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Download annual report and accounts 2016

HIGHLIGHTS

our AMAZEING growth

2016 Highlights
STRATEGIC
Completion of a £400 million capital raise Listing on the Main Market of the London Stock Exchange Record increase in customer accounts from 655,000 to 915,000 year-on-year Brand recognition of 84%1 across the London market and Net Promoter Score of 78%
Operational
Expanded our network to 48 stores, with 8 opening in 2016 Nearly 2,500 colleagues now work for Metro Bank, an increase of almost 500 in 2016 Launch of a game-changing commercial banking platform in November 2016 First UK retail bank to join the Faster Payments scheme since the service was launched in 2008
Financial
Underlying2 profit before tax in Q3 and Q4 2016 (£0.6 million and £1.5 million) Positive income (+62%) and operating expense (+26%) jaws from 2015 to 2016 Decrease in underlying3 loss before tax for the year from £46.6 million in 2015 to £11.7 million in 2016 Decrease in statutory loss before tax for the year from £56.8 million in 2015 to £17.2 million in 2016 LTD ratio increased to 73.8% from 69.4% Improved CET1 ratio to 18.1% from 13.1%
1 Brand awareness figures are from YouGov Plc. Total sample size was 1,021 adults. Fieldwork was undertaken between 14-17 February 2017. The survey was carried out online. The figures have been weighted and are representative of all London adults (aged 18+)
2 Underlying loss before tax for the quarter excludes Listing and related costs, the FSCS levy and impairment of plant and equipment and intangible assets
3 Underlying loss before tax for the year excludes Listing and related costs and impairment of plant and equipment and intangible assets.
  2016 YoY%
increase
2015 2014 2013 2012
Assets £10.1bn +64% £6.1bn £3.7bn £1.9bn £0.8bn
Customer deposits £8.0bn +56% £5.1bn £2.9bn £1.3bn £0.6bn
Net average deposit per store per month £5.7bn +8% £5.3bn £4.9bn £3.4bn £3.1bn
Net customer loans £5.9bn +66% £3.5bn £1.6bn £0.8bn £0.2bn
Underlying loss before tax £(11.7m) improved 75% £(46.6m) £(48.9m) £(55.4m) £(45.7m)
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OUR DISRUPTIVE MODEL

creating FANS generates long-term value for everyone

Investing in...

FANATICAL PHYSICAL EXECUTION

Thinking like retailers while being the most professional bankers Stores open “early till late”, 362 days a year 24/7 telephony, 365 days a year With instant fulfilment – “walk out working” with debit and credit cards, mobile app, internet and telephony

INTEGRATED TECHNOLOGY

With real-time processing enabling real-time fulfilment Making customers’ lives easier Offering customers their channel of choice (store, contact centre, online, mobile)

UNIQUE CULTURE

AMAZEING values Where we “hire for attitude, train for skill” With colleague empowerment – “no stupid rules” Where everyone’s an owner And part of the community we serve
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CREATES FANS

Surprising and delighting every customer With consistent and transparent propositions that encourage and reward loyalty With banking focused on both personal customers and entrepreneurs
And FANS...

FANS

Create advocacy and referral Tell their friends, family and colleagues to join us Bring more and stay longer as they join us for what we are

DEPOSITS

Which are diversified, sticky and low-cost From retail, commercial and private customers Across current accounts, fixed and variable savings (and, of course, we shouldn’t forget instant access safe deposit boxes)

LENDING

Which is low-risk and diversified, creating a positive net interest margin To retail, commercial and private customers Across overdrafts, credit cards, unsecured lending, mortgages, asset and invoice finance and money management accounts
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CREATES LONG-TERM VALUE

By building a trusted franchise and brand Diversified across retail, commercial and private banking Providing reliable income growth at low-risk With a cost base focused on creating and supporting FANS
Download Our Disruptive Model

CHAIRMAN’S STATEMENT

revolutionising british banking

In August 2010, the revolution in British banking began with the opening of Metro Bank as the first new British high street retail bank in 100+ years.

We want to thank both the business community and consumers for their tremendous support.

DEPOSITS (£bn)

Loans (£bn)

2016 underlying profit/(loss) before tax1 (£m)

1 Quarterly underlying profit/(loss) before tax excludes FSCS levy of £0.7 million, which is included in the full-year underlying loss before tax.

our 2020 growth plan

Dear shareholders, customers and friends – our FANS.

Metro Bank is a Power Retailer created to redefine Retail and Business banking in Britain by delivering a unique, AMAZEING experience with unmatched service and convenience.

Our goal is to create a legendary global emotional brand by creating FANS who join our brand, remain loyal and bring their friends…

…Our future is limited only by our success in AMAZEING our FANS.

My thanks to our customers, FANS, colleagues, leaders and Directors. The best is yet to come.

Vernon W. Hill, II - Founder and Chairman 2 March 2017

Download Chairman’s Statement

CHIEF EXECUTIVE OFFICER’S STATEMENT

growing the revolution

2016 has been a fantastic year. From Listing on the London Stock Exchange, to growing our customer account base to over 900,000 FANS; to creating another 500 jobs and going into profitability. Metro Bank continues to go from strength to strength.

Our model is about creating FANS. We focus on creating FANS, and those FANS are telling their friends, families and colleagues that they should bank with us. And I’m very, very proud of that.

We are delighted to present our first Annual Report as a listed company.

This has been another great year for Metro Bank. We have expanded our network to 48 stores and created 500 jobs serving 915,000 customer accounts, with substantial growth across lending, deposits and customer accounts, as well as delivering two quarters of underlying profit and our first quarterly statutory profit.

We continue to show strong deposit growth even as the cost of our deposits falls. This demonstrates that our offering of relevant, convenient high impact stores, UK-based contact centres and easy-to-use online and mobile services is persuasive for retail, business and private customers…

Craig Donaldson - Chief Executive Officer 2 March 2017

STRATEGIC SUMMARY

delivering our vision

INTEGRATED MODEL

STRATEGIC INITIATIVE

We create fans by “surprising and delighting” customers across every channel through integrated technology and AMAZEING colleagues.

PROGRESS IN 2016

We opened eight new stores in 2016 – our regional network now includes 48 stores in Greater London and the south east.

Over the past 12 months, we have launched a new website with a geo-user interface, an online commercial banking platform, Apple Pay, Android Pay and a new personal and business mobile app.

KEY PERFORMANCE INDICATORS
NUMBER OF STORES 48% (2015:40)
PRODUCT/ SERVICE DEVELOPMENTS –

NEW COMMERCIAL BANKING PLATFORM

CUSTOMERS ON MOBILE APP 55%
CUSTOMERS REGISTERED FOR ONLINE BANKING 78%
2017 OBJECTIVES
  • Expand the catchment area of our store network through strategic expansion around existing store locations and new market opportunities.
  • Continue to improve brand awareness as presence across all channels expands.
  • Increase our digital capability, in stores and through mobile, tablet and online services, to enable customers to interact how they want, when they want.

UNIQUE CULTURE

UNIQUE CULTURE

We recruit, train and lead our team to deliver our unique value-added model and create FANS.

PROGRESS IN 2016

Culture is of the utmost importance, with all colleagues receiving vision and values training on their first two days at Metro Bank, followed by a further six weeks for cashiers and customer service roles, and then, of course, regular training after that.

Our in-house training centre, Metro Bank University, has expanded from sites in Holborn, Croydon, Fulham and Milton Keynes to also include new sites at Wimbledon and Slough.

Performance assessments are focused on the effective delivery of Metro Bank values and customer service standards.

KEY PERFORMANCE INDICATORS
NET PROMOTER SCORE 78%
VOICE OF THE COLLEAGUE RESULTS 94% of colleagues think that Metro Bank is a great place to work
COLLEAGUE HOURS OF TRAINING >134,000 face-to-face >47,000 computer-based >23,000 side-by-side
COLLEAGUES PROMOTED IN YEAR >20%
2017 OBJECTIVES
  • Foster an AMAZEING culture, reflected through colleague training, reviews, opportunities for promotion and benchmarking against global high-performing companies.
  • Create 500 new jobs to support expansion of the business.

DIVERSIFIED, STICKY, LOW-COST DEPOSITS

DIVERSIFIED, STICKY, LOW-COST DEPOSITS

We attract deposits through our integrated model and unique culture which creates FANS.

PROGRESS IN 2016

Customer deposits grew by 56% to £7,951 million at 31 December 2016 (2015: £5,108 million), while deposit growth per store permonth was a record £5.7 million for the year.

We have had record growth in customer accounts in 2016 from 655,000 at 31 December 2015 to 915,000 at 31 December 2016, despite a fall in cost of deposits throughout the year (2016: 79bps; 2015: 82bps) with Q4 2016 cost of deposits at 66bps.

KEY PERFORMANCE INDICATORS
RETAIL/COMMERCIAL AT 31 DEC 16 (DEPOSITS)
DEPOSITS £7,951m up 56% from 2015
DEPOSIT GROWTH PER STORE PER MONTH £5.7m (2015: £5.3m)
COST OF DEPOSITS 0.79% (2015: 0.82%)
NUMBER OF CUSTOMER ACCOUNTS 915,000 (2015: 655,000)
2017 OBJECTIVES
  • Continue to attract sticky deposits while maintaining a low cost of deposits.
  • Promote organic growth through existing stores, as well as opening new stores to attract FANS.
  • Expand our FAN base by implementing technology to enable online account opening for new to franchise customers.

LOW-RISK,DIVERSIFIED LENDING

LOW-RISK, DIVERSIFIED LENDING

We offer simple lending products to customers to meet personal and business needs. Our customer-centric underwriting process aims to ensure a low-risk loan book, which is the foundation of long-term growth.

PROGRESS IN 2016

Total loans grew 66% to £5,865 million at 31 December 2016 (2015: £3,543 million). Loans to commercial customers represent 36% of total lending as of 31 December 2016, with a stable average debt to value ratio at below 60% during the year. Our mortgage book grew substantially to £3,605 million, enabled by the attractive high-quality service we provide.

Cost of risk remains low at 0.10% (2015: 0.29%) reflecting a rigorous credit focus and conservative risk profile.

KEY PERFORMANCE INDICATORS
RETAIL/COMMERCIAL AT COST OF RISK 31 DEC 16 (GROSS LENDING)
LENDING £5,865m up 66% from 2015
COST OF RISK 0.10% (2015: 0.29%)
NET INTEREST MARGIN 1.97% (2015: 2.00%)
2017 OBJECTIVES
  • Increase our loan to deposit ratio, while maintaining a cost of risk in line with target of c.0.2%
  • Support businesses through ring-fencing £1 billion of funds to lend to new and existing business and commercial customers.
Download Strategic Summary