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Metro Bank reports 33% quarterly growth in underlying profit before tax and record £1.1 billion increase in deposits

25th April 2017

Metro Bank PLC has delivered a strong trading performance in the first quarter of 2017.

Q1 Highlights

  • Record deposit growth in the quarter which exceeded £1bn for the first time
  • Deposits up 13% quarter-on-quarter to £9.0b ($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 £7.4m ($9.3m) in Q1 2017 versus £5.0m ($6.3m) in Q4 2016. Annualised this represents deposit growth per store of £89m ($112m).   
  • Lending up 11%, quarter-on-quarter to £6.5b ($8.2b)
  • Underlying profit before tax[1] at £2.0m (£1.5m 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 £.  
[1] Underlying profit/(loss) before tax excludes listing related costs, FSCS levy and impairment of property, plant & equipment and intangible assets.

Quarter ending £ in millions31 Mar 201730 Dec 2016Change in Quarter31 Mar 2016Change in Year
Assets £11,624 £10,057 16% £7,388 57%
Loans £6,482 £5,865 11% £4,129 57%
Deposits £9,010 £7,951 13% £5,898 53%
Loan to deposit ratio 72% 74% - 69% -
Underlying profit/(loss) before tax £2.0 £1.5 33% (£9.6)m n/a
Total Revenue £61.9 £57.6 7% £37.7 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 £1 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 £11,624m, up from £10,057m at 31 December 2016 and £7,388m 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 £7.4m ($9.3m) in Q1 2017 versus £5.0m ($6.3m) in Q4 2016, and £6.6m ($8.3m) in Q1 2016 due to an exceptionally strong quarter. This represents annualised deposit growth per store of £89m ($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 £9,010m, up from £7,951m at 31 December 2016 and £5,898m at 31 March 2016; representing 13% in the quarter and year-on-year growth of 53%. Deposits for the first quarter grew by £1.1bn. Deposits from commercial customers represent 50% of 31 March 2017 total deposits (31 December 2016: 50%).
£ in millions31 Mar 2017
30 Dec 2016
% Change in Quarter31 Mar 2016
% Change in Year
Demand: non-interest bearing £2,582 £2,282 13% £1,587 63%
Demand: interest bearing £4,224 £3,513 20% £2,476 71%
Fixed term £2,204 £2,156 2% £1,835 20%
Deposits from customers £9,010 £7,951 13% £5,898 53%
Deposits from customers includes:          
Deposits from retail customers £4,464 £3,945 13% £2,775 61%
Deposits from corporate customers £4,546 £4,006 13% £3,123 46%
  • Cost of deposits in Q1 was 61bps, a reduction from the 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 £6,482m, up from £5,865m at 31 December 2016 and £4,129m 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%).
£ in millions31 Mar 201731 Dec 2016% Change in Quarter31 Mar 2016% Change in Year
Gross Loans and advances to customers £6,491 £5,872 11% £4,136 57%
Less: allowance for impairment £(9) £(7) 29% £(7) 28%
Net Loans and advances to customers £6,482 £5,865 11% £4,129 57%
Gross loans and advances to customers includes:          
Commercial loans £2,276 £2,087 9% £1,428 59%
Residential mortgages £4,023 £3,604 12% £2,566 57%
Consumer and other loans and advances £192 £181 6% £142 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 2016. 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 an 8% in the quarter and 38% year-on-year.
  • Underlying profit before tax has improved by 33% quarter-on-quarter to £2.0m from £1.5m in Q4 2016 (compared to a loss of £9.6m 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. 

For more information, please contact:

Metro Bank PLC Press Office
Tina Coates
+44 (0) 7811 246 016

Martin Pengelley/Latika Shah
Tulchan Communications
+44(0)20 7353 4200