
3,202
72%
Consumer and other loans and advances
208
201
4%
176
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 5,174m. Regulatory Leverage ratio is 6.2%. 
 
Underlying profit before tax has grown 77% quarter-on-quarter to 7.2m (compared to 4.0m in Q2 2017). Statutory profit before tax of 6.7m has grown 131% compared to 2.9m in Q2 2017.
 
We opened our 50th 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
'm
'm
'm
Assets
Loans and advances to customers 
66%
8,608
7,750
5,193
Treasury assets3
5,393
4,827
3,400
Other assets4
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 Growth Rate
 2017
2016
Profit & Loss Account
Q3
Q2
Q3
'000
'000
'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
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