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Annual Results
Part 1
I am always impressed when any Company produces their annual results within 3 months of their year end and for Metro Bank they managed it within 2 months.
Compared to the 2018 Annual Report there are only 54 pages versus 172 pages which is quite a reduction.
I prefer to access a Company’s website for financial information and I like to see what the website is like. I have said on other B.B. I do not like dark or black background colour as it can seem a bid depressing but Metro Bank’s website is bright and colourful.
Before I would read in full the most recent Annual Results I will have already have read the prior year’s results.
Accessing 2018 Annual Results is an eye-opener. As you may expect from our departed (not deceased!) Chairman Vernon W. Hill II he has the first photo (along with some dog) that you see on PAGE 2. In this large tome of 172 pages there are many photos. I always look at who is in the photos and why (normally vanity and often the people are 10 years younger than they actually are) I estimate there are about 13 photos of Directors and senior staff and then there are about 18 other photos of customers, colleagues and others. There are two almost identical photos of Lord Flight & Danielle Harmer (they swapped places) and in my opinion there was no valid reason (apart for vanity imo) to have two photos of the Lord. (You and I paid for these pictures as we own the Company) Finally there is one page of 10 photos which I actually think is appropriate and that is on page 168 which has a small photo of our 10 new locations that opened in 2018 (note not 11 as Vernon likes to inform us)
To be continued.
RKB
Annual Results
Part 2
Now when I look at the current Annual Results the first thing you see is a link to the Webcast of the Results Presentation and then directly below that you can see how you can download the results in PDF form.
The 2019 Results are a lot easier on the eyes than the 2018 Results and as there are no photos there is less to get irritated by.
There is a summary on page 1 of our current loss £11.7 million then when you factor in all the other bits the loss comes to £130.8 million which initially would appear to be a little bit concerning but then when you understand how we get to the loss of £130.8 million then imo it is not too bad. (Other posters can “drill down” if they want but I understand why the losses are there and going forward many of them will not be repeated (there will be some “new losses” which I may allude to in further posts)
I know I will be repeating some figures that were posted on the day and may be posted again before my tome is “Posted” but I feel that certain facts should be posted here for future reference (well most posters don’t even look at the Annual Results and probably do not even reconcile their own Bank Statement)
Highlights:
21% Growth in retail and SME core deposits to £10.2 billion.
Net Fee & other income up 43% (driven by customer growth & the launch of fee earning services) more on this later.
Strong Capital Position CET 1 is 15.6% (which to most will mean nothing but it is good news)
Customer accounts increased almost 25% to 2 million (will also expand on this later)
Metro Bank Rated Number One for customer service in Stores and for online & mobile banking. (Will expand on this later)
Strategic ambition to become the UK’s best community bank (will expand on this too)
Strategic plan revised to achieve statutory RoTE >8.5% by 2024 but this is a little bit remiss because they did not say what it was originally. RoTE is Return on Tangible Equity or technically “Return on Tangible Common Shareholders’ Equity”. Well if you dig around then last year they just use ROE and say “Low double digit RoE by 2023”.
To be continued.
RKB
RKB
Great work - keep it up and
Cheers
Thanks Cuddothisnow & Jtmacs, I will attempt to dissect the Annual Accounts (worts & all) and I will continue to post till I have completed but Mrs gets a little irritated if I spend 24/7 on laptop.
I used to work for a Bank but not as a Banker and Fred outsourced our department just to get me to resign as a Trustee Director of the Pension Fund (after I had fought them for 3 years to hold an election) I only attended one Board Meeting on Thursday 12th Feb 1998 and there were I believe 12 other Directors present (Fred was there but he was not able to vote due to a conflict of interest as it was going to benefit him personally but not in a financial way) Ten Directors all sat on the fence and would not go against Fred, I stood up against him and disagreed and Fred stormed out the meeting.
Lord Sanderson was chairing the Board Meeting and asked everyone present if they disagreed with RKB and as nobody did we made a decision. Fred stormed out the meeting and flew immediately to Melbourne. I flew on Friday the 13th to Australia to visit my mother and I had a meeting at NAB Head Office in Melbourne a few weeks later and it was all over the place (internally as it was kept quite) that Fred was fired. Six weeks later he joined RBS and everyone thought he had been head-hunted! What was it that Fred wanted to do that resulted in him not being part of the NAB Group? Answer, £250 Million that was to be moved under the table out of sight and all Pensioners would have been disadvantaged. (USA Mortgage problem long before the financial crises)
RKB
PS After I was outsourced I trained as an Auditor but only internally not official qualifications, but I sat many financial qualifications over the years and became a Financial Adviser but one week before I became self-employed Northern Rock went bust and Fred lost his Sir.
Blimey, that beats my CV,farmer for 40 years, thought a board meeting was to decide what wood to use.
Theo
Thought my agricultural language would have given it away, most posters on here are faking it, guessing, pretending to be an expert but at least we have a well qualified one now in mr beekeeper.
Thank you RKB and welcome to the forum here.
Good group of folks here.
Excellent research!
Wow, great to have you on the forum RKB.
Some great insight in results and your back story is very interesting.
Good evening Cyberdog
Your expectations are too low.
Try reading the Annual Accounts and factor in that Vernon the Second is no longer on the gravy-train.
If you had been paying attention Vernon lost his “the second” just like Fred lost his gong and when people realise the potential then the shorters will be caught with their underwear down.
If only you knew what I know.
RKB
Sorry try again!
https://www.metrobankonline.co.uk/globalassets/metro-bank-financial-statements-31-december-2019.pdf
Hi T - not from page 12 -54 ? Does this help
Cheers
RKB - welcome to the board, your experience and expertise are most welcomed. Looking forward to hearing more on your insights on what you see as the negative parts of the results.
Interesting reading about 'Fred the Shred' and the similarities of megalomania with our man with the II title.. No wonder we have one of the most expensive office locations in the City, sits nicely with playing into the ego... I noticed Fred liked his penthouses too.. brings no value to shareholders though.. Dan won't be long looking to cut out the ego spends amongst other items which I'm sure we will see on the improved accounts over time...
Panderman lol... clever farmer, I hope our investment here pays off with time. GLA.
Annual Results
Part 3
Good Morning BigDano
I am just beginning to get into the actual numbers and I need to ensure they are accurate and unfortunately whenever I post lots and lots of numbers it can put some Posters off as they don’t like the maths /arithmetic as they just want to focus on one liners which adheres to their view point but I will attempt not to bamboozle them. (I think the wife wants to go out today so I will not be able to number crunch much today)
It may help if I say a little more about Fred’s Bank that he controlled in Glasgow before he took the M8 for a bigger dinner. I need to be careful what I say as they made us all sign a “Bond of Secrecy” so anything I post relates to a fictional Bank that had its roots in the Farming Community in the North of Scotland and then was taking over by a Bank with its roots in the “Middle” of England.
So that Posters can confirm that I did work at A Fictional Bank, all you need to do when you are on Companies House is to search for “Lord Sanderson” and he pops up twice and the one with 17 appointments you click on the 7th company and even though the date of appointment says he was appointed on 1/04/03 he was on the Board before. Look at the people and look for RKB, I no longer live at that address.
RKB
Annual Results
Part 4
Good Morning BigDano (continued)
This Fictional Bank was poorly run from the top and most of the senior staff were in my opinion incompetent. They normally promoted staff not on merit but on moving them around. They seldom recruited externally and if your mum, dad, brother, sister or granny worked there, then the chances you would get a job also (I joined externally because I had computer skills that the Bank badly needed) Nobody ever got pulled-up if they messed-up in fact they got promoted to well out of their depth.
My boss was one of the worse and I basically did her job but she got the big bonus I did not. I had access to many documents and could see how poorly they made lending decisions and how they disguised massive losses. One example which I know personally about because I knew the Branch Manager was that a Hotel loan of several million was going to be called in but the Manager said the owner had a dickey heart and he may not “live” if the Bank Foreclosed so they wrote the loan down substantially. Who do you think the owner of this Hotel was two years later?
Another thing this Fictional Bank did was write off 1,000’s of small loans each year, some for a few hundred £’s and some for a few thousand £’s. Then unknown to many the “debtors” were paying back £1 or £5 a week and this all went into a big big pot. These small loans went back for decades so the money coming in each week was unbelievable. Now when I say a “Hotel Loan” was written off for say £2 million that would have an impact on the balance sheet, would it not? Wrong, you forgot there was a big big pot of money “to sort” this. Fictional? I could write here many things that would open your eyes but I think you will now realise I have knowledge of “bad practice” and I can bench-check that with Metro Bank.
RKB
PS What Fred did not know is that my cousin used to work with him many years ago when he was an accountant and I knew back then about his affairs and at his other Bank he spent £100,000’s trying not to have his affair with an employee made public so he knows how to throw money around.
I like all the maths and analysis, keep it coming.
Whilst I'm not great at reading some of the details in the results I like to read people's analysis who have more experience of breaking down some of the loss obvious figures.
Mr Beekeeper, that is so good to read, have you written a book? If you haven't you should.
Keep it coming,
Panderman.
Annual Results
Part 5
Highlights: continued
Our Assets decreased by £247 Million to £21.4 Billion.
Our Loans increased by £446 Million to £14.7 Billion.
Our Loan to Deposit Ratio moved from 91% to 101%
Our CET 1 Capital Ratio moved from 13.1% to 15.6%
Total Capital Ratio moved from 15.9% to 18.3%
Liquidity Cover Ratio moved from 139% to 197%
Total Underlying Revenue basically the same at £400 Million.
Basic Loss was £11.7 million when previous year there was a profit of £50 million (this has to be looked at in more detail to understand it) and we have to understand how / when we are able to utilise these tax losses as the rules have changed and it is a bit more complicated (I think Fred is the problem because his new Bank racked up so much loses that the Chancellor has to get some tax from them)
Actual Loss was almost £131 million when we made a profit in the previous year of almost £41 million (again we need to look more closely at this but imo it is not as bad as posters are making out)
Net interest margin down from 1.81% to 1.51% and this does give me a concern when the BoE base rate is already so low.
But the good bit for me is that although our earnings per share are negative at 10.8p last year we were at 38.2p and this is really the key as to when / if our share price will increase. Also it should be noted for reference that in 2017 the basic earnings per share was 12.6p. When I do my own personal calculations I can see a substantial increase in earnings but before I can post them I need to do a substantial amount of research and then work out some variables and then proffer them up for scrutiny.
RKB
PS Panderman, I tried on numerous occasions to have quality newspapers publish what I knew about Fred and none would. Why? Because they were aware that all the advertising that they accepted would not continue. Do you still think even quality newspapers are truly independent?
PPS I did have a hand in getting his Pension reduced as I proved his salary and pension pot were out of sync and the powers that be removed a few million £’s. Small conciliation to the millions who were impacted by the financial crash.
Annual Results
Part 6
I need to jump about a bit as already said this morning I do not have the time to complete my analysis (and now am thinking why should I) but I will put a few words down before I make myself a pot of proper coffee to appease a few “detractors”. For the record, real coffee is my drug of choice and the odd bottle or two of red (McD’s is for convenience when I am on the road)
Cost Income Ratio: is not good in fact it is high at 100%. They have a target of 70% - 75% by 2024 and it is this figure that we have to watch closely as that would (should) mean profitability.
We know that loans and deposits are about £14 billion each and that they want loans not to exceed deposits. What brought Northern Rock down in 2007-2008 were funding Mortgages from the Money Markets and offering 125% LTV Mortgages (I was a self-employed Mortgage Broker in Sept 2007 and became self-employed one week after N Rock hit the funding wall)
So how can Metro Bank reduce their Cost Income Ratio? Well basically they have to do a few things like grow their deposits (difficult with low interest rates) make more money from their Products (Loans, Mortgages, C Cards & Services) But in the current climate with interest rates so low the margins could get tighter then they have to cut costs and ensure each Store (Branch) is paying its way by being profitable.
2019 Net Interest Income decreased by £22 million to £308 million.
2019 Net Fee & Other Income increased by £27 million to £90 million but what they don’t beat the drum about is that this is an increase of 42.81%.
2019 Total Underlying Revenue was down 1% to £400 million.
RKB
Annual Results
Part 7
Safe Deposit Boxes: There are 5 sizes of Safe Deposit Boxes which generate a lot of revenue. Per year each box costs £240, £270, £360, £525 & £750. From the accounts we are informed that 6 stores opened in 2019 making 71 stores with 3 opened in the past two months. It is not easy to estimate the revenue from Safe Deposit Boxes as it is not separated out but....
But by looking at the 2018 Annual Results there were 65 Stores I can’t find anything of note about Safe Deposit Boxes so it is in the 2017 Annual Results where we are informed that the 55 Stores and on page 28 (of the glossy brochure) there is a case study of the Ealing Store. It opened in June 2013 and in 2017 about 92% of their Safe Deposit Boxes were occupied and covered all the Stores Rental Costs. Now for Londoners I am sure they will be aware of the size of this Store and they may also be aware of the Rental Costs in that area and although Rental Costs vary it is good to know that one particular service (Safe Deposit Boxes) almost covers their Rental Costs.
RKB
Thanks mr Beekeeper, 1st class post.
RKB - Respect and very Impressive.
One of many points which for me included:
- the average number of personal loans taken out per branch was only 2 WTF!! imagine if that was even 20 per month.
- Dans story about customers aren't even asked whether they want credit cards, as the process is so poor it would lead to damaging the customer relationship
- Lack of progress on personal current accounts
AND
- You can apply for the a business account online.
There is much more of a positive narrative to come through, plus size of fine under £4m.
How long before you think these issues will implemented??
meant You can apply for the a business account online
You CAN'T apply for the a business account online