Metro Bank (MTRO) H1 2024 earnings summary

Executive summary

• Profitability expected in Q4 2024, marking the end of a transitional year and the start of sustainable returns, with upgraded guidance for NIM and ROTI through 2027.

• Significant transformation achieved, including a 23% headcount reduction, over £50m in annualised cost savings, and a strategic pivot toward commercial and SME lending.

• £2.5bn mortgage portfolio sale underway, expected to accelerate balance sheet repositioning, support higher NIM and capital ratios, and result in an estimated £105m loss on sale.

• Capital position secured, with debt maturities extended to 2028+, robust capital ratios, and strong liquidity coverage ratio at 365%.

• Business model repositioned toward commercial, SME, and specialist mortgage lending, with cost efficiency and capital optimisation as key priorities.

Financial highlights

• Statutory loss after tax of £33m in H1 2024, compared to a profit of £13m in H1 2023 and £17m in H2 2023.

• Net interest margin declined to 1.64% in H1 2024, with a target of 4% by 2026.

• Cost-to-income ratio to approach 70% in 2026, 60% in 2027, and 50% by 2028.

• Over £50m in annualised cost savings delivered in H1 2024; on track for £80m by year-end.

• Customer deposits stable at £15.7bn; customer loans down 6% to £11.5bn since December 2023.

Outlook and guidance

• Profitability expected in Q4 2024, with upgraded ROTI and NIM guidance for 2025–2027.

• NIM projected to approach 2.5% in 2024, 3.25% in 2025, and 4.0% in 2026.

• ROTI targeted at mid to upper single digits in 2025, double digits in 2026, and mid to upper teens by 2027.

• Asset mix to shift to 70% commercial/SME and 30% mortgages over time, with total lending to grow at 8–11% CAGR post-mortgage sale.

• Deposit growth expected to remain flat through 2026, with upper single-digit growth thereafter.