RESULTS PRESENTATION FEBRUARY 26, 2019 Metro Bank Today Opening - PowerPoint PPT Presentation

RESULTS PRESENTATION FEBRUARY 26, 2019

Metro Bank Today • Opening stores, entering new markets, expanding digital capabilities, The revolution continues… growing deposits, and creating FANS …delivering strong • Strong deposit and loan growth drives 140% increase in Underlying PBT earnings growth… • …but environment is Continue to operate in a highly competitive lending environment that has put challenging… pressure on our margins • Optimise the balance between growth, profitability and capital efficiency …and so we are evolving • Increasing our focus on SME businesses underpinned by Capability & our strategy… Innovation Fund £120m win • …while ensuring a robust Plan to raise c.£350m of equity in 2019 with committed standby capital position for underwriting to ensure a well capitalised balance sheet primed for the future… growth 2

The Revolution Continues Another Year of Progress Service Delivery Recognition Number 1 For Overall Quality of Best All Round Personal Best Digital Service in Personal Banking (1) Finance Provider Onboarding Strategy 61 54 82 79 Cost of deposits (bps) Growth of Low Cost 15.7 11.7 8.0 Sticky Deposits 5.1 Deposits (£b) 2015 2016 2017 2018 Cost of risk (bps) 29 10 11 7 14.2 Low Risk Lending 9.6 5.9 3.5 Loans (£b) 2015 2016 2017 2018 3 (1) Source: CMA Service Quality Surveys published February 2019

We continue to create FANS Number one service for personal customers… …and well positioned to challenge for the top spot in SME Personal Current Accounts: Overall Quality of Service (1) Business Current Accounts: Overall Quality of Service (1) Award winning customer service… …and award winning colleague engagement of colleagues think Metro Bank is a 96% great place to work in our annual voice of the colleague survey Best Digital Finalist at Onboarding British Bank Strategy Awards Best All Round 5-star rated standard current Personal Finance account Provider 4 (1) Source: CMA Service Quality Surveys published February 2019

As we expand our physical network & digital footprint to deliver an integrated customer experience Increasing Customer Stores Digital Acquisition Customer Accounts Digital Investment in 2018 1,620 (‘000) • Insights launched 1,217 • International payments functionality added 915 • Current Account opening online launched 655 • Instant Access Savings application 447 275 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Average 10% market share of new business current accounts in London (2) 2 nd highest rated New Market Expansion +10 Stores in 2018 Bristol, Southampton and & banking app Northampton in 2018, with overall (1) 15% of SME switchers in ~c.8 Stores in Birmingham and the Midlands London (2) 2019 excl. C&I an opportunity in 2019 funded stores 86% brand awareness in London (3) 33% of current account holders used 66% of customers used a store in 2018 physical & digital in the last 90 days 54% brand awareness in the UK (4) (1) iOS app store (2) MarketVue Business Banking from Savanta, YE Q1 2018 – YE Q4 2018. Base size: new BCAs 162-266, switchers 33-47. Data weighted by region and turnover to be representative of businesses in 5 Great Britain. (3) Figures from YouGov Plc. Total sample size was 1,002 adults. Fieldwork was undertaken between 19-21 February 2019. The figures have been weighted and are representative of all London adults (aged 18+). (4) Figures from YouGov Plc. Total sample size was 2,095 adults. Fieldwork was undertaken between 19-20 February 2018. The figures have been weighted and are representative of all GB adults (aged 18+).

Delivering strong growth in deposits, loans and profit FY 2018 FY 2017 YoY % 1.6m 1.2m 33% Customer accounts £15.7b £11.7b +34% Customer deposits Net average deposit growth £5.9m £6.3m (6)% per store per month 91% 82% +9pp Loan to deposit ratio Net customer loans £14.2b £9.6b +48% £50m £21m +140% Underlying profit before tax 7bps 11bps -4bps Cost of risk 2.67% 2.69% -2bps Customer NIM + Fees 6

With a liquid, deposit-funded balance sheet Annual £’m FY 2018 FY 2017 Growth Loans and advances to customers 14,235 9,620 48% • Liquid balance sheet with a 91% Treasury assets (1) 6,604 6,127 loan to deposit ratio and 139% Other assets (2) 808 608 liquidity coverage ratio Total assets 21,647 16,355 32% • 93% of the liquidity and Deposits from customers 15,661 11,669 34% investment portfolio is cash, government bonds and AAA- Deposits from central banks 3,801 3,321 rated instruments (3) Debt securities 249 - • TFS drawings of £3.8b invested Other liabilities 533 269 in low-risk liquid treasury assets Total liabilities 20,244 15,259 33% • Shareholders’ funds IFRS 9 adopted from 1 January 1,403 1,096 2018. Immaterial impact on 21,647 16,355 32% Total equity and liabilities CET1 after transitional relief Capital adequacy & liquidity coverage ratios: • IFRS 16 adopted from 1 January CET1 capital ratio 13.1% 15.3% - 2019 with an expected £313m Regulatory leverage ratio 5.4% 5.5% - impact on RWAs Risk weighted assets 8,936 5,882 +52% Loan to deposit ratio 91% 82% - Liquidity coverage ratio 139% 141% - (1) Investment securities, cash & balances with the Bank of England, and loans & advances to banks. (2) Property, plant & equipment, intangible assets and other assets 7 (3) Remainder is all investment grade

Driven by core deposit growth TOTAL CUSTOMER DEPOSIT GROWTH SPLIT OF DEPOSITS BY DIVISION £15.7b £4.1b £4.7b Fixed term: Demand: £7.4b £11.7b savings current accounts Retail accounts £8.0b £15.7b £15.7b £5.1b £8.2b Commercial 82 79 54 61 £6.9b Demand: savings accounts 2015 2016 2017 2018 Cost of deposits (bps) AVERAGE DEPOSIT GROWTH PER STORE PER MONTH (£m) 5.3 5.7 6.3 5.9 7.4 6.6 6.6 6.3 6.3 6.2 6.2 5.9 5.7 5.6 5.5 5.5 5.3 5.0 4.7 4.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2017 2018 Average for the year 8

Underpinning our continued low risk lending DIVERSIFIED LENDING PORTFOLIO STRONG ASSET QUALITY Retail: 69% of portfolio Commercial: 31% of portfolio (12bps) 0.27% £0.3b £0.3b £2.3b £1.4b 0.15% £4.4b £9.9b NPL Ratio £7.3b £2.7b 2017 2018 Non-performing loans £26m £21m Professional BTL Residential mortgages Retail mortgages BTL Commercial loans Consumer lending Asset & Invoice finance CONSERVATIVE DEBT TO VALUE PROFILE LOW COST OF RISK (bps) 16 bps UK high- 30% 29% street bank Average retail DTV: 61% average (1) Average commercial DTV: 59% 11bps 20% 21% 20% (4bps) 19% 16% 15% 7bps 11% 9% 4% 3% 2% 1% Less than 51-60% 61-70% 71-80% 81-90% 91-100% More than 2017 2018 50% 100% 2017 2018 1) As of YE2018. 9

Underlying profit before tax growth of 140% year on year FY FY Annual £’m 2018 2017 Growth Net interest income 330.1 241.0 Fees and other income 63.3 49.1 Net gains on sale of assets 10.7 3.7 • Positive operating jaws with income Total revenue 404.1 293.8 38% growth (+38%) outpacing cost (+31%) • Operating expenses (301.0) (231.4) 35% increase in depreciation and amortisation reflects investment in stores Depreciation and amortisation (45.1) (33.4) and digital technology Operating Cost (346.1) (264.8) 31% • Expected credit loss expense of £8.0m remained low, reflecting low-risk lending Expected credit loss expense (1) (8.0) (8.2) and focus on preserving cost of risk Underlying profit before tax 50.0 20.8 140% • Modest improvement in Customer NIM to (13.4) (4.9) Underlying taxation 2.21% reflects competition in the residential mortgage market, offset by 36.6 15.9 Underlying profit after tax 130% higher Loan to Deposit ratio Underlying EPS basic 39.4p 18.8p • Cost of deposits rose by 7bps annually, Ratios materially below the impact of base rate rises in November 2017 and August 2018 Net interest margin 1.81% 1.93% (50bps), reflecting our service driven Customer net interest margin (2) 2.21% 2.19% approach Customer net interest margin (2) + fees 2.67% 2.69% Cost of Deposits 0.61% 0.54% Underlying cost to income ratio 86% 90% Cost of Risk 0.07% 0.11% (1) Credit impairment charges for FY 2017 (2)Customer NIM eliminates the distortions created by TFS drawings, excludes Tier 2 debt expense, and provides a real 10 measure of how effectively the customer deposits are being put to work.

Maintaining a solid capital position CET1 ratio of 13.1% maintains headroom above our minimum target of 12% Capital generation Capital consumption • • Total capital ratio of 15.9% supported by equity raise and 48% growth in lending is the primary driver of capital Tier 2 debt issuance, and is above our minimum total consumption in 2018 capital requirement of 13.0% • RWA adjustment impacted RWAs by £900m • Internal capital generation is improving, benefitting from 151% increase in PAT CET1 AND TOTAL CAPITAL BRIDGE (0.7%) 0.4% (0.5%) 3.7% (3.6%) 2.8% (1.5%) 15.9% 15.3% 14.6% 13.1% CET1% Dec- Equity Retained Intangibles/ Porfolio Lending CET1% Dec- RWA Adj. CET1% Dec- Debt Total Capital 17 Issuance Earnings Other Acquisition Growth/ Mix 18 Pre-Adj 18 Post-Adj Issuance % Dec-18 11