Metro Bank (MTRO) Q4 2024 earnings summary

Executive summary

• Achieved all 2024 guidance, including statutory profit after tax of £42.5m, driven by recognition of a £254.6m deferred tax asset, and underlying profit in H2 2024, marking a return to profitability ahead of schedule.

• Strategic transformation focused on cost discipline, asset rotation, and pivot to higher-yielding corporate, commercial, SME, and specialist mortgage lending, with 71% YoY growth in new originations.

• Delivered £80m in annualised cost savings, reducing on-shore headcount by over 30%, with further benefits expected in 2025.

• Completed £2.5bn prime residential mortgage sale and £584m unsecured loan sale, freeing up capital and liquidity.

• Opened 110,000 personal and 36,000 business current accounts in 2024, with business accounts representing over 5% market share.

Financial highlights

• Net interest margin (NIM) at year-end was 2.65%, up from 1.52% in February 2024 and above guidance.

• Net interest income fell 8% YoY to £377.9m, but increased 20% half-on-half in H2 2024; revenue up 15% half-on-half.

• Statutory profit after tax for the year was £42.5m; underlying loss before tax narrowed to £14.0m.

• Total costs reduced from £530m to £510m, mainly via headcount reduction; cost:income ratio at 101%.

• Customer deposits declined 7% YoY to £14.5bn; net loans fell 27% YoY to £9.0bn, mainly due to asset sales.

Outlook and guidance

• Guidance reconfirmed for ROTE: mid-to-upper single digit in 2025, double digit in 2026, mid-to-upper teens by 2027.

• NIM expected to grow, with exit NIMs of 3.00–3.25% in 2025, 3.60–4.00% in 2026, and 4.00–4.50% in 2027.

• Further 4–5% cost reduction targeted in 2025, mainly from annualised benefits and supplier renegotiations.

• Cost-income ratio targeted at 55–50% by 2028.

• Lending to grow at 8–11% CAGR, with commercial lending to comprise 70% of the book by 2029.