Metro Bank
Holdings plc
Full year
results
Trading update
2023
13 March 2024
Metro Bank
Holdings plc (LSE: MTRO LN)
Results for year
ended 31 December 2023
Highlights
|
|
Statutory profit
before tax of £30.5 million for the year, the first time since
2018, with a 67% year-on-year reduction in underlying loss to £16.9
million
|
|
|
Deposits of
£15,623 million as at 31 December 2023 are up 1% from June leading
to an elevated liquidity coverage ratio of 332% as at 31 December
2023
|
|
|
Underlying
revenue grew by 5% year-on-year reflecting effective asset rotation
and increased yields plus 12% growth in capital efficient fee
income, whilst costs marginally reduced, creating positive
operating jaws
|
|
|
Continued to grow
personal and business current accounts, opened 246,000 accounts in
the year and over 52,000 of those were in the fourth
quarter
|
|
|
On track to
deliver £50 million of annualised cost savings in Q1 2024 as
previously announced, these savings have been actioned with c.1,000
colleagues, equal to 22% of headcount, leaving before
mid-April
|
|
|
A further £30
million of annualised cost savings is expected to be delivered by
the end of 2024
|
|
|
Remain committed
to stores, including opening new stores in the North of
England
|
|
|
Secured the
capital position and extended the debt instrument maturities to
2028 or beyond
|
Daniel Frumkin, Chief
Executive Officer at Metro Bank, said:
“Overall, Metro
Bank performed strongly in 2023 as we continued to position the
business for growth. We were pleased to return to profit on a
statutory basis and deliver our best half-year results for several
years. After addressing our capital position in Q4, we also
launched a successful deposit campaign, with deposits totalling
£16.5 million as at the end of February 2024.”
“During the year
we also launched a cost saving plan which included reducing store
hours and roles across the organisation. These efforts will ensure
the bank is right-sized for the future, with a strong focus on both
digital and great customer service.”
“Looking
forward, I remain confident in our ability to be the number one
community bank. The work we have undertaken this year has laid the
path to become a structurally profitable business and our focus
towards the SME, Commercial and specialist mortgages sector
presents an exciting opportunity in an underserved area of the
market. I remain grateful for the continued support of our
colleagues, customers and shareholders as we embark on the next
chapter of our journey”.
Key Financials
|
£ in
millions
|
31 Dec
2023
|
31 Dec
2022
|
Change
from
FY
2022
|
30 Jun
2023
|
Change
from
H1
2023
|
|
|
|
|
|
|
|
|
Assets
|
£22,245
|
£22,119
|
1%
|
£21,747
|
2%
|
|
Loans
|
£12,297
|
£13,102
|
(6%)
|
£12,572
|
(2%)
|
|
Deposits
|
£15,623
|
£16,014
|
(2%)
|
£15,529
|
1%
|
|
Loan to deposit ratio
|
79%
|
82%
|
(3 ppts)
|
81%
|
(2 ppts)
|
|
|
|
|
|
|
|
|
CET1 capital ratio
|
13.1%
|
10.3%
|
280 bps
|
10.4%
|
270 bps
|
|
Total capital ratio
(TCR)
|
15.1%
|
13.4%
|
170 bps
|
13.2%
|
190 bps
|
|
MREL ratio
|
22.0%
|
17.7%
|
430 bps
|
18.1%
|
390 bps
|
|
Liquidity coverage ratio
|
332%
|
213%
|
119 bps
|
214%
|
118 bps
|
|
£ in
millions
|
FY
2023
|
FY
2022
|
Change
from
FY
2022
|
H2
2023
|
H1
2023
|
Change
from
H1
2023
|
|
|
|
|
|
|
|
|
|
Total underlying
revenue1
|
£546.5
|
£522.1
|
5%
|
£260.9
|
£285.6
|
(9%)
|
|
Underlying profit/(loss) before
tax2
|
(£16.9)
|
(£50.6)
|
67%
|
(£33.0)
|
£16.1
|
(305%)
|
|
Statutory profit/(loss) before
tax
|
£30.5
|
(£70.7)
|
143%
|
£15.1
|
£15.4
|
(2%)
|
|
Net interest margin
|
1.98%
|
1.92%
|
6 bps
|
1.85%
|
2.14%
|
(29 bps)
|
|
Lending yield
|
4.72%
|
3.67%
|
105 bps
|
4.91%
|
4.50%
|
41 bps
|
|
Cost of deposits
|
0.97%
|
0.20%
|
77 bps
|
1.29%
|
0.66%
|
63 bps
|
|
Cost of risk
|
0.26%
|
0.32%
|
(6 bps)
|
0.34%
|
0.18%
|
(16 bps)
|
|
Underlying EPS
|
(8.4p)
|
(30.5p)
|
22.1p
|
(12.2p)
|
7.8p
|
(20.0p)
|
|
Tangible book value per
share
|
£1.40
|
£4.29
|
(67%)
|
£1.40
|
£4.42
|
(68%)
|
-
Underlying revenue excludes grant
income recognised relating to the Capability & Innovation fund
and the gain relating to the capital raise and
refinancing
-
Underlying loss before tax is an
alternative performance measure and excludes impairment and
write-off of property, plant & equipment (PPE) and intangible
assets, transformation costs, remediation costs, costs incurred as
part of the holding company insertion and impacts of the capital
raise and refinancing
Investor
presentation
A presentation for investors and
analysts will be held at 9AM (UK time) on Wednesday 13 March 2024.
The presentation will be webcast on:
https://webcast.openbriefing.com/metrobank-mar24/
For those
wishing to dial-in:
From the UK: +44 800 358
1035
From the US: +1 855 9796
654
Access code: 439242
Other global dial-in
numbers:
https://www.netroadshow.com/events/global-numbers?confId=59913
Financial performance for the
year ended 31 December 2023
Deposits
|
£ in
millions
|
31 Dec
2023
|
31 Dec
2022
|
Change
from
FY
2022
|
30 Jun
2023
|
Change
from
H1
2023
|
|
|
|
|
|
|
|
|
Demand: current accounts
|
£5,696
|
£7,888
|
(28%)
|
£7,106
|
(20%)
|
|
Demand: savings accounts
|
£7,827
|
£7,501
|
4%
|
£7,218
|
8%
|
|
Fixed term: savings
accounts
|
£2,100
|
£625
|
236%
|
£1,205
|
74%
|
|
Deposits from
customers
|
£15,623
|
£16,014
|
(2%)
|
£15,529
|
1%
|
|
|
|
|
|
|
|
|
Deposits from
customers includes:
|
|
|
|
|
|
Retail customers (excluding retail
partnerships)
|
£7,235
|
£5,797
|
25%
|
£5,647
|
28%
|
|
SMEs3
|
£3,782
|
£5,080
|
(26%)
|
£5,066
|
(25%)
|
|
|
£11,017
|
£10,877
|
1%
|
£10,713
|
3%
|
|
Retail partnerships
|
£1,708
|
£1,949
|
(12%)
|
£1,910
|
(11%)
|
|
Commercial customers (excluding
SMEs3)
|
£2,898
|
£3,188
|
(9%)
|
£2,906
|
0%
|
|
|
£4,606
|
£5,137
|
(10%)
|
£4,816
|
(4%)
|
|
-
SME defined as enterprises which employ
fewer than 250 persons and which have an annual turnover not
exceeding €50 million, and/or an annual balance sheet total not
exceeding €43 million, and have aggregate deposits less than €1
million
|
-
Total deposits
increased by 1% from June to £15,623 million, and further increased
to c£16.5 billion in February 2024 (31 December 2022: £16,014
million). The underlying
service-led core deposit franchise remained resilient and over
117,000 current accounts were opened in the second half of
2023.
In Q4 the Group saw deposit
outflows following press speculation in the week leading up to the
capital raise, Metro Bank launched a successful fourth quarter
deposit campaign in response to these outflows proving the
resilience and value in the brand. The campaign has now concluded
and the significant levels of liquidity raised now enable the Group
to focus on low-cost relationship deposits to manage down the cost
of funding.
|
-
Cost of deposits
was 0.97% for the year (2022: 0.20%) reflecting rising base rates, the impact of the
deposit campaign in the fourth quarter, and the customer behaviour
shift away from current accounts towards savings and fixed term
accounts, a trend seen across the market.
|
-
Customer account
growth of 0.3 million in the year to 3.0 million (31 December 2022:
2.7 million) as organic
growth in the underlying franchise continued, with over 203,000
personal current accounts and over 43,000 business current accounts
opened in the year.
|
-
Stores remain a
key element to the Group’s service offering and opportunity exists
for further market penetration in new locations,
Metro Bank continues to work to
identify appropriate sites for new stores in the North of England.
Locations are being prioritised to support Metro Bank’s SME,
Commercial and Corporate Banking offering.
|
Loans
|
£ in
millions
|
31 Dec
2023
|
31 Dec
2022
|
Change
from
FY
2022
|
30 Jun
2023
|
Change
from
H1
2023
|
|
|
|
|
|
|
|
|
Gross loans and
advances to customers
|
£12,496
|
£13,289
|
(6%)
|
£12,769
|
(2%)
|
|
Less: allowance for
impairment
|
(£199)
|
(£187)
|
6%
|
(£197)
|
1%
|
|
Net loans and
advances to customers
|
£12,297
|
£13,102
|
(6%)
|
£12,572
|
(2%)
|
|
|
|
|
|
|
|
|
Gross loans and
advances to customers consists of:
|
|
|
|
|
|
|
Retail mortgages
|
£7,818
|
£7,649
|
2%
|
£7,591
|
3%
|
|
Commercial
lending4
|
£2,443
|
£2,847
|
(14%)
|
£2,659
|
(8%)
|
|
Consumer lending
|
£1,297
|
£1,480
|
(12%)
|
£1,410
|
(8%)
|
|
Government-backed
lending5
|
£938
|
£1,313
|
(29%)
|
£1,109
|
(15%)
|
|
-
Includes CLBILS
-
BBLS, CBILS and RLS
|
-
Total net loans
reduced by 6% in the year to £12,297 million (31 December 2022:
£13,102 million) as focus
remained on optimising the mix for risk-adjusted return on
regulatory capital, the Consumer and Government-backed lending
portfolios are in run-off as the Group pivots its strategy towards
SME, Commercial and Specialist Mortgages.
|
-
Retail mortgages
increased by 2% during the year to £7,818 million (31 December
2022: £7,649 million) and
remains the largest component of the lending book at 63% (31
December 2022: 58%). The DTV of the portfolio at 31 December 2023
was 58% (31 December 2022: 56%) and 80% of new originations in 2023
were <80% LTV (2022: 82%). Over the next 3 years more than £4.1
billion of fixed rate mortgages will mature at an average blended
yield of less than 3.7%. A pivot towards more specialist mortgages
is expected following recent investment to enhance product
offerings. Metro Bank’s operating model is tailored to more complex
underwriting which enables the Group to meet the needs of more
customers and scale underserved markets whilst offering improved
risk-adjusted returns.
|
-
Commercial loans
(excluding BBLS, CBILS and RLS) reduced by 14% during the year to
£2,443 million (31 December 2022: £2,847) reflecting continued portfolio management with
reductions in commercial real estate to £509 million (31 December
2022: £681 million) and portfolio buy-to-let to £465 million (31
December 2022: £731 million). The DTV of the portfolio at 31
December 2023 was 55% (31 December 2022: 55%) and the portfolio has
a coverage ratio of 2.13% (31 December 2022: 2.21%). Metro Bank is
committed to supporting local businesses and expects to grow SME
and Commercial lending through 2024.
|
-
Cost of risk
reduced to 26bps for the year (2022: 32bps) reflecting the run-off of the Consumer
portfolio, improvements in the macroeconomic scenarios for the
Commercial and Retail mortgage portfolios and repayments of a small
number of large Commercial exposures.
|
-
Non-performing
loans increased to 3.11% (31 December 2022: 2.65%)
driven largely by the maturity
profile of the Consumer portfolio and reduced Commercial lending
volumes, partly offset by successful BBLS claims and repayments of
a number of large Commercial exposures. Excluding Government-backed
lending, non-performing loans were 2.58% at 31 December 2023 (31
December 2022: 2.02%).
|
-
The Group’s loan
portfolio remains highly collateralised and well
provisioned. The ECL
provision at 31 December 2023 was £199 million with a coverage
ratio of 1.59%, compared to £187 million with a coverage ratio of
1.41% at 31 December 2022.
|
Profit and Loss
Account
-
Underlying net
interest income increased by 2% to £411.9 million (2022: £404.2
million) driven by
improvements in net interest margin (NIM) which is up 6bps to 1.98%
for the year (2022: 1.92%) reflecting improved yields on new
lending and treasury investments offset by the impact of increased
cost of deposits in the fourth quarter following the successful
deposit campaign.
|
-
Underlying net
fee and other income increased by 12% to £131.9 million (2022:
£117.9 million) reflecting
strong underlying customer acquisition and increased transactional
volumes.
|
-
Underlying costs
reduced to £530.2 million for the year (2022: £532.8
million) against a backdrop
of inflationary pressures, including the full year impact of the
autumn 2022 2.75% cost of living payrise coupled with a 5% average
colleague payrise in April 2023. Cost reduction has been driven by the disciplined approach to cost
management.
|
-
The previously
announced annualised savings of £50 million (up from the original
guidance of £30 million) are on track to be delivered in the first
quarter of 2024, with the
colleague restructuring and consultation process having concluded,
and all impacted colleagues having left the organisation by
mid-April. The Group continues to seek cost-reductions through
transitioning to a more cost-effective model and expects to deliver
additional annualised savings of £30 million by the end of
2024.
|
-
The Group has
upgraded its cost guidance as it expects to deliver additional
annualised savings of £30 million by the end of 2024.
Together with the £50 million
already announced this totals £80 million of annualised cost
reductions, all delivered in 2024.
|
-
Operating jaws
remain positive and led to a reduction in the underlying
cost:income ratio to 97% (2022: 102%), the first time Metro Bank’s cost:income ratio
has fallen below 100% since 2018.
|
-
Underlying loss
before tax continued to improve, reducing to £16.9 million for the
year (2022: loss of £50.6 million) reflecting significant margin improvements
achieved through disciplined cost management and balance sheet
optimisation. The second half loss was impacted by market pressures
on current account balances and asset pricing, and constrained
lending volumes to maintain capital as well as the impact of
inflated cost of deposits in the fourth quarter due to the deposit
campaign in response to the previously announced deposit outflows
and press speculation.
|
-
Statutory profit
before tax of £30.5 million for the year (2022: loss of £70.7
million), the first time
Metro Bank has achieved statutory profitability since 2018, driven
by the first half performance and the gain recognised in relation
to the haircut on the Tier 2 debt instrument in the debt
refinancing, marginally offset by costs associated with
restructuring.
|
Capital, Funding and
Liquidity
|
|
Position
31 Dec
2023
|
Position
31 Dec
2022
|
Minimum
requirement
including
buffers6
|
Minimum
requirement
excluding
buffers6
|
|
|
|
|
|
|
|
Common Equity Tier 1
(CET1)
|
13.1%
|
10.3%
|
9.2%
|
4.7%
|
|
Tier 1
|
13.1%
|
10.3%
|
10.8%
|
6.3%
|
|
Total Capital
|
15.1%
|
13.4%
|
12.9%
|
8.4%
|
|
Total Capital + MREL
|
22.0%
|
17.7%
|
21.2%
|
16.7%
|
|
-
CRD IV buffers
-
On 30 November
2023 Metro Bank announced completion of the Capital Raise which
consisted of £150 million equity, £600
million of debt refinancing and £175 million of new MREL
debt. The capital raise
secured the balance sheet, extended the debt instrument maturities
to 2028 or beyond and provided sufficient capital resources to
enable the Group to meet all minimum regulatory requirements
including CRD IV buffers.
|
-
Total RWAs as at
31 December 2023 were £7,533 million (31 December 2022: £7,990
million). The movement
reflects the actions taken to optimise the balance sheet. RWA
density was 33.9% as at 31 December 2023 (31 December 2022: 36.1%),
the movement year-on-year reflects the elevated liquidity
position.
|
-
Strong liquidity
and funding position maintained. All customer loans are fully funded by customer
deposits with a loan-to-deposit ratio of 79% as at 31 December
2023, and less than 75% in February 2024 (31 December 2022: 82%).
Liquidity Coverage Ratio (LCR) of 332% as at 31 December 2023, and
more than 360% in February 2024 (31 December 2022: 213%) with cash
balances at c£5.1 billion. Net Stable Funding Ratio (NSFR) of 145%
as at 31 December 2023 (31 December 2022: 134%). Over the next 3
years more than £2.0 billion of fixed rate treasury assets will
mature at an average blended yield of less than 0.9%, these will be
replaced by asset with yields in line with the prevailing base
rate.
|
-
UK leverage ratio
was 5.3% as at 31 December 2023 (31 December 2022:
4.2%).
|
-
No decision has been made regarding
the Group’s AIRB application. Forward plans are not predicated on
accreditation and the work performed on the application to date
remains beneficial to the Group.
|
Outlook and
Guidance
|
|
2023
|
Guidance
|
|
Lending
|
£12.3
billion
|
-
Loan growth of mid-single digit
CAGR from 2024 to 2028
-
Total blended risk weight density
on a standardised basis (total RWA/ total assets)
35-45%
|
|
Deposits
|
£15.6
billion
|
-
Low-mid single digit reduction in
2024 to optimise cost of funding
-
Mid-single digit growth across 2025
and 2026
|
|
NIM
|
1.98%
|
-
Marginal reduction in 2024;
-
Headwinds in H1 2024 following the
deposit campaign, marginally offset by;
-
Momentum generated in H2 2024 as
assets reprice, lending pivot towards higher yielding specialist
mortgages and SME/ Commercial, and the elevated liquidity position
enables focus on reducing cost of funding
-
2024 exit rate will support
accretion through 2025 and 2026, coupled with a continuation of
asset repricing, lending pivot and a rising loan-to-deposit
ratio
|
|
Costs
|
£530
million
|
-
£80m of annualised cost savings, of
which;
-
£50 million of annualised cost
savings to be delivered in Q1 2024
-
£30 million of annualised cost
savings to be delivered by Q4 2024
-
2024 costs are expected to be below
2023, with further reductions in 2025 reflecting the benefit of the
full £80 million annualised cost savings
-
Low single digit annual growth from
2025 onwards, nearing 60% cost:income ratio by 2028
|
|
ROTE
|
4%
|
-
ROTE low-single digit in 2025,
increasing to high-single digit in 2026 and low-mid teens
thereafter
|
|
-
The guidance above reflects the
impact of recent market pressures, competition for deposits and the
prevailing macroeconomic outlook.
Metro Bank Holdings
plc
Summary Balance Sheet and
Profit & Loss Account
(Unaudited)
|
Balance
Sheet
|
YoY
change
|
|
31 Dec
2023
|
30 Jun
2023
|
31 Dec
2022
|
|
|
|
|
£'million
|
£'million
|
£'million
|
|
Assets
|
|
|
|
|
|
|
Loans and advances to
customers
|
(6%)
|
|
£12,297
|
£12,572
|
£13,102
|
|
Treasury assets7
|
|
|
£8,770
|
£8,023
|
£7,870
|
|
Other assets8
|
|
|
£1,178
|
£1,152
|
£1,147
|
|
Total
assets
|
1%
|
|
£22,245
|
£21,747
|
£22,119
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Deposits from customers
|
(2%)
|
|
£15,623
|
£15,529
|
£16,014
|
|
Deposits from central
banks
|
|
|
£3,050
|
£3,800
|
£3,800
|
|
Debt securities
|
|
|
£694
|
£573
|
£571
|
|
Other liabilities
|
|
|
£1,744
|
£875
|
£778
|
|
Total
liabilities
|
0%
|
|
£21,111
|
£20,777
|
£21,163
|
|
Total
shareholder's equity
|
|
|
£1,134
|
£970
|
£956
|
|
Total equity and
liabilities
|
|
|
£22,245
|
£21,747
|
£22,119
|
-
Comprises investment securities and
cash & balances with the Bank of England
-
Comprises property, plant &
equipment, intangible assets and other assets
|
|
YoY
change
|
|
|
|
|
Year
ended
|
|
Profit & Loss
Account
|
31 Dec
2023
|
31 Dec
2022
|
|
|
|
£'million
|
£'million
|
|
|
|
|
|
|
Underlying net interest
income
|
2%
|
£411.9
|
£404.2
|
|
Underlying net fee and other
income
|
12%
|
£131.9
|
£117.9
|
|
Underlying net gains on sale of
assets
|
|
£2.7
|
-
|
|
Total underlying
revenue
|
5%
|
£546.5
|
£522.1
|
|
|
|
|
|
|
Underlying operating
costs
|
-
|
(£530.2)
|
(£532.8)
|
|
Expected credit loss
expense
|
|
(£33.2)
|
(£39.9)
|
|
|
|
|
|
|
Underlying (loss)
before tax
|
|
(£16.9)
|
(£50.6)
|
|
|
|
|
|
|
Impairment and write-off of
property plant & equipment and intangible assets
|
|
(£4.6)
|
(£9.7)
|
|
Transformation costs
|
|
(£20.2)
|
(£3.3)
|
|
Remediation costs
|
|
-
|
(£5.3)
|
|
Capital raise and
refinancing
|
|
£74.0
|
-
|
|
Holding company insertion
costs
|
|
(£1.8)
|
(£1.8)
|
|
Statutory
profit/(loss) before tax
|
|
£30.5
|
(£70.7)
|
|
|
|
|
|
|
Statutory taxation
|
|
(£1.0)
|
(£2.0)
|
|
|
|
|
|
|
Statutory
profit/(loss) after tax
|
|
£29.5
|
(£72.7)
|
| |
|
|
|
|
|
|
|
|
|
|
|
Year
ended
|
|
Key
metrics
|
31 Dec
2023
|
31 Dec
2022
|
|
|
|
|
|
|
|
Underlying earnings per share –
basic
|
|
(8.4p)
|
(30.5p)
|
|
Number of shares
|
|
672.7m
|
172.5m
|
|
Net interest margin
(NIM)
|
|
1.98%
|
1.92%
|
|
Lending yield
|
|
4.72%
|
3.67%
|
|
Cost of deposits
|
|
0.97%
|
0.20%
|
|
Cost of risk
|
|
0.26%
|
0.32%
|
|
Arrears rate
|
|
3.8%
|
3.2%
|
|
Underlying cost:income
ratio
|
|
97%
|
102%
|
|
Tangible book value per
share
|
|
£1.40
|
£4.29
|
|
Risk weighted assets
(RWAs)
|
|
£7,533m
|
£7,990m
|
|
Risk weight density (RWAs / total
assets)
|
|
33.9%
|
36.1%
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Half year
ended
|
|
Profit & Loss
Account
|
HoH
change
|
31 Dec
2023
|
30 Jun
2023
|
31 Dec
2022
|
|
|
|
£'million
|
£'million
|
£'million
|
|
|
|
|
|
|
|
Underlying net interest
income
|
(14%)
|
£190.4
|
£221.5
|
£223.3
|
|
Underlying net fee and other
income
|
8%
|
£68.6
|
£63.3
|
£62.6
|
|
Underlying net gains on sale of
assets
|
|
£1.9
|
£0.8
|
-
|
|
Total underlying
revenue
|
(9%)
|
£260.9
|
£285.6
|
£285.9
|
|
|
|
|
|
|
|
Underlying operating
costs
|
5%
|
(£272.0)
|
(£258.2)
|
(£266.5)
|
|
Expected credit loss
expense
|
|
(£21.9)
|
(£11.3)
|
(£22.0)
|
|
|
|
|
|
|
|
Underlying
profit/(loss) before tax
|
|
(£33.0)
|
£16.1
|
(£2.6)
|
|
|
|
|
|
|
|
Impairment and write-off of
property plant & equipment and intangible assets
|
|
(£4.6)
|
-
|
(£1.5)
|
|
Transformation costs
|
|
(£20.2)
|
-
|
(£2.3)
|
|
Remediation costs
|
|
(£0.8)
|
£0.8
|
(£2.3)
|
|
Capital raise and
refinancing
|
|
£74.0
|
-
|
-
|
|
Holding company insertion
costs
|
|
(£0.3)
|
(£1.5)
|
(£1.8)
|
|
Statutory
profit/(loss) before tax
|
|
£15.1
|
£15.4
|
(£10.5)
|
|
|
|
|
|
|
|
Statutory taxation
|
|
£1.7
|
(£2.7)
|
(£0.5)
|
|
|
|
|
|
|
|
Statutory
profit/(loss) after tax
|
|
£16.8
|
£12.7
|
(£11.0)
|
|
|
|
Half year
ended
|
|
Key
metrics
|
31 Dec
2023
|
30 Jun
2023
|
31 Dec
2022
|
|
|
|
|
|
|
|
|
Underlying earnings per share –
basic
|
|
(12.2p)
|
7.8p
|
(2.0p)
|
|
|
Number of shares
|
|
672.7m
|
172.6m
|
172.5m
|
|
|
Net interest margin
(NIM)
|
|
1.85%
|
2.14%
|
2.11%
|
|
|
Lending yield
|
|
4.91%
|
4.50%
|
3.93%
|
|
|
Cost of deposits
|
|
1.29%
|
0.66%
|
0.25%
|
|
|
Cost of risk
|
|
0.34%
|
0.18%
|
0.33%
|
|
|
Arrears rate
|
|
3.8%
|
3.5%
|
3.2%
|
|
|
Underlying cost:income
ratio
|
|
104%
|
90%
|
93%
|
|
|
Tangible book value per
share
|
|
£1.40
|
£4.42
|
£4.29
|
|
|
Risk weighted assets
(RWAs)
|
|
£7,533m
|
£7,802m
|
£7,990m
|
|
|
Risk weight density (RWAs / total
assets)
|
|
33.9%
|
35.9%
|
36.1%
|
|
| |
|
|
|
|
|
Enquiries
For more information, please
contact:
Metro Bank PLC
Investor Relations
+44 (0) 20 3402 8900
IR@metrobank.plc.uk
Teneo
Charles Armitstead / Haya Herbert
Burns
+44 (0) 7703 330269 / +44 (0) 7342
031051
Metrobank@teneo.com
Metro Bank PLC
Media Relations
pressoffice@metrobank.plc.uk
ENDS
About Metro
Bank
Metro Bank services over three
million customer accounts and is celebrated for its exceptional
customer experience. It remains one of the highest rated high
street banks for overall service quality for personal customers,
the best bank for service in-store for business customers and joint
top for service in-store for personal customers, in the Competition
and Markets Authority’s Service Quality Survey in February
2024.
Metro Bank has also been awarded
“Large Loans Mortgage Lender of the Year”, 2024 and 2023 Mortgage
Awards, accredited as a top ten Most Loved Workplace 2023, “2023
Best Lender of the Year – UK” in the M&A Today, Global Awards,
the “Inclusive Culture Initiative Award” in the 2023 Inclusive
Awards, “Diversity, Equity & Inclusion Award” and “Leader of
the Year Award 2023” at the Top 1% Workplace Awards, “Best Women
Mortgage Leaders in the UK” from Elite Women 2023, “Diversity Lead
of the Year”, 2023 Women in Finance, Best Large Loan Lender, 2023
Mortgage Strategy Awards,, “Best Business Credit Card”, Forbes
Advisor Best of 2023 Awards, “Best Business Credit Card”, 2023
Moneynet Personal Finance Awards.
The community bank offers retail,
business, commercial and private banking services, and prides
itself on giving customers the choice to bank however, whenever and
wherever they choose, and supporting the customers and communities
it serves. Whether that’s through its network of 76 stores open
seven days a week, 362 days a year; on the phone through its
UK-based contact centres; or online through its internet banking or
award-winning mobile app, the bank offers customers real
choice.
Metro Bank Holdings plc (registered
in England and Wales with company number 14387040, registered
office: One Southampton Row, London, WC1B 5HA) is the listed entity
and holding company of Metro Bank PLC.
Metro Bank plc (registered in
England and Wales with company number 6419578, registered office:
One Southampton Row, London, WC1B 5HA) is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and Prudential Regulation Authority. ‘Metrobank’
is a registered trademark of Metro Bank PLC. Eligible 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.
Metro Bank is an independent UK
bank – it is not affiliated with any other bank or organisation
(including the METRO newspaper or its publishers) anywhere in the
world. Please refer to Metro Bank using the full name.
Metro Bank Holdings PLC
Preliminary Announcement
(Unaudited)
For the year ended 31 December 2023
Chief Executive Officer’s statement
With 3.0 million customer accounts covering retail, SME and
commercial, a national network of stores and our continued digital
investments we remain the UK’s leading full-service mid-sized
bank.
The start of the year began with continued momentum from 2022,
which saw us return to profit on both a statutory and underlying
basis and deliver our best set of results for several years in the
first half. For the full year, we recognised an underlying loss
before tax of £16.9 million for 2023 (2022: loss of £50.6 million),
impacted in part by deposit pricing actions taken in the second
half. On a statutory basis we delivered a profit before tax of
£30.5 million
(2022: loss of £70.7 million) largely as the result of a one-off
gain from the capital restructure completed in November.
2023 saw the continued execution of our strategic priorities with
tangible progress made across all areas. We enter 2024 with an
improved and longer-dated capital position, and continue to take a
disciplined approach to cost saving and have commenced further
activities to achieve the savings outlined, all of which will set
us up to continue on our path to sustainable profitability, and
deliver on our ambition to be the number one community
bank.
Capital package
Going into the year we were always clear about our need both to
access the capital markets comfortably ahead of the call date for
our MREL in October 2024 and
to deliver profitability as a prerequisite. The increased capital
requirements in July, combined with the setback in September to our
ambition to achieve Advanced Internal Ratings Based (AIRB)
accreditation for residential mortgages, put pressure on our
capital position, impacting the levels to which we were able to
grow capital organically. Speculative media reporting contributed
to
our decision to accelerate and address our capital position in the
fourth quarter.
The ability to secure the £925 million capital package demonstrates
our investors’ faith in us and in our customer service-centric
model. We believe that this capital support provides certainty for
us going forward.
Strategic delivery
Throughout the year our customers have remained supportive and our
promise to provide better service and to support the communities in
which we operate continues to resonate. Progress has been achieved
in the automation of back-office processes and investment in core
infrastructure aimed at ensuring the stability and security of
systems. Alongside this we have seen the launch of new products
including enhanced commercial overdrafts and business credit cards.
Whilst we see near-term pressure on profitability resulting from
the increased cost of deposits gathered in the final quarter of the
year, we are optimistic that the good work put in throughout 2023
continues to set us up well for the future.
Revenue
Revenue during the year benefitted from increases in base rates and
the continued growth in customer accounts, with total underlying
income increasing 5% to £546.5 million (2022: £522.1
million).
Like most banks, a large proportion of our lending is fixed rate
and therefore despite base rates having stabilised we are
continuing to see the benefits as older loans mature into a higher
rate environment. We will see further upside in 2024, 2025 and 2026
as loans and fixed rate treasury investments continue to reprice.
Offsetting this, the weakened outlook for base rates and the
competitive nature of the lending market will likely compress
front-book loan pricing through 2024.
We also saw the increase in base rates flow through to deposit
pricing, particularly as competition in the savings market
continued to increase. As cost-of-living pressures continue, which
is leading to customers utilising current account balances, and
industry-wide drawings under TFSME mature we envisage these
pressures continuing through 2024 and for the medium term. To aid
this we have been investing in our deposit capabilities, including
preparing for the ISA season in 2024 through improvements to our
ISA switching capabilities. We have also started to provide savings
accounts on deposit aggregator sites and are launching a new
‘boost’ proposition for savings accounts. While these deposits are
more expensive than our core current account deposits, they are
priced to be net interest income accretive, enable more lending and
help to support our strong liquidity position.
Following the announcement of the successful completion of the
capital package in November, we launched a deposit campaign to
replace the deposits we lost in October resulting from speculative
media reports. As a result, our deposits ended the year at £15.6
billion up 1% from the level reported in our interim results. This
campaign and the prevailing higher rate environment, saw cost of
deposits in the second half of the year increase to 1.29%, up from
0.66% in the first half.
Our priority remains growing the number, depth and quality of our
deposit relationships and we remain committed to supporting more
customers and communities.
Costs
We continue to take a disciplined approach to costs, with
underlying costs slightly down year on year, despite the continued
high inflationary environment. The executive team has worked hard
to improve processes helping manage costs. Our processes are still
not as efficient or as automated as we would want which gives us
the opportunity to identify and deliver further cost savings going
forward. As committed at the time of the capital package, we
are
on track, to deliver up to £50 million in annualised cost savings.
As part of this approach we took the decision to reduce our store
hours, to focus on the times when customers need us most, and
introduced changes to our organisational structure resulting in a
reduction of roles. As a people-focused organisation it is always
incredibly difficult to let good colleagues go. I want to thank all
of them for their hard work and dedication to Metro Bank. Whilst
this was a very tough decision, it was ultimately necessary and is
a key step in helping support our long-term sustainability. The
exits agreed results in £43 million of annual savings and we remain
confident in exceeding £50 million in total annual cost savings in
2024.
We will continue to explore options to further right-size our cost
base in the months ahead, as we look to secure a sustainably
profitable future for the bank. Part of this will include
continuing to review our options around stores and our real estate
which remain one of the largest components of our fixed cost
base.
Infrastructure
Whilst we have reduced our operating hours we remain committed to
stores, which remain central to our proposition. During the year,
we acquired a freehold site in Chester which will be our next new
location. We continue to focus on building a pipeline to deliver
our growth in the years ahead and have placed a greater focus on
securing locations with a strong SME presence. Further store
openings in the north of England will predominantly focus on
out-of-town locations with parking which are easier for businesses
to access and can serve larger populations.
Although a physical presence remains core to our offering, our
priority will be to continue to digitalise to ensure we remain both
competitive against larger high-street peers and new digital
entrants. A particular area of focus will continue to be on
enhancing our self-service features as well as building out our SME
offering where we feel we are continuing to win market share in an
area which remains underserved by the market.
During the year we worked to transform our mortgage origination
platform, which has streamlined the process for both mortgage
intermediaries and customers. As mortgages will continue to be the
largest component of our lending portfolio we envisage that this
investment will yield improvements in productivity and allow us to
launch a greater range of products.
In May, we completed the implementation of our holding company
marking an important milestone in meeting our requirements in
respect of the Bank of England’s resolution framework.
Balance sheet optimisation
Over the course of 2023, the management team actively constrained
lending to around replacement levels in an effort to build capital
organically. Following the capital raise it is now more important
than ever that we continue to optimise our balance sheet and
utilise our capital stack most efficiently to get the best possible
sustainable returns for all stakeholders.
The return to a more normalised interest rate environment has led
us to shift our focus away from unsecured lending back towards
commercial, whilst mortgages will remain the largest component of
our balance sheet. With the feedback from the PRA that we would not
receive AIRB approval in 2023, our focus is to participate in niche
parts of the mortgage market where our manual underwriting capacity
is a competitive advantage. This will likely mean that we seek to
compete less for vanilla mortgages where AIRB-approved competitors
benefit from a materially lower RWA weightage than either
standardised weightages or those expected under the Basel 3.1
regulations. The pivot to commercial and specialist lending will
drive higher risk adjusted returns but will also increase risk
density. In order to meet customer demand and improve profitability
we will manage the balance sheet to optimise returns, which may
include (but not limited to) periodically utilising capital buffers
or electing to access capital markets to support growth.
Communication
Our focus on delivering excellent customer service is reflected in
the latest Independent Competition and Markets Authority (CMA)
survey where we retained the number one spot for in-store service
for personal and business customers. 2023 also saw us implement
Consumer Duty and sign up to the Government’s Mortgage Charter
supporting our commitment to customers, especially as many dealt
with the effects of increases in the cost of living.
Whilst we have reduced our store opening hours in 2024, we remain
committed to maintaining a physical presence and ensuring that
stores remain both accessible and at the heart of local
communities. In 2023, we rolled out our British Sign Language
service which customers can now access in any of our stores, on the
phone, in app or online. Fifty-two of our stores are also now
designated as Safe Spaces – places where those suffering domestic
abuse can go to safely start the process of rebuilding their
lives.
Our community bank ethos also saw us deliver our financial
education programme Money Zone in record numbers. The programme has
now been delivered to 2,800 schools and 250,000 children, which in
2023 included delivering to 1,100 children in just one day at the
Hertfordshire Agricultural Society Food and Farming Day. We have
also introduced bespoke programmes for our armed forces’
communities as well as for teenagers aged 16 to 18.
Alongside Money Zone we support our communities through a wider
range of initiatives. We have dedicated over 4,000 hours to local
causes ranging from litter picks to sponsored walks as well as
celebrating large scale community events, notably Pride in London,
Birmingham and Cardiff.
We are determined that the right-sizing of our workforce will not
impede our ability to be a great place to work or a great place to
bank. We will continue to foster an environment where colleagues
can grow their careers and thrive. I was particularly pleased that
during the year we were voted as a top 10 place to work in the UK
and our annual Voice of the Colleague survey, conducted in October,
saw some of the best results in our history as well as being
significantly higher than the global benchmark.
We continue to focus on our culture of promoting from within, with
over 40% of the positions in the first half of the year filled by
colleagues being promoted or moving around the business. For the
remaining hires we have amplified our community focus when
recruiting talent, increased opportunities available for
apprentices from disadvantaged backgrounds, run a series of
roadshows for professional returners trying to get back into the
workplace and engaged with later in career populations to support
our diverse workforce.
In May we launched a five-year partnership with the England and
Wales Cricket Board, later jointly pledging to treble the number of
girls’ cricket teams to support the development of women’s and
girls’ cricket both at a national and community level, with the aim
of delivering a lasting legacy for female representation in the
sport. The partnership includes the sponsorship of key sporting
events including the Women’s Ashes where we are the title
partner.
Looking ahead
2023 has been a varied year for performance with the continued
strong underlying momentum towards achieving underlying
profitability in the first half of the year and our successful
capital raise being key highlights. These have been offset by
continued external headwinds combined with the need to make
difficult decisions in the last quarter of the year. Some of these
decisions, including our higher deposit cost will continue to
impact earnings potential into 2024, whilst we will not fully
benefit from the effects of loan and investment repricing until
2026, therefore acting as a drag on our near-term results. Despite
this I remain confident that the work we have undertaken has
allowed us to build the foundations of a structurally profitable
bank – which is fundamentally different from where we were four
years ago.
I remain grateful for the continued support of all our colleagues,
customers, debt holders and shareholders as well as wider
stakeholders.
Finance review
Summary of the year
2023 was another important year for us as we returned to profit on
both a statutory and underlying basis in the first half of the
year, established our new holding company and secured a successful
capital package that will allow us to continue to profitably grow
the business over the coming years.
For the full year ended 31 December 2023, we recorded an underlying
loss before tax of £16.9 million a reduction of 67% from 2022
(2022: loss of £50.6 million) partially reflecting the higher cost
of deposits and wider market trend of declining current account
balances.
On a statutory basis we recognised a profit before tax of £30.5
million (2022: loss of £70.7 million),
reflecting the one-off gain on the refinancing of our existing Tier
2 debt as part of the capital package.
Additionally, non-underlying items included £20.2 million of costs
associated with our announced cost reduction plan which is designed
to improve the ongoing efficiency of our business as we look to
deliver sustainable profitability.
Our results were impacted by the setback in September to our
ambition to achieve AIRB accreditation for residential mortgages
and associated speculative media reports regarding our capital
position led to an outflow of customer deposits, with a notable
decrease in current accounts balances. Our strong levels of
liquidity and prudent approach meant these outflows were manageable
and we were able to quickly replace these balances with longer-term
deposits, albeit at a higher cost, which contributed to a material
increase in our cost of deposits in the fourth quarter.
Despite these challenges we have entered 2024 with both a stronger
capital and liquidity position. We have taken the first steps to
deliver a disciplined cost reduction programme that will act to
mitigate many of the headwinds we face and ensure a return to
sustainable profitability.
Income statement
|
|
2023
£m
|
2022
£m
|
Change
%
|
|
Underlying net interest income
|
411.9
|
404.2
|
2%
|
|
Underlying non-net interest income
|
134.6
|
117.9
|
14%
|
|
Total underlying revenue
|
546.5
|
522.1
|
5%
|
|
Underlying operating expenses
|
(530.2)
|
(532.8)
|
-
|
|
Expected credit loss expense
|
(33.2)
|
(39.9)
|
(17%)
|
|
Underlying loss before tax
|
(16.9)
|
(50.6)
|
(67%)
|
|
Non-underlying items
|
47.4
|
(20.1)
|
n/a
|
|
Statutory profit/(loss) before tax
|
30.5
|
(70.7)
|
n/a
|
Interest income
Interest income benefitted from a rising base rate during the
period, increasing 52% to £855.7 million (2022: £563.7 million).
Lending income continues to be the largest component of our
interest income.
Residential mortgage assets benefitted from higher rates for new
and retained customers, with asset yields increasing to 3.37%
(2022: 2.65%). Our retail mortgages are 92% fixed with an average
time to reversion of 2.41 years (31 December 2022: 2.45 years); we
expect to see continued rate growth in the years ahead as older
balances roll-off and are replaced with new lending at a higher
rate.
Our commercial lending portfolio income grew due to higher yields,
predominantly driven by our floating business loans which have seen
greater yields as a result of the higher base rate environment, as
well as the continued attrition of lower-yielding government-backed
lending which was written during the COVID-19 pandemic.
Commercial lending remains a strong and growing part of our book;
as part of our strategy we will continue to rotate and grow our
commercial lending, with a particular focus on small and medium
enterprises as well as more specialist lending.
Consumer lending income also increased, driven by higher yielding
originations due to the base rate environment. In 2024, we will no
longer provide new consumer lending and instead focus on the
commercial and retail markets for new originations.
We also saw the benefits of increased rates flowing through to our
treasury portfolio with interest income on our cash and investment
securities increasing. This increase was also aided by our decision
to adjust our portfolio mix towards lower risk-weighted investment
securities and restrict levels of new lending origination to
repayment levels.
Interest expense
Interest expense increased 178% to £443.8 million
(2022: £159.6 million). This increase reflected the combination of
the continued gradual reduction in non-interest bearing personal
current accounts as well as an increase in cost of deposits
reflecting the rising rate environment.
The reduction in average balances started across the industry in
late 2022 in response to increases in the cost of living, as
customers looked to pay down debt and move excess deposits into
savings accounts, as well as weather the higher inflationary
environment. We saw additional attrition in the fourth quarter
following media speculation surrounding our capital options
although we have continued to see the number of current accounts
grow.
During 2023, we have enhanced our deposit capabilities, including
serving aggregators and the launch of limited-edition
savings
products.
This has successfully aided deposit inflows, whilst also increasing
our average cost of deposits to 0.97% (2022: 0.20%).
Our wholesale funding expenses have also increased as a function of
interest rates, where the largest expense is the Bank of England’s
Term Funding Scheme (TFSME) which is directly linked to base rate.
Due to a higher rate environment, we have seen expenses for TFSME
increase to £161.3 million (2022: £55.5 million). Despite this
increase, it remains an additional stable cost of funding and is
accretive to net interest income.
During the year we repaid early the TFSME maturities scheduled for
2024 and the start of 2025. This repayment was partially funded by
repurchase agreements, which represented a more cost-effective form
of funding. We also used repurchase agreements in the fourth
quarter which provided additional liquidity, which were largely
repaid by the year-end. A combination of these factors, along with
the increase in base rate, led to an increase in interest expense
on repurchase agreements from £3.4 million in 2022 to £50.1 million
in 2023.
As part of the capital package, our existing Tier 2 notes, which
repriced to 9% in June 2023, were redeemed and replaced with £150
million of new Tier 2 notes at a coupon of 14%. The redemption date
of our existing MREL debt was extended, and £175 million new MREL
debt issued, both at a coupon of 12%.
The repricing and restructuring has resulted in an increase to
interest expense on debt securities in 2023 which rose from £48.7
million in 2022 to £55.7 million in 2023; this increased cost of
funding will continue into the future. Despite the increased cost,
the refinancing of our wholesale debt has enhanced our balance
sheet strength, provides additional certainty to all stakeholders
and allows us greater runway to continue to deliver our strategy
thereby assisting in delivering greater earnings potential in the
future.
Non-interest income
Net fee and commission income has increased by £8.6 million to
£90.4 million in 2023 (2022: £81.8 million), reflecting growth in
retail and business current account volumes. Interchange income
grew by £3.0 million to £40.0
million (2022: £37.0
million) reflecting increased consumer spending using a Metro Bank
card.
Safe deposit box income increased by £1.7 million
to £18.2 million (2022: £16.5 million)
reflecting higher volumes as occupancy levels increased, driven by
greater consumer demand in strategic geographical locations.
Foreign exchange income has remained broadly static year on year at
£34.0 million (2022: £34.1 million), providing a valuable source of
income, whilst having minimal impact on our capital
ratios.
Operating expenses
|
|
2023
|
2022
|
|
Underlying cost:income ratio
|
97%
|
102%
|
|
Statutory cost:income ratio
|
90%
|
106%
|
Despite inflationary pressures, our disciplined approach to cost
management has led to a slight decrease in underlying operating
expenses to £530.2 million compared to £532.8 million in
2022.
This was aided by the decision at the end of 2022 to reduce the
number of consultants and contractors used in the business, and to
streamline our project delivery capabilities.
Salary costs remain our biggest contributor to operating expenses
and in the current year we incurred costs of £241.2 million (2022:
£236.6 million). A £13.8 million provision for the cost of the
restructure has been booked in 2023 as a non-underlying
item.
Professional fees have reduced significantly by £15.2 million to
£23.2 million (2022: £38.4 million) as we have moved away from the
use of contractors. In addition to this information technology
costs have also fallen by £2.5 million to £59.7 million (2022:
£62.2 million), reflecting our cost discipline.
Occupancy expenses continue to be a fixed cost being driven by our
store portfolio; costs have remained broadly flat despite the
inflationary environment as we continue to actively reduce the cost
base whilst maintaining our presence on the high street.
The continued discipline in operational cost has also funded areas
of increased expenses including greater investment into deposit
product capability as well as a new multi-year sponsorship of women
and girls cricket with the ECB. We see this as part of our ongoing
commitment to become the number one community bank.
Non-underlying items
|
|
2023
£m
|
2022
£m
|
Change
%
|
|
Impairment and write-off of property, plant, equipment and
intangible assets
|
(4.6)
|
(9.7)
|
(53%)
|
|
Remediation costs
|
–
|
(5.3)
|
n/a
|
|
Transformation costs
|
(20.2)
|
(3.3)
|
512%
|
|
Capital raise and refinancing
|
74.0
|
–
|
n/a
|
|
Holding company insertion costs
|
(1.8)
|
(1.8)
|
–
|
|
Non-underlying items
|
47.4
|
(20.1)
|
(336%)
|
We have recognised non-underlying income in 2023 of £47.4 million
(2022: expenses of £20.1 million) driven by the capital package
secured in October 2023 which resulted in a 40% haircut, and a £100
million gain, on the £250 million Tier 2 debt
issuance.
As part of the capital packaged we incurred costs of £26.0 million.
These consisted of fees paid to our advisors in relation to the
debt restructuring, the acceleration of unamortised issuance costs
as well as the impacts from the breaking of the hedge relationships
the instruments were previously in.
This is offset by the recognition of £20.2 million of
transformation costs, which includes a £15.0 million provision for
restructuring and associated costs. We have benefitted from the
completion of remediation activities which were settled in
2022.
Expected credit loss expense
|
31 December 2023
|
ECL Allowance
£m
|
Coverage ratio
%
|
Non-performing loan ratio
%
|
|
Retail mortgages
|
19
|
0.24%
|
1.87%
|
|
Consumer lending
|
108
|
8.33%
|
5.94%
|
|
Commercial
|
72
|
2.13%
|
4.91%
|
|
Total lending
|
199
|
1.59%
|
3.11%
|
|
31 December 2022
|
|
|
|
|
Retail mortgages
|
20
|
0.26%
|
1.45%
|
|
Consumer lending
|
75
|
5.07%
|
3.38%
|
|
Commercial
|
92
|
2.21%
|
4.59%
|
|
Total lending
|
187
|
1.41%
|
2.65%
|
We recognised an expected credit loss expense of £33.2 million in
year 2023 (2022: £39.9 million), reflecting the challenging
economic environment arising from the increased cost of living. The
decrease from 2022 is due to management actions to optimise the
credit quality of new lending combined with releases relating to
commercial customers that we have worked with and have secured
repayments from. We continue to maintain management overlays and
adjustments of £23.4 million (2022: £30.9 million) which represents
12% of ECL stock (31 December 2022: 16%). As at 31 December 2023
our coverage ratio was 1.59% (2022: 1.41%) and we believe we remain
appropriately provided at this stage in the economic
cycle.
Consumer lending accounted for the majority of the expected credit
loss expense driven by loan maturation and deteriorated performance
due to macroeconomic factors. The loan coverage ratio for consumer
lending ended the year at 8.33% compared to 5.07% as at 31 December
2022.
Commercial lending has been more resilient in 2023, with a release
of expected credit losses during the year. The coverage ratio for
commercial lending has decreased slightly to 2.13% as at 31
December 2023, down from 2.21% as at 31 December 2022.
We also saw a release of expected credit losses in respect of our
retail mortgage portfolio, where credit quality remains high,
leading to a slight decrease in coverage ratio from 0.26% to 0.24%
over the year to 31 December 2023.
Looking forwards into 2024, we expect to continue the rotation of
assets away from consumer unsecured and towards the commercial
sector where we see strategic opportunity to support SMEs, a vital
segment of the UK economy. The economic environment and wider
outlook remain challenging and uncertain; however our processes
ensure we continue to maintain adequate coverage ratios and
continue to actively manage our portfolios.
Balance sheet
Lending
|
|
31 December
|
|
|
|
2023
£m
|
2022
£m
|
Change
%
|
|
Retail mortgages
|
7,817
|
7,649
|
2%
|
|
Consumer lending
|
1,297
|
1,480
|
(12%)
|
|
Commercial
|
3,382
|
4,160
|
(19%)
|
|
Gross lending
|
12,496
|
13,289
|
(6%)
|
|
ECL allowance
|
(199)
|
(187)
|
6%
|
|
Net lending
|
12,297
|
13,102
|
(6%)
|
Net loans and advances to customers ended the year at £12,297
million, down 6% from £13,102 million as at 31 December 2022, as we
actively managed our RWA capacity reflecting our capital
constraints for the majority of the year. The increased rate
environment is ensuring that we are achieving a higher return on
regulatory capital in all areas of lending as new loans are written
at higher yields but with the same risk-weighting.
Retail mortgages continue to form the largest component of our
lending base at £7,817 million (31 December 2022: £7,649 million),
representing 63% of lending (31 December 2022: 58%). With
the feedback
from the PRA that we should not expect to receive AIRB approval in
2023, our focus going forward will be to dominate in niche parts of
the mortgage market where our manual underwriting capacity is a
competitive advantage. This will likely mean that we seek to
compete less for vanilla mortgages with competitors benefitting
from a materially lower RWA weightage than either standardised
weightages or those expected under the
Basel 3.1 regulations.
The commercial portfolio has decreased from £4,160 million as at 31
December 2022 to £3,382 million as at 31 December 2023. The
decrease primarily related to our government-backed COVID relief
loans which continue to run off following the closure of most
schemes in 2021. As at 31 December 2022 outstanding lending under
these schemes totalled £938 million (31 December
2022: £1,313 million). Although these loans are highly capital
efficient due to their government backing, as these were written at
the bottom of the interest rate cycle they are relatively
low-yielding and we will continue to see the benefit to interest
income as these loans roll-off.
Commercial lending is expected to increase in
2024 as we shift our asset focus to commercial
and specialist lending, especially in the SME sector which is
currently underserved in the market. This includes launching a
suite of relationship-driven products to ensure we can meet all of
our customer needs. In 2023, we launched our new business credit
card and commercial overdraft, which are fully digital journeys
with automated acceptance and decision scoring. This comes off the
back of our business overdraft in 2022 which continues to be
popular with customers.
The consumer portfolio has also decreased to £1,297
million (31 December 2022: £1,480 million),
driven in part to minimise exposure to a higher risk segment during
this part of the economic environment, but also partly reflecting
our evolving strategic priorities where we are looking to
prioritise relationship lending as part of our ambition to be the
best community bank.
Treasury portfolio
Over the year we have continued to optimise our treasury portfolio
to maximise our risk adjusted return on regulatory capital,
particularly as rates have risen. We ended the year with £8,770
million of treasury assets
(31 December
2022: £7,870 million), comprising
£4,879 million investment securities and £3,891 million cash and
balances at the Bank of England (31 December 2022: £5,914 million
and £1,956 million respectively). Our investment securities remain
high quality and liquid with 75% being either AAA-rated or gilts
(31 December 2022: 68%).
Other assets
Property, plant and equipment ended the year at £723 million, down
from £748 million as at 31 December
2022. Depreciation continues to outstrip additions, due to no new
store openings taking place in 2023, although we are continuing to
identify sites for future stores in the North of England. These
sites are likely to be smaller than previously envisaged and more
likely to be in locations that are most convenient for surrounding
businesses.
Freehold and long-leasehold properties total
30 out of our 76 stores. This strategy continues
to provide us with a more cost-effective way of delivering its
store-based service-led model. Intangible assets have decreased to
£193 million, down from £216 million in 2022, reflecting a more
selective approach to investments. Our investments in 2023 have
including delivering confirmation of payee services, improved
deposit propositions and a new mortgage platform.
Deposits
|
|
31 December
|
|
|
|
2023
£m
|
2022
£m
|
Change
%
|
|
Retail customer (excluding retail partnerships)
|
7,235
|
5,797
|
25%
|
|
Retail partnership
|
1,708
|
1,949
|
(12%)
|
|
Commercial customers (excluding SMEs)
|
2,898
|
3,188
|
(9%)
|
|
SMEs
|
3,782
|
5,080
|
(26%)
|
|
Total customer deposits
|
15,623
|
16,014
|
(2%)
|
|
Of which:
|
|
|
|
|
Demand: current accounts
|
5,696
|
7,888
|
(28%)
|
|
Demand: savings accounts
|
7,827
|
7,501
|
4%
|
|
Fixed term: savings accounts
|
2,100
|
625
|
236%
|
We remain focused on being a service-led deposit-driven bank. We
ended the year with deposits of £15,623 million (31 December 2022:
£16,014 million), a decrease of 2% year on year but up 1% from 30
June 2023. Deposits have been gradually decreasing during 2023 due
to the increased cost of living weighing on people’s savings
capacity as well as the increasingly competitive interest rate
environment which has seen customers both paying down debt and
increasingly move deposits to higher-earning savings
accounts.
Following press speculation surrounding our capital raise, we saw a
time-limited outflow of deposits. Core deposit flows have since
stabilised to more recent normal ranges and we have seen a return
to growth in these balances following the successful completion of
the capital raise. The launch of a deposit gathering promotion in
November 2023 saw us successfully attract new funding albeit at a
higher cost.
Overall our deposit base continues to remain diversified with a
57%:43% split between retail and commercial customers (31 December
2022: 49%:51%).
We expect to continue raising deposits along with current account
growth with planned store openings in the North of England, as well
as continuing to pursue growth in the Instant Access and Cash ISA
markets.
Wholesale funding
We remain predominantly a deposit funded organisation, with
wholesale funding utilised where appropriate. Our wholesale funding
continues to be mainly the Term Funding Scheme with additional
incentives for SMEs (TFSME). During the year we have reduced our
utilisation of the TFSME by £750 million, reducing our holding to
£3,050 million (31 December 2022: £3,800 million) as we repaid some
maturities due in 2024 and 2025 early. Part of this has been funded
by our high levels of liquidity, as well as via the utilisation of
short-term repurchase agreements which represented a more
cost-effective source of financing.
Taxation
We recorded a tax charge of £1.0 million (2022: £2.0 million) in
the year. This charge is primarily due to the offsetting impact of
achieving a statutory profit, against exemptions in tax law for the
gain recognised on the Tier 2 haircut.
We have unused tax losses of £912 million
(2022: £859 million) for which no deferred tax asset is being
recognised. The current value of our deferred tax asset is
£214 million
(2022: £215 million). There is no time limit on the utilisation of
tax losses and as such the bank will recognise a deferred tax asset
once sustainable profitability is achieved.
Liquidity
Our liquidity position remains strong and in excess of regulatory
minimum requirements. We ended the year with a liquidity coverage
ratio of 332% (31 December 2022: 213%) and a net stable funding
ratio of 145% (31 December
2022: 134%).
We continue to hold large amounts of high-quality liquid assets
totalling £6,656 million
(2022: £4,976 million). This included £3,642 million of cash held
at the Bank of England (2022: £1,761 million).
Capital
|
|
2023
£m
|
2022
£m
|
Change
|
|
CET1 capital1
|
985
|
819
|
20%
|
|
RWAs
|
7,533
|
7,990
|
(6%)
|
|
CET1 ratio1
|
13.1%
|
10.3%
|
280bps
|
|
Total regulatory capital ratio1
|
15.1%
|
13.4%
|
170bps
|
|
Total regulatory capital + MREL ratio1
|
22.0%
|
17.7%
|
430bps
|
|
UK regulatory leverage ratio1
|
5.3%
|
4.2%
|
110bps
|
-
All the capital figures as at
31 December 2023 are presented on a proforma basis, including our
profit for the year. The profit will only be eligible to be
included in our capital resources following the completion of our
audit and publication of our Annual Report and
Accounts.
We ended the year with CET1, total capital and total capital plus
MREL ratios of 13.1%, 15.1% and 22.0% respectively (31 December
2022: 10.3%, 13.4% and 17.7%), above regulatory minima, including
buffers (excluding any confidential buffers, where applicable), of
9.2%, 10.8% and 21.2%.
The capital raise saw us issue £150 million of new equity and £175
million in new MREL-eligible debt. As part of the capital package,
a long-time investor, Spaldy Investment Limited, became our
majority shareholder,
In addition to raising new capital, we also refinanced all of our
existing regulatory debt. This consisted of £350 million of MREL,
which had a call date in November 2024. The refinanced debt, along
with the new MREL has a call date of 30 April 2028, providing
additional runway for us to deliver our strategy. Alongside this,
we replaced our existing £250 million of Tier 2 debt with
£150 million
of new instruments. The £100 million
haircut agreed by bondholders has led to a one-off gain which has
been reported as a non-underlying income amount in 2023.
We ended the year with risk-weighted assets of
£7,533 million (31 December 2022: £7,990 million),
reflecting the active capital management we have delivered since
the end of 2022 as well as prudent lending decisions at this stage
in the economic cycle.
At the end of the first half of 2023 we also completed the
implementation of our holding company marking an important
milestone in meeting our requirements in respect of the Bank of
England’s resolution framework. All of our regulatory capital and
debt capital is now issued from the new holding company.
Basel 3.1
The PRA has published the first of two near-final policy statements
covering the implementation of the Basel 3.1 standards for market
risk, credit valuation adjustment risk, counterparty credit risk,
and operational risk, with remaining elements of the standards
expected to be published in Q2 2024.
In September 2023 the PRA announced a delay in implementation of
the proposals until 1 July 2025. However, the phase in period for
the output floor was reduced from 5 years to 4.5 years to maintain
full implementation by 1 January 2030.
Based on our balance sheet and lending mix as at 31 December 2023
and the current proposals, our initial assessment of the impact
indicates that there should be no material change to our capital
position on implementation day. It should be noted that the rules
are still subject to change.
Looking ahead
We enter 2024 with a stronger and longer dated capital base,
putting us in a good position to deliver on strategy. We have also
started the process of delivering a disciplined cost reduction
programme, which will help to mitigate some of the near-term
headwinds, notably the increased cost of deposits.
Ensuring we reduce our cost of deposits from their 2023 exit rate
through the generation of additional core-deposits remains a
priority. Alongside this a key area of focus will be rotation of
assets from consumer unsecured towards commercial lending where we
believe we can generate a better return in the current
environment.
This
combination of selective capital allocation, pricing rigour and
cost discipline are core to our execution, with these steps meaning
we are on the path to long term sustainable
profitability.
Risk summary
We operate a straightforward community banking strategy and
business model, carefully managing risk as we serve our customers
through both physical and digital channels.
Approach to risk management
Our risk management framework underpins our ability to deliver,
ensuring risks are carefully considered when making decisions and
are managed within acceptable limits on an ongoing basis. The
framework establishes the risk management responsibilities of all
colleagues, which are embedded within our AMAZEING values,
formalises our risk appetite and sets out the tools and techniques
used to operate safely within it.
Risk environment in 2023
During 2023, there has been particular focus on overseeing the
management of our capital risk, culminating with the successful
completion of the refinancing activity in November, which restored
capital ratios to above regulatory minima including buffers
(excluding any confidential buffers, where applicable). Management
of liquidity risk was also heightened following increased customer
deposit outflows in October as a result of speculative media
reports on the strength of our capital position and
negotiations.
Our strong levels of liquidity and prudent approach meant these
outflows were manageable and by year end we had returned to broadly
the same deposit levels as we reported for the third quarter.
Whilst some deposits came at an increased cost, we continue to
demonstrate strong liquidity and funding regulatory ratios. Focus
has also remained on assessing and manging the impact of the
changing macroeconomic environment and the effect of this on credit
risk, including supporting our customers and ensuring appropriate
levels of credit provisions.
Key areas of focus across non-financial risk have been the
implementation of the new Consumer Duty requirements, ongoing
assessment and improvements in operational resilience and continued
strengthening of financial crime controls. Through the year, we
have continued to enhance our risk data and systems, introduced new
and updated tooling and focused on their application to further
mature and streamline risk management activities. Our Policy
Governance Framework has been refined with a focus on usability and
we have enhanced reporting to governance committees and the
Board.
Principal risk exposures
On an ongoing basis, we assess our risks against risk appetite,
including those that could result in events or circumstances that
might threaten our business model, future performance, solvency or
liquidity, and reputation. We consider the potential impact and
likelihood of internal and external risk events and circumstances,
and the timescale over which they may occur.
We identify, define and assess a range of principal risks to which
we are exposed. These are the high-level risks we face, for which
risk appetite is set and monitored via key risk indicators. They
are consistent with those set out in last year’s annual report and
comprise:
-
Credit
risk.
-
Capital
risk.
-
Liquidity
and Funding risk.
-
Market
risk.
-
Financial
Crime risk.
-
Operational
risk.
-
Conduct
risk.
-
Regulatory
risk.
-
Legal
risk.
-
Model
risk.
-
Strategic
risk.
Amongst these, certain risks have been considered most material
over the course of the year. Our capital risk position has improved
following the successful refinancing in late 2023, but oversight
remains heightened as we continue to closely monitor the
implementation of our strategy and our financial performance.
Credit risk has been subject to continued close scrutiny in light
of the challenging macroeconomic environment and management of
financial crime risk remains a priority, aligned to regulatory
focus. Strategic risk including reputational risk has also been
subject to more active management in light of the risks prior to,
and following, the capital restructuring and associated media
speculation. This risk is anticipated to stabilise and improve in
line with our planned return to sustained profitability. Further
details on these four risks are set out below:
|
Strategic risk
|
Exposure
Strategic risk could arise as the result of an insufficiently
defined, flawed, or poorly implemented strategy.
Successful management of strategic risk requires a plan that is
responsive to the rapidly evolving external environment in which we
operate. Furthermore, our strategy needs to meet the expectations
of our stakeholders, including our customers, regulators and
investors.
During 2023, we remained focused on the execution of our strategy,
with the return to profitability in the first half of the year
demonstrating the strengths of our community banking strategy. The
second half of the year saw a combination of increased capital
requirements together with a setback in September to our ambition
to achieve AIRB for residential mortgages. These factors put
pressure on our capital position and restrained the levels to which
we were able to grow capital organically.
In challenging market conditions, we were successful in delivering
a £925 million capital package which included the raising of new
capital as well as the refinancing of our existing regulatory debt.
Externally, some negative sentiment was generated prior to and
following this activity with short-term impacts on
deposits.
Response
We continue to oversee the development and execution of our
strategy on an ongoing basis through regular in-depth management
reviews of business performance and change delivery, oversight of
strategic risks through risk governance and regular updates
presented to the Board. We actively monitor media coverage to
understand stakeholder perceptions and potential impacts and ensure
our corporate announcements are clear, informative and a fair
reflection of who we are and what we do. The Board undertakes an
annual review of the strategy and Long-Term Plan, which is
supported by a risk assessment reviewed at the Risk Oversight
Committee. During 2023, we have continued to strengthen our cost
management discipline, including prioritisation and delivery of
technology change.
Outlook
We continue to see a high level of volatility in the external
environment. The risk of further negative sentiment is expected to
remain for the near term, but we are confident that we have
developed a strategy for 2024 that serves our customers, sets us on
a path to sustained profitability and supports our ambition to be
the number one community bank. As we begin to see the success of
our revised strategy, we expect this risk to recede.
Monitoring of performance will remain heightened with close Board
oversight of the efficacy of the strategy and its implementation.
This will be supported by ongoing risk assessment to support active
management of the evolving risk profile, with oversight from the
Risk Oversight Committee.
|
|
Capital risk
|
Exposure
Capital risk exposures arise from the depletion of our capital
resources which may result from:
-
Increased
RWAs.
-
Losses.
-
Changes to
regulatory minima or other regulatory rules.
Our capital risk management approach is therefore focused on
ensuring we can maintain appropriate levels of capital to both meet
regulatory minima and support our objectives, both under normal and
stress conditions.
Response
Our capital risk mitigation is focused on three key
components:
-
A return to
sustainable profitability that will allow us to generate organic
capital growth.
-
The
continued optimisation of our balance sheet to ensure we are
utilising our capital stack efficiently.
-
Continuing
to assess the raising of capital, as and when market conditions and
opportunities allow.
Outlook
Following the capital raise we enter 2024 with a stronger and
longer dated capital base, putting us in a good position to deliver
on strategy and achieve sustainable profitability in the years
ahead. Our active P&L management, including disciplined cost
reduction programme, will help to mitigate the near-term headwinds
from the increased cost of deposits and funding for the bank.
Capital risk will continue to be subject to heighted monitoring and
active management.
|
|
Credit
risk
|
Exposure
During 2023, the macroeconomic environment in the UK has been
impacted by high inflation, increased interest rates and subdued
economic growth. This has impacted upon the cost of living for our
customers and in turn, affordability and property valuations. There
have been decreases observed in the residential property price
indices, although the overall reduction has been relatively muted
to date.
The rate of inflation has reduced significantly over the year,but
remained above the central bank target rate at year end. As a
result, whilst the Bank of England base rate has remained higher
than prior years, mortgage rates have started to decrease and there
is an expectation that this will continue in 2024.
We have observed some crystallisation of the economic deterioration
on customer positions and through this, onto ECL. As affordability
for customers has come under pressure from rising higher interest
rates, we have observed an increase in arrears rates for the
mortgage portfolio from a low base. Against this, whilst the
economic outlook remains on the downside, forecasts have improved
over the course of 2023, and this has resulted in a positive impact
on the ECL position.
Response
We have an appetite and credit criteria appropriate for managing
lending through an economic cycle and have made limited updates to
our credit criteria and risk exposure where appropriate during
2023. We have continued to enhance our credit risk framework and
associated policies in the current macroeconomic environment:
reporting, analysis, and forecasting have been enhanced,
particularly around arrears and impairments, to inform strategic
decision-making and operational management.
We have sought to work with our customers who are in arrears, have
payment shortfalls or are in financial difficulties to obtain the
most appropriate outcome for both the Bank and the customer. The
primary objectives of our policy are to ensure that appropriate
mechanisms and tools are in place to support customers during
periods of financial difficulty and to minimise the duration of the
difficulty and the consequence, costs and other impacts
arising.
Outlook
As noted above, the macroeconomic outlook has improved during the
course of 2023, although risks remain as central banks manage the
course of interest rates, and geopolitical instability continues
from conflicts in both Ukraine and the Middle East.
We remain alert to the ongoing impact of the resetting of interest
rates after a prior period of historically lower rates. We
anticipate that the impact of this will continue throughout 2024 as
customers transfer from older fixed rate mortgage products, and we
have appropriate mechanisms in place to support customers and
manage the associated risks.
We utilise macroeconomic scenarios provided by Moody’s Analytics in
the assessment of provisions. The use of an independent supplier
for the provision of scenarios helps to ensure that the estimates
are unbiased. The macroeconomic scenarios are assessed and reviewed
monthly to ensure appropriateness and relevance to the ECL
calculation.
|
|
Financial crime
risk
|
Exposure
We may be exposed to financial crime risk if we do not effectively
identify and appropriately mitigate the risks of criminals using
our products and services for financial crime. Financial crime
risks include money laundering, violations of sanctions, bribery
and corruption, facilitation of tax evasion and terrorist
financing.
Failure to prevent financial crime may result in harm to our
customers, ourselves and third parties. In addition, non-compliance
with regulatory and legal requirements may result in enforcement
action such as regulatory fines, restrictions, or suspension of
business or cost of mandatory corrective action, which will have an
adverse effect on us from a financial and reputational
perspective.
Response
We are committed to safeguarding
both ourselves and our customers from financial crime.
We continue to invest in our financial crime
control framework to ensure compliance with current as well as
newly issued legal and regulatory requirements. We have invested in
an ongoing financial crime change capability to deliver these
improvements as well as support with the embedding of previously
implemented controls. In 2023, this saw us deliver an ongoing due
diligence capability.
We continue to identify emerging trends and typologies through
conducting horizon scanning activity, through information obtained
from investigative and intelligence teams and through attending key
industry forums (or associations) such as those hosted by UK
Finance. As required, we continue to update our control framework
to ensure emerging risks are identified and mitigated.
Outlook
Recognising the evolving landscape of financial
crime risk against the backdrop of increasing regulatory focus, we
continue to invest in our financial crime control environment to
prevent financial crime and remain aligned to our legal and
regulatory requirements. The FCA is currently undertaking enquiries
regarding our financial crime systems and controls. We continue to
engage and co-operate fully with the FCA in relation to these
matters, and the FCA’s enquiries remain ongoing.
|
Consolidated statement of comprehensive income
For the year ended 31 December 2023
|
|
|
Years ended 31 December
|
|
|
Notes
|
2023
£’million
|
2022
£’million
|
|
Interest income
|
2
|
855.7
|
563.7
|
|
Interest expense
|
2
|
(443.8)
|
(159.6)
|
|
Net interest income
|
|
411.9
|
404.1
|
|
Fee and commission income
|
3
|
95.0
|
84.4
|
|
Fee and commission expense
|
3
|
(4.6)
|
(2.6)
|
|
Net fee and commission income
|
|
90.4
|
81.8
|
|
Net gains on sale of assets
|
|
2.7
|
–
|
|
Other income
|
|
143.9
|
37.6
|
|
Total income
|
|
648.9
|
523.5
|
|
General operating expenses
|
4
|
(502.9)
|
(467.6)
|
|
Depreciation and amortisation
|
9, 10
|
(77.7)
|
(77.0)
|
|
Impairment and write-offs of property, plant, equipment and
intangible assets
|
9, 10
|
(4.6)
|
(9.7)
|
|
Total operating expenses
|
|
(585.2)
|
(554.3)
|
|
Expected credit loss expense
|
12
|
(33.2)
|
(39.9)
|
|
Profit/(loss) before tax
|
|
30.5
|
(70.7)
|
|
Taxation
|
5
|
(1.0)
|
(2.0)
|
|
Profit/(loss) for the year
|
|
29.5
|
(72.7)
|
|
Other comprehensive income/(expense) for the year
|
|
|
|
|
Items which will be reclassified subsequently to profit or
loss:
|
|
|
|
|
Movement in respect of investment securities held at FVOCI (net of
tax):
|
|
|
|
|
|
|
2.4
|
(7.6)
|
|
Total other comprehensive income/(expense)
|
|
2.4
|
(7.6)
|
|
Total comprehensive profit/(loss) for the year
|
|
31.9
|
(80.3)
|
|
Earnings per share
|
|
|
|
|
Basic (pence)
|
15
|
13.8
|
(42.2)
|
|
Diluted (pence)
|
15
|
13.4
|
(42.2)
|
Consolidated balance sheet
As at 31 December 2023
|
|
|
Years ended 31 December
|
|
|
Notes
|
2023
£’million
|
2022
£’million
|
|
Cash and balances with the Bank of England
|
|
3,891
|
1,956
|
|
Loans and advances to customers
|
7
|
12,297
|
13,102
|
|
Investment securities held at fair value through other
comprehensive income
|
8
|
476
|
571
|
|
Investment securities held at amortised cost
|
8
|
4,403
|
5,343
|
|
Financial assets held at fair value through profit and
loss
|
|
–
|
1
|
|
Derivative financial assets
|
|
36
|
23
|
|
Property, plant and equipment
|
9
|
723
|
748
|
|
Intangible assets
|
10
|
193
|
216
|
|
Prepayments and accrued income
|
|
118
|
85
|
|
Assets classified as held for sale
|
|
–
|
1
|
|
Other assets
|
|
108
|
73
|
|
Total assets
|
|
22,245
|
22,119
|
|
Deposits from customers
|
|
15,623
|
16,014
|
|
Deposits from central banks
|
|
3,050
|
3,800
|
|
Debt securities
|
|
694
|
571
|
|
Repurchase agreements
|
|
1,191
|
238
|
|
Derivative financial liabilities
|
|
–
|
26
|
|
Lease liabilities
|
11
|
234
|
248
|
|
Deferred grants
|
|
16
|
17
|
|
Provisions
|
|
23
|
7
|
|
Deferred tax liability
|
5
|
13
|
12
|
|
Other liabilities
|
|
267
|
230
|
|
Total liabilities
|
|
21,111
|
21,163
|
|
Called-up share capital
|
|
–
|
–
|
|
Share premium
|
|
144
|
1,964
|
|
Retained earnings
|
|
978
|
(1,015)
|
|
Other reserves
|
|
12
|
7
|
|
Total equity
|
|
1,134
|
956
|
|
Total equity and liabilities
|
|
22,245
|
22,119
|
Consolidated statements of changes in equity
For the year ended 31 December 2023
|
|
Called-up
share
capital
£’million
|
Share
premium
£’million
|
Merger
reserve
£’million
|
Retained
earnings
£’million
|
FVOCI
reserve
£’million
|
Share
option
reserve
£’million
|
Total
equity
£’million
|
|
Balance as at 1 January 2023
|
–
|
1,964
|
–
|
(1,015)
|
(13)
|
20
|
956
|
|
Profit for the year
|
–
|
–
|
–
|
29
|
–
|
–
|
29
|
|
Other comprehensive income (net of tax) relating to investment
securities held at FVOCI
|
–
|
–
|
–
|
–
|
2
|
–
|
2
|
|
Total comprehensive income
|
–
|
–
|
–
|
29
|
2
|
–
|
31
|
|
Net share
option movements
|
–
|
–
|
–
|
–
|
–
|
3
|
3
|
|
Cancellation
of Metro Bank PLC share capital and share premium
|
–
|
(1,964)
|
–
|
1,964
|
–
|
–
|
–
|
|
Issuance
of Metro Bank Holdings PLC share capital
|
–
|
–
|
965
|
(965)
|
–
|
–
|
–
|
|
Bonus
issuance
|
965
|
–
|
(965)
|
-
|
–
|
–
|
–
|
|
Capital
reduction of Metro Bank Holdings PLC share capital
|
(965)
|
–
|
–
|
965
|
–
|
–
|
–
|
|
Shares
issued
|
–
|
150
|
–
|
–
|
–
|
–
|
150
|
|
Cost of
shares issued
|
–
|
(6)
|
–
|
–
|
–
|
–
|
(6)
|
|
Balance as at 31 December 2023
|
–
|
144
|
–
|
978
|
(11)
|
23
|
1,134
|
|
Balance as at 1 January 2022
|
–
|
1,964
|
–
|
(942)
|
(5)
|
18
|
1,035
|
|
Loss for the year
|
–
|
–
|
–
|
(73)
|
–
|
–
|
(73)
|
|
Other comprehensive expense (net of tax) relating to investment
securities held at FVOCI
|
–
|
–
|
–
|
–
|
(8)
|
–
|
(8)
|
|
Total comprehensive loss
|
–
|
–
|
–
|
(73)
|
(8)
|
–
|
(81)
|
|
Net share option movements
|
–
|
–
|
–
|
–
|
–
|
2
|
2
|
|
Balance as at 31 December 2022
|
–
|
1,964
|
–
|
(1,015)
|
(13)
|
20
|
956
|
Consolidated cash flow statement
For the year ended 31 December 2023
|
|
|
Years ended 31 December
|
|
|
Notes
|
2023
£’million
|
2022
£’million
|
|
Reconciliation of loss before tax to net cash flows from operating
activities:
|
|
|
|
|
Profit/(loss) before tax
|
|
31
|
(71)
|
|
Adjustments for non-cash items
|
16
|
(376)
|
(273)
|
|
Interest received
|
|
834
|
553
|
|
Interest paid
|
|
(370)
|
(124)
|
|
Changes in other operating assets
|
|
744
|
(852)
|
|
Changes in other operating liabilities
|
|
(235)
|
(418)
|
|
Net cash inflows/(outflows) from operating activities
|
|
628
|
(1,185)
|
|
Cash flows from investing activities
|
|
|
|
|
Sales, redemptions and paydowns of investment securities
|
|
1,870
|
857
|
|
Purchase of investment securities
|
|
(816)
|
(1,206)
|
|
Purchase of property, plant and equipment
|
9
|
(12)
|
(29)
|
|
Purchase and development of intangible assets
|
10
|
(26)
|
(24)
|
|
Net cash inflows/(outflows) from investing activities
|
|
1,016
|
(402)
|
|
Cash flows from financing activities
|
|
|
|
|
Repayment
of capital elements of leases
|
11
|
(23)
|
(25)
|
|
Issuance
of new shares
|
|
150
|
–
|
|
Cost of
share issuance
|
|
(6)
|
–
|
|
Issuance
of debt securities
|
|
175
|
–
|
|
Cost of
debt issuance
|
|
(5)
|
–
|
|
Net cash inflows/(outflows) from financing activities
|
|
291
|
(25)
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
1,935
|
(1,612)
|
|
Cash and
cash equivalents at start of year
|
|
1,956
|
3,568
|
|
Cash and
cash equivalents at end of year
|
|
3,891
|
1,956
|
1. Basis of preparation and significant accounting
policies
Basis of preparation
Our consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the UK, interpretations issued by the IFRS
Interpretations Committee and the Companies Act 2006 applicable to
companies reporting under IFRSs. They were authorised by the Board
for issue on 13 March 2024.
Insertion of Metro Bank Holdings PLC
To meet Bank of England’s resolution requirements, on 19 May 2023,
Metro Bank Holdings PLC was inserted as the new ultimate holding
company and listed entity of the Group. Prior to this date Metro
Bank PLC was both a banking entity and the ultimate parent company
of the Group, but has subsequently become a 100% subsidiary of
Metro Bank Holdings PLC. In addition to the insertion of a new
holding company the Group undertook a reduction in capital to
provide the Group with distributable reserves.
The insertion of Metro Bank Holdings PLC has been treated as a
business combination under common control, with the Group
controlled by the same parties both before and after the insertion.
Combinations under common control are outside the scope of IFRS 3
‘Business Combinations’ and accordingly, the insertion has not been
recognised at fair value and no goodwill or fair value acquisition
adjustments have been recognised. The Group has instead applied
predecessor accounting approach as this most faithfully represents
the substance of the facts and circumstances of the series of
transactions that comprise the insertion of Metro Bank Holdings
PLC. This is on the basis that those transactions are not designed
to deliver economic benefits but represent a re-arrangement of the
organisation of business activities across legal entities in order
to be compliant with the relevant regulations.
In applying this approach, we have used the carrying amounts in
Metro Bank PLC’s consolidated financial statements at the date of
transfer to determine the value of the assets and liabilities
transferred. These financial statements are therefore prepared as
if Metro Bank Holdings PLC had been the parent company throughout
the current and prior years, to treat the new
structure as if it has always been in place. Hedge accounting
continues to be applied to the
transferred designated hedge relationships as if they have
originally been designated by the
Group.
Changes in accounting policy and disclosures
During the period there have not been any changes in accounting
policy or disclosures that have had a material impact on our
financial statements.
2. Net interest income
Interest income
|
|
2023
£’million
|
2022
£’million
|
|
Cash and balances held with the Bank of England
|
120.9
|
33.0
|
|
Loans and advances to customers
|
599.9
|
462.2
|
|
Investment securities held at amortised cost
|
118.6
|
62.9
|
|
Investment securities held at FVOCI
|
6.8
|
4.7
|
|
Interest income calculated using the effective interest rate
method
|
846.2
|
562.8
|
|
Derivatives in hedge relationships
|
9.5
|
0.9
|
|
Total interest income
|
855.7
|
563.7
|
Interest expense
|
|
2023
£’million
|
2022
£’million
|
|
Deposits from customers
|
147.8
|
32.9
|
|
Deposits from central banks
|
161.3
|
55.5
|
|
Debt securities
|
55.7
|
48.7
|
|
Lease liabilities
|
13.1
|
14.4
|
|
Repurchase agreements
|
50.1
|
3.4
|
|
Interest expense calculated using the effective interest rate
method
|
428.0
|
154.9
|
|
Derivatives in hedge relationships
|
15.8
|
4.7
|
|
Total interest expense
|
443.8
|
159.6
|
3. Net fee and commission income
|
|
2023
£’million
|
2022
£’million
|
|
Service charges and other fee income
|
36.8
|
30.9
|
|
Safe deposit box income
|
18.2
|
16.5
|
|
ATM and interchange fees
|
40.0
|
37.0
|
|
Fee and commission income
|
95.0
|
84.4
|
|
Fee and commission expense
|
(4.6)
|
(2.6)
|
|
Total net fee and commission income
|
90.4
|
81.8
|
4. General operating expenses
|
|
2023
£’million
|
2022
£’million
|
|
People costs
|
241.2
|
236.6
|
|
Information technology costs
|
59.7
|
62.2
|
|
Occupancy costs
|
31.7
|
30.8
|
|
Money transmission and other banking-related costs
|
49.2
|
48.7
|
|
Transformation costs
|
20.2
|
3.3
|
|
Remediation costs
|
–
|
5.3
|
|
Capability and Innovation Fund costs
|
2.4
|
1.3
|
|
Legal and regulatory fees
|
7.0
|
7.0
|
|
Professional fees
|
23.2
|
38.4
|
|
Printing, postage and stationery costs
|
7.2
|
6.2
|
|
Travel costs
|
1.5
|
1.6
|
|
Marketing costs
|
7.7
|
5.0
|
|
Costs associated with capital raise
|
26.0
|
–
|
|
Holding company insertion costs
|
1.8
|
1.8
|
|
Other
|
24.1
|
19.4
|
|
Total general operating expenses
|
502.9
|
467.6
|
5. Taxation
Tax expense
|
|
2023
£’million
|
2022
£’million
|
|
Current tax
|
|
|
|
Current tax
|
(0.1)
|
–
|
|
Total current tax expense
|
(0.1)
|
–
|
|
Deferred tax
|
|
|
|
Origination and reversal of temporary differences
|
(0.5)
|
(1.5)
|
|
Effect of changes in tax rates
|
(0.4)
|
(0.7)
|
|
Adjustment in respect of prior years
|
–
|
0.2
|
|
Total deferred tax expense
|
(0.9)
|
(2.0)
|
|
Total tax expense
|
(1.0)
|
(2.0)
|
Reconciliation of the total tax expense
|
|
2023
£’million
|
Effective
tax rate
%
|
2022
£’million
|
Effective
tax rate
%
|
|
Accounting profit/(loss) before tax
|
30.5
|
|
(70.7)
|
|
|
Tax expense at statutory tax rate of 23.5% (2022: 19%)
|
(7.2)
|
23.5%
|
13.4
|
19.0%
|
|
Tax effects of:
|
|
|
|
|
|
Non-deductible expenses – depreciation on non-qualifying fixed
assets
|
(2.5)
|
8.3%
|
(2.5)
|
(3.5%)
|
|
Non-deductible expenses – investment property impairment
|
–
|
–
|
(0.1)
|
(0.1%)
|
|
Non-deductible expenses – remediation
|
–
|
–
|
(0.6)
|
(0.8%)
|
|
Non-deductible expenses – other
|
(0.8)
|
2.6%
|
(0.4)
|
(0.6%)
|
|
Impact of intangible asset write-off on research and development
deferred tax liability
|
0.1
|
(0.3%)
|
0.3
|
0.4%
|
|
Share-based payments
|
(1.2)
|
3.9%
|
0.1
|
0.1%
|
|
Adjustment in respect of prior years
|
–
|
–
|
0.2
|
0.2%
|
|
Current year losses for which no deferred tax asset has been
recognised
|
(15.4)
|
50.5%
|
(11.7)
|
(16.5%)
|
|
Losses
offset against current year profits
|
1.1
|
(3.6%)
|
–
|
–
|
|
Movement
in recognised deferred tax asset for unused tax losses
|
1.8
|
(5.9%)
|
–
|
–
|
|
Effect of
changes in tax rates
|
(0.4)
|
1.3%
|
(0.7)
|
(1.0%)
|
|
Income
tax not taxable
|
23.5
|
(77.0%)
|
–
|
–
|
|
Tax expense reported in the consolidated income
statement
|
(1.0)
|
3.3%
|
(2.0)
|
(2.8%)
|
Deferred tax assets
|
|
31 December 2023
|
|
|
Unused
tax losses
£’million
|
Investment
securities
and
impairments
£’million
|
Share-
based
payments
£’million
|
Property,
plant and
equipment
£’million
|
Intangible
assets
£’million
|
Total
£’million
|
|
Deferred tax assets
|
14
|
2
|
1
|
–
|
–
|
17
|
|
Deferred tax liabilities
|
–
|
4
|
–
|
(29)
|
(5)
|
(30)
|
|
Deferred tax liabilities (net)
|
14
|
6
|
1
|
(29)
|
(5)
|
(13)
|
|
1 January 2023
|
12
|
7
|
1
|
(26)
|
(6)
|
(12)
|
|
Income statement
|
2
|
(1)
|
–
|
(3)
|
1
|
(1)
|
|
31 December 2023
|
14
|
6
|
1
|
(29)
|
(5)
|
(13)
|
|
|
31 December 2022
|
|
|
Unused
tax losses
£’million
|
Investment
securities
and
impairments
£’million
|
Share-
based
payments
£’million
|
Property,
plant and
equipment
£’million
|
Intangible
assets
£’million
|
Total
£’million
|
|
Deferred tax assets
|
12
|
3
|
1
|
–
|
–
|
16
|
|
Deferred tax liabilities
|
–
|
4
|
–
|
(26)
|
(6)
|
(28)
|
|
Deferred tax liabilities (net)
|
12
|
7
|
1
|
(26)
|
(6)
|
(12)
|
|
1 January 2022
|
13
|
5
|
–
|
(23)
|
(7)
|
(12)
|
|
Income statement
|
(1)
|
–
|
1
|
(3)
|
1
|
(2)
|
|
Other comprehensive income
|
–
|
2
|
–
|
–
|
–
|
2
|
|
31 December 2022
|
12
|
7
|
1
|
(26)
|
(6)
|
(12)
|
Unrecognised deferred tax assets
We have total unused tax losses of £912 million for which a
deferred tax asset of £214 million has not been recognised. The
impact of recognising the deferred tax asset in the future would be
material.
Although there is an expectation for future profits in the near
future, as we have a recent history of operating losses for tax
purposes, we have taken the decision not to recognise a deferred
tax asset in respect of these losses at 31 December 2023. We will
continue to reassess this decision as we move into 2024.
6. Financial instruments
Our financial instruments primarily comprise customer deposits,
loans and advances to customers and investment securities, all of
which arise as a result of our normal operations.
The main financial risks arising from our financial instruments are
credit risk, liquidity risk and market risks (price and interest
rate risk).
The financial instruments we hold are simple in nature and we do
not consider that we have made any significant or material
judgements relating to the classification and measurement of
financial instruments under IFRS 9.
Cash and balances with the Bank of
England, trade and other receivables, trade and other payables and
other assets and liabilities which meet the definition of financial
instruments are not included in the following tables.
Classification of financial instruments
|
|
31 December 2023
|
|
|
Fair value
through
profit and
loss
£’million
|
FVOCI
£’million
|
Amortised
cost
£’million
|
Total
£’million
|
|
Assets
|
|
|
|
|
|
Loans and advances to customers
|
–
|
–
|
12,297
|
12,297
|
|
Investment securities
|
–
|
476
|
4,403
|
4,879
|
|
Derivative financial assets
|
36
|
–
|
–
|
36
|
|
Liabilities
|
|
|
|
|
|
Deposits from customers
|
–
|
–
|
15,623
|
15,623
|
|
Deposits from central bank
|
–
|
–
|
3,050
|
3,050
|
|
Debt securities
|
–
|
–
|
694
|
694
|
|
Repurchase agreements
|
–
|
–
|
1,191
|
1,191
|
|
|
31 December 2022
|
|
|
Fair value
through
profit
and loss
£’million
|
FVOCI
£’million
|
Amortised
cost
£’million
|
Total
£’million
|
|
Assets
|
|
|
|
|
|
Loans and advances to customers
|
–
|
–
|
13,102
|
13,102
|
|
Investment securities
|
–
|
571
|
5,343
|
5,914
|
|
Financial assets held as fair value through profit and
loss
|
1
|
–
|
–
|
1
|
|
Derivative financial assets
|
23
|
–
|
–
|
23
|
|
Liabilities
|
|
|
|
|
|
Deposits from customers
|
–
|
–
|
16,014
|
16,014
|
|
Deposits from central bank
|
–
|
–
|
3,800
|
3,800
|
|
Debt securities
|
–
|
–
|
571
|
571
|
|
Derivative financial liabilities
|
26
|
–
|
–
|
26
|
|
Repurchase agreements
|
–
|
–
|
238
|
238
|
7. Loans and advances to customers
|
|
31 December 2023
|
31 December 2022
|
|
|
Gross
carrying
amount
£’million
|
ECL
allowance
£’million
|
Net
carrying
amount
£’million
|
Gross
carrying
amount
£’million
|
ECL
allowance
£’million
|
Net
carrying
amount
£’million
|
|
Consumer lending
|
1,297
|
(108)
|
1,189
|
1,480
|
(75)
|
1,405
|
|
Retail mortgages
|
7,817
|
(19)
|
7,798
|
7,649
|
(20)
|
7,629
|
|
Commercial lending
|
3,382
|
(72)
|
3,310
|
4,160
|
(92)
|
4,068
|
|
Total loans and advances to customers
|
12,496
|
(199)
|
12,297
|
13,289
|
(187)
|
13,102
|
Gross loans and advances by product category
|
|
31 December
2023
£’million
|
31 December
2022
£’million
|
|
Overdrafts
|
40
|
60
|
|
Credit cards
|
28
|
19
|
|
Term loans
|
1,219
|
1,401
|
|
Consumer auto-finance
|
10
|
–
|
|
Total consumer lending
|
1,297
|
1,480
|
|
Residential owner occupied
|
5,851
|
5,507
|
|
Retail buy-to-let
|
1,966
|
2,142
|
|
Total retail mortgages
|
7,817
|
7,649
|
|
Total retail lending
|
9,114
|
9,129
|
|
Professional buy-to-let
|
465
|
731
|
|
Bounce back loans
|
524
|
801
|
|
Coronavirus business interruption loans
|
86
|
127
|
|
Recovery loan scheme1
|
328
|
385
|
|
Other term loans
|
1,341
|
1,578
|
|
Commercial term loans
|
2,744
|
3,622
|
|
Overdrafts and revolving credit facilities
|
172
|
122
|
|
Credit cards
|
4
|
4
|
|
Asset and invoice finance
|
462
|
412
|
|
Total commercial lending
|
3,382
|
4,160
|
|
Gross loans and advances to customers
|
12,496
|
13,289
|
|
Amounts include:
|
|
|
|
Repayable at short notice
|
244
|
156
|
Recovery loan scheme includes £70 million acquired from third
parties under forward flow arrangements (31 December 2022: £97
million). The loans are held in a trust arrangement in which we
hold 99% of the beneficial interest, with the issuer retaining the
remaining 1% (the trust retains the legal title loans).
8. Investment securities
|
|
31 December
2023
£’million
|
31 December
2022
£’million
|
|
Investment securities held at FVOCI
|
476
|
571
|
|
Investment securities held at amortised cost
|
4,403
|
5,343
|
|
Total investment securities
|
4,879
|
5,914
|
Investment securities held at FVOCI
|
|
31 December
2023
£’million
|
31 December
2022
£’million
|
|
Sovereign bonds
|
220
|
215
|
|
Residential mortgage-backed securities
|
–
|
38
|
|
Covered bonds
|
112
|
152
|
|
Multi-lateral development bank bonds
|
144
|
166
|
|
Total investment securities held at FVOCI
|
476
|
571
|
Investment securities held at amortised cost
|
|
31 December
2023
£’million
|
31 December
2022
£’million
|
|
Sovereign bonds
|
938
|
1,717
|
|
Residential mortgage-backed securities
|
954
|
1,095
|
|
Covered bonds
|
594
|
542
|
|
Multi-lateral development bank bonds
|
1,729
|
1,821
|
|
Asset backed securities
|
188
|
168
|
|
Total investment securities held at amortised cost
|
4,403
|
5,343
|
9. Property, plant and equipment
|
|
Investment
property
£’million
|
Leasehold
improvements
£’million
|
Freehold
land and
buildings
£’million
|
Fixtures,
fittings and
equipment
£’million
|
IT Hardware
£’million
|
Right-of-use
assets
£’million
|
Total
£’million
|
|
Cost
|
|
|
|
|
|
|
|
|
1 January 2023
|
12
|
261
|
372
|
22
|
8
|
283
|
958
|
|
Additions
|
–
|
–
|
9
|
1
|
2
|
–
|
12
|
|
Disposals
|
–
|
–
|
–
|
–
|
–
|
(4)
|
(4)
|
|
Transfers
|
–
|
(5)
|
5
|
–
|
–
|
–
|
–
|
|
31 December 2023
|
12
|
256
|
386
|
23
|
10
|
279
|
966
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
1 January 2023
|
8
|
69
|
34
|
20
|
2
|
77
|
210
|
|
Depreciation charge
|
–
|
13
|
5
|
1
|
2
|
13
|
34
|
|
Disposals
|
–
|
–
|
–
|
–
|
–
|
(1)
|
(1)
|
|
Transfers
|
–
|
(3)
|
3
|
–
|
–
|
–
|
–
|
|
31 December 2023
|
8
|
79
|
42
|
21
|
4
|
89
|
243
|
|
Net book value
|
4
|
177
|
344
|
2
|
6
|
190
|
723
|
|
|
Investment
property
£’million
|
Leasehold
improvements
£’million
|
Freehold
land and
buildings
£’million
|
Fixtures,
fittings and
equipment
£’million
|
IT Hardware
£’million
|
Right-of-use
assets
£’million
|
Total
£’million
|
|
Cost
|
|
|
|
|
|
|
|
|
1 January 2022
|
18
|
280
|
341
|
24
|
1
|
295
|
959
|
|
Additions
|
–
|
–
|
22
|
–
|
7
|
1
|
30
|
|
Disposals
|
–
|
–
|
–
|
–
|
–
|
(13)
|
(13)
|
|
Write-offs
|
–
|
(10)
|
–
|
(2)
|
–
|
–
|
(12)
|
|
Moved to held for sale
|
(6)
|
–
|
–
|
–
|
–
|
–
|
(6)
|
|
Transfers
|
–
|
(9)
|
9
|
–
|
–
|
–
|
–
|
|
31 December 2022
|
12
|
261
|
372
|
22
|
8
|
283
|
958
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
1 January 2022
|
12
|
68
|
28
|
19
|
–
|
67
|
194
|
|
Depreciation charge
|
–
|
12
|
5
|
3
|
2
|
13
|
35
|
|
Impairments
|
1
|
–
|
–
|
–
|
–
|
–
|
1
|
|
Disposals
|
–
|
–
|
–
|
–
|
–
|
(3)
|
(3)
|
|
Write-offs
|
–
|
(10)
|
–
|
(2)
|
–
|
–
|
(12)
|
|
Moved to held for sale
|
(5)
|
–
|
–
|
–
|
–
|
–
|
(5)
|
|
Transfers
|
–
|
(1)
|
1
|
–
|
–
|
–
|
–
|
|
31 December 2022
|
8
|
69
|
34
|
20
|
2
|
77
|
210
|
|
Net book value
|
4
|
192
|
338
|
2
|
6
|
206
|
748
|
10. Intangible assets
|
|
Goodwill
£’million
|
Brands
£’million
|
Software
£’million
|
Total
£’million
|
|
Cost
|
|
|
|
|
|
1 January 2023
|
10
|
2
|
338
|
350
|
|
Additions
|
–
|
–
|
26
|
26
|
|
Write-offs
|
–
|
–
|
(9)
|
(9)
|
|
31 December 2023
|
10
|
2
|
355
|
367
|
|
Accumulated amortisation
|
|
|
|
|
|
1 January 2023
|
–
|
–
|
134
|
134
|
|
Amortisation charge
|
–
|
1
|
43
|
44
|
|
Write-offs
|
–
|
–
|
(4)
|
(4)
|
|
31 December 2023
|
–
|
1
|
173
|
174
|
|
Net book value
|
10
|
1
|
182
|
193
|
|
|
Goodwill
£’million
|
Brands
£’million
|
Software
£’million
|
Total
£’million
|
|
Cost
|
|
|
|
|
|
1 January 2022
|
10
|
2
|
336
|
348
|
|
Additions
|
–
|
–
|
24
|
24
|
|
Write-offs
|
–
|
–
|
(22)
|
(22)
|
|
31 December 2022
|
10
|
2
|
338
|
350
|
|
Accumulated amortisation
|
|
|
|
|
|
1 January 2022
|
–
|
–
|
105
|
105
|
|
Amortisation charge
|
–
|
–
|
42
|
42
|
|
Write-offs
|
–
|
–
|
(13)
|
(13)
|
|
31 December 2022
|
–
|
–
|
134
|
134
|
|
Net book value
|
10
|
2
|
204
|
216
|
11. Leases
Lease liabilities
|
|
2023
£’million
|
2022
£’million
|
|
1 January
|
249
|
269
|
|
Additions and modifications
|
–
|
1
|
|
Disposals
|
(5)
|
(11)
|
|
Lease payments made
|
(23)
|
(25)
|
|
Interest on lease liabilities
|
13
|
14
|
|
31 December
|
234
|
248
|
Minimum lease payments
|
|
31 December
2023
£’million
|
31 December
2022
£’million
|
|
Within one year
|
22
|
24
|
|
Due in one to five years
|
83
|
88
|
|
Due in more than five years
|
145
|
172
|
|
Total
|
250
|
284
|
12. Expected credit losses and credit risk
Expected credit loss expense
|
|
2023
£’million
|
2022
£’million
|
|
Retail mortgages1
|
(1)
|
1
|
|
Consumer lending1
|
33
|
33
|
|
Commercial lending1
|
(20)
|
(16)
|
|
Investment securities
|
1
|
1
|
|
Write-offs and other movements
|
20
|
21
|
|
Total expected credit loss expense
|
33
|
40
|
1. Represents
the movement in ECL stock during the year and therefore excludes
write-offs which are shown separately.
Loss allowance
Total loans and advances to customers
|
|
Gross carrying amount
|
|
Loss allowance
|
|
Net carrying amount
|
|
£’million
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
1 January 2023
|
10,849
|
2,088
|
352
|
–
|
13,289
|
|
(66)
|
(51)
|
(70)
|
–
|
(187)
|
|
10,783
|
2,037
|
282
|
–
|
13,102
|
|
Transfers to/(from) Stage 11
|
872
|
(857)
|
(15)
|
–
|
–
|
|
(15)
|
15
|
–
|
–
|
–
|
|
857
|
(842)
|
(15)
|
–
|
–
|
|
Transfers to/(from) Stage 2
|
(581)
|
589
|
(8)
|
–
|
–
|
|
4
|
(6)
|
2
|
–
|
–
|
|
(577)
|
583
|
(6)
|
–
|
–
|
|
Transfers to/(from) Stage 3
|
(170)
|
(71)
|
241
|
–
|
–
|
|
3
|
4
|
(7)
|
–
|
–
|
|
(167)
|
(67)
|
234
|
–
|
–
|
|
Net remeasurement due to transfers2
|
–
|
–
|
–
|
–
|
–
|
|
12
|
(13)
|
(38)
|
–
|
(39)
|
|
12
|
(13)
|
(38)
|
–
|
(39)
|
|
New lending3
|
2,060
|
239
|
16
|
–
|
2,315
|
|
(18)
|
(6)
|
(6)
|
–
|
(30)
|
|
2,042
|
233
|
10
|
–
|
2,285
|
|
Repayments, additional drawdowns
and interest accrued
|
(685)
|
(172)
|
(40)
|
–
|
(897)
|
|
–
|
–
|
–
|
–
|
–
|
|
(685)
|
(172)
|
(40)
|
–
|
(897)
|
|
Derecognitions4
|
(1,749)
|
(305)
|
(157)
|
–
|
(2,211)
|
|
13
|
10
|
26
|
–
|
49
|
|
(1,736)
|
(295)
|
(131)
|
–
|
(2,162)
|
|
Changes to model assumptions5
|
–
|
–
|
–
|
–
|
–
|
|
4
|
4
|
–
|
–
|
8
|
|
4
|
4
|
–
|
–
|
8
|
|
31 December 2023
|
10,596
|
1,511
|
389
|
–
|
12,496
|
|
(63)
|
(43)
|
(93)
|
–
|
(199)
|
|
10,533
|
1,468
|
296
|
–
|
12,297
|
|
Off-balance sheet items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and guarantees
|
|
|
|
|
718
|
|
|
|
|
|
–
|
|
|
|
|
|
718
|
|
|
Gross carrying amount
|
|
Loss allowance
|
|
Net carrying amount
|
|
£’million
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
1 January 2022
|
10,071
|
1,925
|
462
|
1
|
12,459
|
|
(47)
|
(49)
|
(73)
|
–
|
(169)
|
|
10,024
|
1,876
|
389
|
1
|
12,290
|
|
Transfers to/(from) Stage 1
|
517
|
(504)
|
(13)
|
–
|
–
|
|
(13)
|
13
|
–
|
–
|
–
|
|
504
|
(491)
|
(13)
|
–
|
–
|
|
Transfers to/(from) Stage 2
|
(451)
|
458
|
(7)
|
–
|
–
|
|
2
|
(2)
|
–
|
–
|
–
|
|
(449)
|
456
|
(7)
|
–
|
–
|
|
Transfers to/(from) Stage 3
|
(124)
|
(73)
|
197
|
–
|
–
|
|
1
|
7
|
(8)
|
–
|
–
|
|
(123)
|
(66)
|
189
|
–
|
–
|
|
Net remeasurement due to transfers
|
–
|
–
|
–
|
–
|
–
|
|
10
|
(10)
|
(15)
|
–
|
(15)
|
|
10
|
(10)
|
(15)
|
–
|
(15)
|
|
New lending
|
3,157
|
742
|
31
|
–
|
3,930
|
|
(30)
|
(15)
|
(11)
|
–
|
(56)
|
|
3,127
|
727
|
20
|
–
|
3,874
|
|
Repayments, additional drawdowns
and interest accrued
|
(604)
|
(107)
|
(26)
|
(1)
|
(738)
|
|
–
|
–
|
–
|
–
|
–
|
|
(604)
|
(107)
|
(26)
|
(1)
|
(738)
|
|
Derecognitions
|
(1,717)
|
(353)
|
(292)
|
–
|
(2,362)
|
|
7
|
10
|
34
|
–
|
51
|
|
(1,710)
|
(343)
|
(258)
|
–
|
(2,311)
|
|
Changes to model assumptions
|
–
|
–
|
–
|
–
|
–
|
|
4
|
(5)
|
3
|
–
|
2
|
|
4
|
(5)
|
3
|
–
|
2
|
|
31 December 2022
|
10,849
|
2,088
|
352
|
–
|
13,289
|
|
(66)
|
(51)
|
(70)
|
–
|
(187)
|
|
10,783
|
2,037
|
282
|
–
|
13,102
|
|
Off-balance sheet items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and guarantees
|
|
|
|
|
1,120
|
|
|
|
|
|
–
|
|
|
|
|
|
1,120
|
-
Represents stage transfers
prior to any ECL remeasurements.
-
Represents the remeasurement
between the 12 month and lifetime ECL due to stage transfer. In
addition it includes any ECL change resulting from model
assumptions and forward-looking information on these
loans.
-
Represents the increase in
balances resulting from loans and advances that have been newly
originated, purchased or renewed as well as any ECL that has been
recognised in relation to these loans during the year.
-
Represents the decrease in
balances resulting from loans and advances that have been fully
repaid, sold or written off.
-
Represents the change in ECL to
those loans that remain within the same stage through the
year.
Retail mortgages
|
|
Gross carrying amount
|
|
Loss allowance
|
|
Net carrying amount
|
|
£’million
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
1 January 2023
|
6,195
|
1,343
|
111
|
–
|
7,649
|
|
(6)
|
(11)
|
(3)
|
–
|
(20)
|
|
6,189
|
1,332
|
108
|
–
|
7,629
|
|
Transfers to/(from) Stage 1
|
745
|
(737)
|
(8)
|
–
|
–
|
|
(6)
|
6
|
–
|
–
|
–
|
|
739
|
(731)
|
(8)
|
–
|
–
|
|
Transfers to/(from) Stage 2
|
(193)
|
199
|
(6)
|
–
|
–
|
|
–
|
–
|
–
|
–
|
–
|
|
(193)
|
199
|
(6)
|
–
|
–
|
|
Transfers to/(from) Stage 3
|
(38)
|
(29)
|
67
|
–
|
–
|
|
–
|
–
|
–
|
–
|
–
|
|
(38)
|
(29)
|
67
|
–
|
–
|
|
Net remeasurement due to transfers
|
–
|
–
|
–
|
–
|
–
|
|
5
|
(2)
|
(2)
|
–
|
1
|
|
5
|
(2)
|
(2)
|
–
|
1
|
|
New lending
|
1,195
|
147
|
1
|
–
|
1,343
|
|
(1)
|
(1)
|
–
|
–
|
(2)
|
|
1,194
|
146
|
1
|
–
|
1,341
|
|
Repayments, additional drawdowns
and interest accrued
|
(177)
|
(18)
|
–
|
–
|
(195)
|
|
–
|
–
|
–
|
–
|
–
|
|
(177)
|
(18)
|
–
|
–
|
(195)
|
|
Derecognitions
|
(840)
|
(121)
|
(19)
|
–
|
(980)
|
|
1
|
1
|
–
|
–
|
2
|
|
(839)
|
(120)
|
(19)
|
–
|
(978)
|
|
Changes to model assumptions
|
–
|
–
|
–
|
–
|
–
|
|
–
|
1
|
(1)
|
–
|
–
|
|
–
|
1
|
(1)
|
–
|
-
|
|
31 December 2023
|
6,887
|
784
|
146
|
–
|
7,817
|
|
(7)
|
(6)
|
(6)
|
–
|
(19)
|
|
6,880
|
778
|
140
|
–
|
7,798
|
|
|
Gross carrying amount
|
|
Loss allowance
|
|
Net carrying amount
|
|
£’million
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
1 January 2022
|
5,546
|
1,063
|
114
|
–
|
6,723
|
|
(2)
|
(12)
|
(5)
|
–
|
(19)
|
|
5,544
|
1,051
|
109
|
–
|
6,704
|
|
Transfers to/(from) Stage 1
|
293
|
(281)
|
(12)
|
–
|
–
|
|
(4)
|
4
|
–
|
–
|
–
|
|
289
|
(277)
|
(12)
|
–
|
–
|
|
Transfers to/(from) Stage 2
|
(199)
|
205
|
(6)
|
–
|
–
|
|
–
|
–
|
–
|
–
|
–
|
|
(199)
|
205
|
(6)
|
–
|
–
|
|
Transfers to/(from) Stage 3
|
(16)
|
(22)
|
38
|
–
|
–
|
|
–
|
1
|
(1)
|
–
|
–
|
|
(16)
|
(21)
|
37
|
–
|
–
|
|
Net remeasurement due to transfers
|
–
|
–
|
–
|
–
|
–
|
|
4
|
(1)
|
–
|
–
|
3
|
|
4
|
(1)
|
–
|
–
|
3
|
|
New lending
|
1,666
|
549
|
1
|
–
|
2,216
|
|
(3)
|
(7)
|
–
|
–
|
(10)
|
|
1,663
|
542
|
1
|
–
|
2,206
|
|
Repayments, additional drawdowns
and interest accrued
|
(130)
|
(22)
|
(5)
|
–
|
(157)
|
|
–
|
–
|
–
|
–
|
–
|
|
(130)
|
(22)
|
(5)
|
–
|
(157)
|
|
Derecognitions
|
(965)
|
(149)
|
(19)
|
–
|
(1,133)
|
|
(1)
|
2
|
3
|
–
|
4
|
|
(966)
|
(147)
|
(16)
|
–
|
(1,129)
|
|
Changes to model assumptions
|
–
|
–
|
–
|
–
|
–
|
|
–
|
2
|
–
|
–
|
2
|
|
–
|
2
|
–
|
–
|
2
|
|
31 December 2022
|
6,195
|
1,343
|
111
|
–
|
7,649
|
|
(6)
|
(11)
|
(3)
|
–
|
(20)
|
|
6,189
|
1,332
|
108
|
–
|
7,629
|
Consumer lending
|
|
Gross carrying amount
|
|
Loss allowance
|
|
Net carrying amount
|
|
£’million
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
1 January 2023
|
1,180
|
250
|
50
|
–
|
1,480
|
|
(21)
|
(12)
|
(42)
|
–
|
(75)
|
|
1,159
|
238
|
8
|
–
|
1,405
|
|
Transfers to/(from) Stage 1
|
34
|
(34)
|
–
|
–
|
–
|
|
(2)
|
2
|
–
|
–
|
–
|
|
32
|
(32)
|
–
|
–
|
–
|
|
Transfers to/(from) Stage 2
|
(182)
|
182
|
–
|
–
|
–
|
|
2
|
(2)
|
–
|
–
|
–
|
|
(180)
|
180
|
–
|
–
|
–
|
|
Transfers to/(from) Stage 3
|
(35)
|
(9)
|
44
|
–
|
–
|
|
1
|
2
|
(3)
|
–
|
–
|
|
(34)
|
(7)
|
41
|
–
|
–
|
|
Net remeasurement due to transfers
|
–
|
–
|
–
|
–
|
–
|
|
2
|
(6)
|
(28)
|
–
|
(32)
|
|
2
|
(6)
|
(28)
|
–
|
(32)
|
|
New lending
|
311
|
78
|
7
|
–
|
396
|
|
(9)
|
(4)
|
(6)
|
–
|
(19)
|
|
302
|
74
|
1
|
–
|
377
|
|
Repayments, additional drawdowns
and interest accrued
|
(217)
|
(111)
|
(10)
|
–
|
(338)
|
|
–
|
–
|
–
|
–
|
–
|
|
(217)
|
(111)
|
(10)
|
–
|
(338)
|
|
Derecognitions
|
(185)
|
(42)
|
(14)
|
–
|
(241)
|
|
3
|
2
|
12
|
–
|
17
|
|
(182)
|
(40)
|
(2)
|
–
|
(224)
|
|
Changes to model assumptions
|
–
|
–
|
–
|
–
|
–
|
|
(2)
|
2
|
1
|
–
|
1
|
|
(2)
|
2
|
1
|
–
|
1
|
|
31 December 2023
|
906
|
314
|
77
|
–
|
1,297
|
|
(26)
|
(16)
|
(66)
|
–
|
(108)
|
|
880
|
298
|
11
|
–
|
1,189
|
|
|
Gross carrying amount
|
|
Loss allowance
|
|
Net carrying amount
|
|
£’million
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
1 January 2022
|
786
|
82
|
21
|
1
|
890
|
|
(18)
|
(8)
|
(16)
|
–
|
(42)
|
|
768
|
74
|
5
|
1
|
848
|
|
Transfers to/(from) Stage 1
|
19
|
(19)
|
–
|
–
|
–
|
|
(2)
|
2
|
–
|
–
|
–
|
|
17
|
(17)
|
–
|
–
|
–
|
|
Transfers to/(from) Stage 2
|
(96)
|
96
|
–
|
–
|
–
|
|
1
|
(1)
|
–
|
–
|
–
|
|
(95)
|
95
|
–
|
–
|
–
|
|
Transfers to/(from) Stage 3
|
(21)
|
(6)
|
27
|
–
|
–
|
|
1
|
2
|
(3)
|
–
|
–
|
|
(20)
|
(4)
|
24
|
–
|
–
|
|
Net remeasurement due to transfers
|
–
|
–
|
–
|
–
|
–
|
|
2
|
(3)
|
(15)
|
–
|
(16)
|
|
2
|
(3)
|
(15)
|
–
|
(16)
|
|
New lending
|
806
|
156
|
12
|
–
|
974
|
|
(15)
|
(7)
|
(9)
|
–
|
(31)
|
|
791
|
149
|
3
|
–
|
943
|
|
Repayments, additional drawdowns
and interest accrued
|
(144)
|
(41)
|
(6)
|
(1)
|
(192)
|
|
–
|
–
|
–
|
–
|
–
|
|
(144)
|
(41)
|
(6)
|
(1)
|
(192)
|
|
Derecognitions
|
(170)
|
(18)
|
(4)
|
–
|
(192)
|
|
5
|
1
|
1
|
–
|
7
|
|
(165)
|
(17)
|
(3)
|
–
|
(185)
|
|
Changes to model assumptions
|
–
|
–
|
–
|
–
|
–
|
|
5
|
2
|
–
|
–
|
7
|
|
5
|
2
|
–
|
–
|
7
|
|
31 December 2022
|
1,180
|
250
|
50
|
–
|
1,480
|
|
(21)
|
(12)
|
(42)
|
–
|
(75)
|
|
1,159
|
238
|
8
|
–
|
1,405
|
Commercial lending
|
|
Gross carrying amount
|
|
Loss allowance
|
|
Net carrying amount
|
|
£’million
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
1 January 2023
|
3,474
|
495
|
191
|
–
|
4,160
|
|
(39)
|
(28)
|
(25)
|
–
|
(92)
|
|
3,435
|
467
|
166
|
–
|
4,068
|
|
Transfers to/(from) Stage 1
|
93
|
(86)
|
(7)
|
–
|
–
|
|
(7)
|
7
|
–
|
–
|
–
|
|
86
|
(79)
|
(7)
|
–
|
–
|
|
Transfers to/(from) Stage 2
|
(206)
|
208
|
(2)
|
–
|
–
|
|
2
|
(4)
|
2
|
–
|
–
|
|
(204)
|
204
|
–
|
–
|
–
|
|
Transfers to/(from) Stage 3
|
(97)
|
(33)
|
130
|
–
|
–
|
|
2
|
2
|
(4)
|
–
|
–
|
|
(95)
|
(31)
|
126
|
–
|
–
|
|
Net remeasurement due to transfers
|
–
|
–
|
–
|
–
|
–
|
|
5
|
(5)
|
(8)
|
–
|
(8)
|
|
5
|
(5)
|
(8)
|
–
|
(8)
|
|
New lending
|
554
|
14
|
8
|
–
|
576
|
|
(8)
|
(1)
|
–
|
–
|
(9)
|
|
546
|
13
|
8
|
–
|
567
|
|
Repayments, additional drawdowns
and interest accrued
|
(291)
|
(43)
|
(30)
|
–
|
(364)
|
|
–
|
–
|
–
|
–
|
–
|
|
(291)
|
(43)
|
(30)
|
–
|
(364)
|
|
Derecognitions
|
(724)
|
(142)
|
(124)
|
–
|
(990)
|
|
9
|
7
|
14
|
–
|
30
|
|
(715)
|
(135)
|
(110)
|
–
|
(960)
|
|
Changes to model assumptions
|
–
|
–
|
–
|
–
|
–
|
|
6
|
1
|
–
|
–
|
7
|
|
6
|
1
|
–
|
–
|
7
|
|
31 December 2023
|
2,803
|
413
|
166
|
–
|
3,382
|
|
(30)
|
(21)
|
(21)
|
–
|
(72)
|
|
2,773
|
392
|
145
|
–
|
3,310
|
|
|
Gross carrying amount
|
|
Loss allowance
|
|
Net carrying amount
|
|
£’million
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI
|
Total
|
|
1 January 2022
|
3,739
|
780
|
327
|
–
|
4,846
|
|
(27)
|
(29)
|
(52)
|
–
|
(108)
|
|
3,712
|
751
|
275
|
–
|
4,738
|
|
Transfers to/(from) Stage 1
|
205
|
(204)
|
(1)
|
–
|
–
|
|
(7)
|
7
|
–
|
–
|
–
|
|
198
|
(197)
|
(1)
|
–
|
–
|
|
Transfers to/(from) Stage 2
|
(156)
|
157
|
(1)
|
–
|
–
|
|
1
|
(1)
|
–
|
–
|
–
|
|
(155)
|
156
|
(1)
|
–
|
–
|
|
Transfers to/(from) Stage 3
|
(87)
|
(45)
|
132
|
–
|
–
|
–
|
–
|
4
|
(4)
|
–
|
–
|
|
(87)
|
(41)
|
128
|
–
|
–
|
|
Net remeasurement due to transfers
|
–
|
–
|
–
|
–
|
–
|
|
4
|
(6)
|
-
|
–
|
(2)
|
|
4
|
(6)
|
–
|
–
|
(2)
|
|
New lending
|
685
|
37
|
18
|
–
|
740
|
|
(12)
|
(1)
|
(2)
|
–
|
(15)
|
|
673
|
36
|
16
|
–
|
725
|
|
Repayments, additional drawdowns
and interest accrued
|
(330)
|
(44)
|
(15)
|
–
|
(389)
|
|
–
|
–
|
–
|
–
|
–
|
|
(330)
|
(44)
|
(15)
|
–
|
(389)
|
|
Derecognitions
|
(582)
|
(186)
|
(269)
|
–
|
(1,037)
|
|
3
|
7
|
30
|
–
|
40
|
|
(579)
|
(179)
|
(239)
|
–
|
(997)
|
|
Changes to model assumptions
|
–
|
–
|
–
|
–
|
–
|
|
(1)
|
(9)
|
3
|
–
|
(7)
|
|
(1)
|
(9)
|
3
|
–
|
(7)
|
|
31 December 2022
|
3,474
|
495
|
191
|
–
|
4,160
|
|
(39)
|
(28)
|
(25)
|
–
|
(92)
|
|
3,435
|
467
|
166
|
–
|
4,068
|
Credit risk exposures
Retail mortgages
|
|
31 December 2023
|
31 December 2022
|
|
£’million
|
Stage 1
12-month
ECL
|
Stage 2
Lifetime
ECL
|
Stage 3
Lifetime
ECL
|
POCI
Lifetime
ECL
|
Total
|
Stage 1
12-month
ECL
|
Stage 2
Lifetime
ECL
|
Stage 3
Lifetime
ECL
|
POCI
Lifetime
ECL
|
Total
|
|
Up to date
|
6,885
|
695
|
37
|
–
|
7,617
|
6,194
|
1,289
|
33
|
–
|
7,516
|
|
1 to 29 days past due
|
2
|
28
|
10
|
–
|
40
|
1
|
21
|
7
|
–
|
29
|
|
30 to 89 days past due
|
–
|
61
|
16
|
–
|
77
|
–
|
33
|
15
|
–
|
48
|
|
90+ days past due
|
–
|
–
|
83
|
–
|
83
|
–
|
–
|
56
|
–
|
56
|
|
Gross carrying amount
|
6,887
|
784
|
146
|
–
|
7,817
|
6,195
|
1,343
|
111
|
–
|
7,649
|
Consumer lending
|
|
31 December 2023
|
31 December 2022
|
|
£’million
|
Stage 1
12-month
ECL
|
Stage 2
Lifetime
ECL
|
Stage 3
Lifetime
ECL
|
POCI
Lifetime
ECL
|
Total
|
Stage 1
12-month
ECL
|
Stage 2
Lifetime
ECL
|
Stage 3
Lifetime
ECL
|
POCI
Lifetime
ECL
|
Total
|
|
Up to date
|
900
|
297
|
3
|
–
|
1,200
|
1,172
|
235
|
3
|
–
|
1,410
|
|
1 to 29 days past due
|
6
|
2
|
–
|
–
|
8
|
8
|
2
|
–
|
–
|
10
|
|
30 to 89 days past due
|
–
|
15
|
7
|
–
|
22
|
–
|
13
|
5
|
–
|
18
|
|
90+ days past due
|
–
|
–
|
67
|
–
|
67
|
–
|
–
|
42
|
–
|
42
|
|
Gross carrying amount
|
906
|
314
|
77
|
–
|
1,297
|
1,180
|
250
|
50
|
–
|
1,480
|
Commercial lending
|
|
31 December 2023
|
31 December 2022
|
|
£’million
|
Stage 1
12-month
ECL
|
Stage 2
Lifetime
ECL
|
Stage 3
Lifetime
ECL
|
POCI
Lifetime
ECL
|
Total
|
Stage 1
12-month
ECL
|
Stage 2
Lifetime
ECL
|
Stage 3
Lifetime
ECL
|
POCI
Lifetime
ECL
|
Total
|
|
Up to date
|
2,768
|
350
|
83
|
–
|
3,201
|
3,453
|
419
|
67
|
–
|
3,939
|
|
1 to 29 days past due
|
35
|
24
|
5
|
–
|
64
|
21
|
36
|
5
|
–
|
62
|
|
30 to 89 days past due
|
–
|
39
|
20
|
–
|
59
|
–
|
40
|
20
|
–
|
60
|
|
90+ days past due
|
–
|
–
|
58
|
–
|
58
|
–
|
–
|
99
|
–
|
99
|
|
Gross carrying amount
|
2,803
|
413
|
166
|
–
|
3,382
|
3,474
|
495
|
191
|
–
|
4,160
|
Credit risk concentration
Retail mortgage lending by repayment type
|
|
31 December 2023
£’million
|
|
31 December 2022
£’million
|
|
|
Retail owner occupied
|
Retail
buy-to-let
|
Total
retail mortgages
|
|
Retail owner occupied
|
Retail
buy-to-let
|
Total
retail mortgages
|
|
Interest only
|
1,933
|
1,878
|
3,811
|
|
2,005
|
2,047
|
4,052
|
|
Capital and repayment
|
3,918
|
88
|
4,006
|
|
3,502
|
95
|
3,597
|
|
Total retail mortgage lending
|
5,851
|
1,966
|
7,817
|
|
5,507
|
2,142
|
7,649
|
Retail mortgage lending by geographic exposure
|
|
31 December 2023
£’million
|
|
31 December 2022
£’million
|
|
|
Retail owner occupied
|
Retail
buy-to-let
|
Total
retail mortgages
|
|
Retail owner occupied
|
Retail
buy-to-let
|
Total
retail mortgages
|
|
Greater London
|
2,040
|
1,091
|
3,131
|
|
1,937
|
1,201
|
3,138
|
|
South east
|
1,564
|
381
|
1,945
|
|
1,435
|
408
|
1,843
|
|
South west
|
487
|
87
|
574
|
|
476
|
99
|
575
|
|
East of England
|
590
|
150
|
740
|
|
531
|
163
|
694
|
|
North west
|
268
|
65
|
333
|
|
263
|
68
|
331
|
|
West Midlands
|
240
|
71
|
311
|
|
226
|
76
|
302
|
|
Yorkshire and the Humber
|
185
|
32
|
217
|
|
184
|
34
|
218
|
|
East Midlands
|
180
|
53
|
233
|
|
168
|
54
|
222
|
|
Wales
|
111
|
17
|
128
|
|
109
|
18
|
127
|
|
North east
|
60
|
8
|
68
|
|
63
|
10
|
73
|
|
Scotland
|
126
|
11
|
137
|
|
115
|
11
|
126
|
|
Total retail mortgage lending
|
5,851
|
1,966
|
7,817
|
|
5,507
|
2,142
|
7,649
|
Retail mortgage lending by DTV
|
|
31 December 2023
£’million
|
|
31 December 2022
£’million
|
|
|
Retail owner occupied
|
Retail
buy-to-let
|
Total
retail mortgages
|
|
Retail owner occupied
|
Retail
buy-to-let
|
Total
retail mortgages
|
|
Less than 50%
|
1,994
|
439
|
2,433
|
|
2,007
|
568
|
2,575
|
|
51–60%
|
1,069
|
375
|
1,444
|
|
961
|
463
|
1,424
|
|
61–70%
|
1,044
|
642
|
1,686
|
|
1,088
|
660
|
1,748
|
|
71–80%
|
1,100
|
493
|
1,593
|
|
990
|
434
|
1,424
|
|
81–90%
|
550
|
16
|
566
|
|
374
|
13
|
387
|
|
91–100%
|
89
|
–
|
89
|
|
87
|
–
|
87
|
|
More than 100%
|
5
|
1
|
6
|
|
–
|
4
|
4
|
|
Total retail mortgage lending
|
5,851
|
1,966
|
7,817
|
|
5,507
|
2,142
|
7,649
|
Commercial lending – excluding BBLS by repayment type
|
|
31 December 2023
£’million
|
|
31 December 2022
£’million
|
|
|
Professional
buy-to-let
|
Other
term loans
|
Total commercial term loans
|
|
Professional
buy-to-let
|
Other
term loans
|
Total commercial term loans
|
|
Interest only
|
438
|
222
|
660
|
|
691
|
253
|
944
|
|
Capital and repayment
|
27
|
1,533
|
1,560
|
|
40
|
1,837
|
1,877
|
|
Total commercial term loans
|
465
|
1,755
|
2,220
|
|
731
|
2,090
|
2,821
|
Commercial term lending – excluding BBLS by geographic
exposure
|
|
31 December 2023
£’million
|
|
31 December 2022
£’million
|
|
|
Professional
buy-to-let
|
Other
term loans
|
Total commercial term loans
|
|
Professional
buy-to-let
|
Other
term loans
|
Total commercial term loans
|
|
Greater London
|
298
|
880
|
1,178
|
|
472
|
1,052
|
1,524
|
|
South east
|
88
|
340
|
428
|
|
149
|
377
|
526
|
|
South west
|
15
|
111
|
126
|
|
22
|
143
|
165
|
|
East of England
|
31
|
122
|
153
|
|
45
|
147
|
192
|
|
North west
|
11
|
106
|
117
|
|
13
|
153
|
166
|
|
West Midlands
|
4
|
101
|
105
|
|
8
|
112
|
120
|
|
Yorkshire and the Humber
|
2
|
17
|
19
|
|
3
|
23
|
26
|
|
East Midlands
|
9
|
44
|
53
|
|
12
|
43
|
55
|
|
Wales
|
3
|
8
|
11
|
|
3
|
11
|
14
|
|
North east
|
3
|
19
|
22
|
|
3
|
19
|
22
|
|
Scotland
|
–
|
5
|
5
|
|
–
|
7
|
7
|
|
Northern Ireland
|
1
|
2
|
3
|
|
1
|
3
|
4
|
|
Total commercial term loans
|
465
|
1,755
|
2,220
|
|
731
|
2,090
|
2,821
|
Commercial
term lending – excluding BBLS by sector exposure
|
|
31 December 2023
£’million
|
|
31 December 2022
£’million
|
|
|
Professional
buy-to-let
|
Other
term loans
|
Total commercial term loans
|
|
Professional
buy-to-let
|
Other
term loans
|
Total commercial term loans
|
|
Real estate (rent, buy and sell)
|
465
|
509
|
974
|
|
731
|
681
|
1,412
|
|
Hospitality
|
–
|
368
|
368
|
|
–
|
372
|
372
|
|
Health and social work
|
–
|
298
|
298
|
|
–
|
334
|
334
|
|
Legal, accountancy and consultancy
|
–
|
150
|
150
|
|
–
|
196
|
196
|
|
Retail
|
–
|
136
|
136
|
|
–
|
161
|
161
|
|
Real estate (develop)
|
–
|
14
|
14
|
|
–
|
6
|
6
|
|
Recreation, cultural and sport
|
–
|
72
|
72
|
|
–
|
87
|
87
|
|
Construction
|
–
|
48
|
48
|
|
–
|
62
|
62
|
|
Education
|
–
|
19
|
19
|
|
–
|
17
|
17
|
|
Real estate (management of)
|
–
|
7
|
7
|
|
–
|
9
|
9
|
|
Investment and unit trusts
|
–
|
7
|
7
|
|
–
|
11
|
11
|
|
Other
|
–
|
127
|
127
|
|
–
|
154
|
154
|
|
Total commercial term loans
|
465
|
1,755
|
2,220
|
|
731
|
2,090
|
2,821
|
Commercial term lending – excluding BBLS by DTV
|
|
31 December 2023
£’million
|
|
31 December 2022
£’million
|
|
|
Professional
buy-to-let
|
Other
term
loans
|
Total
commercial term loans
|
|
Professional
buy-to-let
|
Other
term
loans
|
Total
commercial term loans
|
|
Less than 50%
|
160
|
707
|
867
|
|
278
|
817
|
1,095
|
|
51–60%
|
59
|
319
|
378
|
|
158
|
433
|
591
|
|
61–70%
|
105
|
185
|
290
|
|
219
|
112
|
331
|
|
71–80%
|
76
|
79
|
155
|
|
62
|
76
|
138
|
|
81–90%
|
60
|
21
|
81
|
|
3
|
53
|
56
|
|
91–100%
|
2
|
11
|
13
|
|
5
|
12
|
17
|
|
More than 100%
|
3
|
433
|
436
|
|
6
|
587
|
593
|
|
Total commercial term loans
|
465
|
1,755
|
2,220
|
|
731
|
2,090
|
2,821
|
13.
Legal and regulatory matters
As part of the normal course of business we are subject to legal
and regulatory matters. The matters outlined below represent
contingent liabilities and as such at the reporting date no
provision has been made for any of these cases within the financial
statements. This is because, based on the facts currently known, it
is not practicable to predict the outcome, if any, of these matters
or reliably estimate any financial impact. Their inclusion does not
constitute any admission of wrongdoing or legal
liability.
Financial Crime
The FCA is currently undertaking enquiries regarding our financial
crime systems and controls. We continue to engage and co-operate
fully with the FCA in relation to these matters, and the FCA’s
enquiries remain ongoing.
Magic Money Machine litigation
In 2022 Arkeyo LLC, a software company based in the United States,
filed a civil suit with a stated value of over £24 million against
us in the English High Court alleging, among other matters, that we
infringed their copyright and misappropriated their trade secrets
relating to money counting machines (i.e. our Magic Money
Machines).
We believe Arkeyo LLC’s claims are without merit and are vigorously
defending the claim.
14. Fair value of financial instruments
|
|
31 December 2023
|
|
|
Carrying
value
£’million
|
Quoted
market
price
Level 1
£’million
|
Using
observable
inputs
Level 2
£’million
|
With
significant
unobservable
inputs
Level 3
£’million
|
Total fair
value
£’million
|
|
Assets
|
|
|
|
|
|
|
Loans and advances to customers
|
12,297
|
–
|
–
|
12,156
|
12,156
|
|
Investment securities held at fair value through other
comprehensive income
|
476
|
476
|
–
|
–
|
476
|
|
Investment securities held at amortised cost
|
4,403
|
3,143
|
1,072
|
–
|
4,215
|
|
Derivative financial assets
|
36
|
–
|
36
|
–
|
36
|
|
Liabilities
|
|
|
|
|
|
|
Deposits from customers
|
15,623
|
–
|
–
|
15,622
|
15,622
|
|
Deposits from central bank
|
3,050
|
–
|
–
|
3,050
|
3,050
|
|
Debt securities
|
694
|
–
|
585
|
–
|
585
|
|
Repurchase agreements
|
1,191
|
–
|
–
|
1,191
|
1,191
|
|
|
31 December 2022
|
|
|
Carrying
value
£’million
|
Quoted
market
price
Level 1
£’million
|
Using
observable
inputs
Level 2
£’million
|
With
significant
unobservable
inputs
Level 3
£’million
|
Total fair
value
£’million
|
|
Assets
|
|
|
|
|
|
|
Loans and advances to customers
|
13,102
|
–
|
–
|
12,321
|
12,321
|
|
Investment securities held at fair value through other
comprehensive income
|
571
|
533
|
38
|
–
|
571
|
|
Investment securities held at amortised cost
|
5,343
|
3,834
|
1,135
|
40
|
5,009
|
|
Financial assets held at fair value through profit and
loss
|
1
|
–
|
–
|
1
|
1
|
|
Derivative financial assets
|
23
|
–
|
23
|
–
|
23
|
|
Liabilities
|
|
|
|
|
|
|
Deposits from customers
|
16,014
|
–
|
–
|
16,004
|
16,004
|
|
Deposits from central bank
|
3,800
|
–
|
–
|
3,800
|
3,800
|
|
Debt securities
|
571
|
423
|
–
|
–
|
423
|
|
Derivative financial liabilities
|
26
|
–
|
26
|
–
|
26
|
|
Repurchase agreements
|
238
|
–
|
–
|
238
|
238
|
Information on how fair values are calculated are explained
below:
Loans and advances to customers
Fair value is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of
interest at the balance sheet date, adjusted for future credit
losses and prepayments, if considered material.
Investment securities
The fair value of investment securities is based on either observed
market prices for those securities that have an active trading
market (fair value Level 1 assets) or using observable inputs (in
the case of fair value Level 2 assets).
Financial assets held at fair value through profit and
loss
The financial assets at fair value through profit and loss relate
to the loans and advances previously assumed by the RateSetter
provision fund. They are measured at the fair value of the amounts
that we expect to recover on these loans.
Deposits from customers
Fair values are estimated using discounted cash flows, applying
current rates offered for deposits of similar remaining maturities.
The fair value of a deposit repayable on demand is approximated by
its carrying value.
Debt securities
Fair values are determined using the quoted market price at the
balance sheet date.
Deposits from central banks/repurchase agreements
Fair values are estimated using discounted cash flows, applying
current rates. Fair values approximate carrying amounts as their
balances are either short-dated or are on a variable rate which
aligns to the current market rate.
Derivative financial liabilities
The fair values of derivatives are obtained from discounted cash
flow models as appropriate.
15.
Earnings per share
Basic earnings per share (‘EPS’) is calculated by dividing the
(loss)/profit attributable to ordinary equity holders of Metro Bank
by the weighted average number of ordinary shares in issue during
the period.
Diluted EPS has been calculated by dividing the loss attributable
to our ordinary equity holders by the weighted average number of
ordinary shares in issue during the year plus the weighted average
number of ordinary shares that would be issued on the conversion to
shares of options granted to colleagues.
As we were loss making in the year ended 31 December 2022, the
share options would be antidilutive, as they would reduce the loss
per share. Therefore, all the outstanding options have been
disregarded in the calculation of dilutive EPS for 2022.
In the year ended 31 December 2023, 6.5 million share options were
excluded from the weighted average number of shares due to these
being anti-dilutive.
|
|
2023
|
2022
|
|
Profit/(loss) attributable to
ordinary equity holders (£’million)
|
29.5
|
(72.7)
|
|
Weighted average
number of ordinary shares in issue (thousands)
|
|
|
|
Basic
|
214,297
|
172,464
|
|
Adjustment for share
awards
|
6,459
|
–
|
|
Diluted
|
220,756
|
172,464
|
|
Earning per share
(pence)
|
|
|
|
Basic
|
13.8
|
(42.2)
|
|
Diluted
|
13.4
|
(42.2)
|
16. Non-cash items
|
|
2023
£’million
|
2022
£’million
|
|
Interest income
|
(856)
|
(564)
|
|
Interest expense
|
444
|
160
|
|
Depreciation and amortisation
|
78
|
77
|
|
Impairment and write-offs of property, plant, equipment and
intangible assets
|
5
|
10
|
|
Expected credit loss expense
|
33
|
40
|
|
Share option charge
|
3
|
2
|
|
Grant income recognised in the income statement
|
(2)
|
(2)
|
|
Amounts provided for (net of amounts released)
|
16
|
4
|
|
Haircut on Tier 2 debt
|
(100)
|
–
|
|
Gain on sale of assets
|
3
|
–
|
|
Total adjustments for non-cash items
|
(376)
|
(273)
|
17. Post balance sheet events
There have been no material post balance sheet events.
Reconciliation from statutory to underlying results
|
|
Year ended 31 December 2023
|
Statutory basis
£’million
|
Impairment and write-off of property, plant, equipment and
intangible assets
£’million
|
Net C&I
costs
£’million
|
Transformation costs
£’million
|
Remediation costs
£’million
|
Holding company insertion costs £’million
|
Capital raise and refinancing
£’million
|
Underlying basis
£’million
|
|
|
|
Net interest income
|
411.9
|
–
|
–
|
–
|
–
|
–
|
–
|
411.9
|
|
|
|
Net fee and commission income
|
90.4
|
–
|
–
|
–
|
–
|
–
|
–
|
90.4
|
|
|
|
Net gains on sale of assets
|
2.7
|
–
|
–
|
–
|
–
|
–
|
–
|
2.7
|
|
|
|
Other income
|
143.9
|
–
|
(2.4)
|
–
|
–
|
–
|
(100.0)
|
41.5
|
|
|
|
Total income
|
648.9
|
–
|
(2.4)
|
–
|
–
|
–
|
(100.0)
|
546.5
|
|
|
|
General operating expenses
|
(502.9)
|
–
|
2.4
|
20.2
|
–
|
1.8
|
26.0
|
(452.5)
|
|
|
|
Depreciation and amortisation
|
(77.7)
|
–
|
–
|
–
|
–
|
–
|
–
|
(77.7)
|
|
|
|
Impairment and write-offs of PPE and intangible assets
|
(4.6)
|
4.6
|
–
|
–
|
–
|
–
|
–
|
–
|
|
|
|
Total operating expenses
|
(585.2)
|
4.6
|
2.4
|
20.2
|
–
|
1.8
|
26.0
|
(530.2)
|
|
|
|
Expected credit loss expense
|
(33.2)
|
–
|
–
|
–
|
–
|
–
|
–
|
(33.2)
|
|
|
|
Profit/(loss) before tax
|
30.5
|
4.6
|
–
|
20.2
|
–
|
1.8
|
(74.0)
|
(16.9)
|
|
|
|
Year ended 31 December 2022
|
Statutory basis
£’million
|
Impairment and write-off of property, plant, equipment and
intangible assets
£’million
|
Net C&I
costs
£’million
|
Transformation costs
£’million
|
Remediation costs
£’million
|
Holding company insertion costs £’million
|
Capital raise and refinancing
£’million
|
Underlying basis
£’million
|
|
|
|
Net interest income
|
404.1
|
–
|
0.1
|
–
|
–
|
–
|
–
|
404.2
|
|
|
|
Net fee and commission income
|
81.8
|
–
|
–
|
–
|
–
|
–
|
–
|
81.8
|
|
|
|
Net gains on sale of assets
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–-
|
|
|
|
Other income
|
37.6
|
–
|
(1.5)
|
–
|
–
|
–
|
–
|
36.1
|
|
|
|
Total income
|
523.5
|
–
|
(1.4)
|
–
|
–
|
–
|
–
|
522.1
|
|
|
|
General operating expenses
|
(467.6)
|
–
|
1.4
|
3.3
|
5.3
|
1.8
|
–
|
(455.8)
|
|
|
|
Depreciation and amortisation
|
(77.0)
|
–
|
–
|
–
|
–
|
–
|
–
|
(77.0)
|
|
|
|
Impairment and write-offs of PPE and intangible assets
|
(9.7)
|
9.7
|
–
|
–
|
–
|
–
|
–
|
–
|
|
|
|
Total operating expenses
|
(554.3)
|
9.7
|
1.4
|
3.3
|
5.3
|
1.8
|
–
|
(532.8)
|
|
|
|
Expected credit loss expense
|
(39.9)
|
–
|
–
|
–
|
–
|
–
|
–
|
(39.9)
|
|
|
|
Loss before tax
|
(70.7)
|
9.7
|
–
|
3.3
|
5.3
|
1.8
|
–
|
(50.6)
|
|
Capital
information
Key
metrics
|
|
31 December
2023
£’million
|
31 December
2022
£’million
|
|
Available
capital
|
|
|
|
CET1 capital
|
985
|
819
|
|
Tier 1 capital
|
985
|
819
|
|
Total capital
|
1,135
|
1,069
|
|
Total capital + MREL
|
1,655
|
1,416
|
|
Risk-weighted
assets
|
|
|
|
Total risk-weighted
assets
|
7,533
|
7,990
|
|
|
|
|
|
Risk-based
capital ratios as % of risk-weighted assets
|
|
|
|
CET1 ratio
|
13.1%
|
10.3%
|
|
Tier 1 ratio
|
13.1%
|
10.3%
|
|
Total capital ratio
|
15.1%
|
13.4%
|
|
MREL ratio
|
22.0%
|
17.7%
|
|
Additional CET1
buffer requirements as % of risk-weighted assets
|
|
|
|
Capital conservation buffer
requirement
|
2.5%
|
2.5%
|
|
Countercyclical buffer
requirement
|
2.0%
|
1.0%
|
|
Total of bank CET1 specific buffer
requirements
|
4.5%
|
3.5%
|
|
|
|
|
|
Leverage
ratio
|
|
|
|
UK leverage ratio
|
5.3%
|
4.2%
|
|
|
|
|
|
Liquidity
coverage ratio
|
|
|
|
Liquidity coverage ratio
|
332%
|
213%
|
Leverage
ratio
The table below shows our Tier 1
Capital and Total Leverage Exposure that are used to derive the UK
leverage ratio. The UK leverage ratio is the ratio of Tier 1
Capital to Total Leverage exposure.
|
|
31 December
2023
£’million
|
31 December
2022
£’million
|
|
Common equity tier 1
capital
|
985
|
819
|
|
Additional tier 1
capital
|
|
–
|
|
Tier 1 capital
|
985
|
819
|
|
|
|
|
|
CRD IV leverage exposure
|
18,420
|
19,348
|
|
|
|
|
|
UK leverage ratio
|
5.3%
|
4.2%
|
Liquidity
coverage ratio
The table below shows the bank's
Total HQLA and total net cash outflow that are used to derive the
liquidity coverage ratio.
|
|
31 December
2023
£’million
|
31 December
2022
£’million
|
|
Total high-quality liquid
assets
|
6,656
|
4,976
|
|
Total net cash outflow
|
2,002
|
2,342
|
|
Liquidity coverage ratio
|
332%
|
213%
|
Overview of
risk-weighted assets and capital requirements
|
|
31 December
2023
£’million
|
31 December
2022
£’million
|
Pillar 1
capital required
31 December
2023
£’million
|
|
Credit risk (excluding counterparty
credit risk (CCR))
|
6,804
|
7,237
|
544
|
|
Of which the
standardised approach
|
6,804
|
7,237
|
544
|
|
CCR
|
26
|
9
|
2
|
|
Of which mark to
market
|
26
|
7
|
2
|
|
Of which
CVA
|
0
|
2
|
-
|
|
Market risk
|
–
|
–
|
-
|
|
Operational risk
|
703
|
739
|
56
|
|
Of which basic
indicator approach
|
–
|
739
|
|
|
Of which
standardised indicator approach
|
703
|
–
|
|
|
Amounts below the thresholds for
deduction (subject to 250% risk weight)
|
–
|
5
|
|
|
Total
|
7,533
|
7,990
|
602
|
Credit risk
exposures by exposure class
Our Pillar 1 capital requirement
for credit risk is set out in the table below.
|
|
31 December 2023
£’million
|
|
31 December 2022
£’million
|
|
|
Exposure value
|
Capital required
|
|
Exposure value
|
Capital
required
|
|
Central
governments or central banks
|
5,997
|
1
|
|
5,326
|
–
|
|
Exposures
to multilateral development banks
|
1,614
|
–
|
|
1,663
|
–
|
|
Institutions
|
9
|
–
|
|
10
|
–
|
|
Corporates
|
702
|
49
|
|
703
|
50
|
|
Retail
|
1,639
|
93
|
|
1,870
|
107
|
|
Secured
by mortgages on immovable property
|
9,061
|
291
|
|
9,424
|
308
|
|
Covered
bonds
|
706
|
6
|
|
693
|
6
|
|
Claims on
institutions and corporates with a short-term credit
assessment
|
133
|
3
|
|
97
|
3
|
|
Securitisation
position
|
1,075
|
10
|
|
1,223
|
13
|
|
Exposure
at default
|
210
|
17
|
|
179
|
15
|
|
Collective
investment undertakings
|
58
|
–
|
|
59
|
–
|
|
Items
associated with particularly high risk
|
12
|
1
|
|
18
|
2
|
|
Other
exposures
|
973
|
72
|
|
1,021
|
75
|
|
Total
|
22,189
|
544
|
|
22,286
|
579
|
Capital
resources
The table below summarises the
composition of regulatory capital on a proforma basis, including
the profit for the year1.
|
|
|
31 December
2023
£’million
|
31 December
2022
£’million
|
|
Share capital and
premium
|
|
144
|
1,964
|
|
Retained earnings
|
|
949
|
(942)
|
|
Profit/(loss) for the
year1
|
|
29
|
(73)
|
|
Available for sale
reserve
|
|
-
|
(13)
|
|
Other reserves
|
|
12
|
20
|
|
Intangible assets
|
|
(193)
|
(216)
|
|
Other regulatory
adjustments
|
|
44
|
79
|
|
CET 1 capital
|
|
985
|
819
|
|
|
|
|
|
|
Tier 1 capital
|
|
985
|
819
|
|
Tier 2 capital
|
|
150
|
250
|
|
Total capital resources
|
|
1,135
|
1,069
|
|
|
|
|
|
|
MREL eligible debt
|
|
520
|
347
|
|
TCR + MREL
|
|
1,655
|
1,416
|
-
The profit for the year is
included to show our capital resources on a proforma basis as at 31
December 2023. The profit will only be eligible to be included in
our capital resources following the completion of our audit and
publication of our Annual Report and accounts.
Our capital adequacy was in excess
of the minimum required by the regulators at all times.
