Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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investor6/Jinny122, you both point to loan book, yes, it's kind of hard to grow, but on another side of a scales as Theosus suggests there are financing costs (mostly depos of MTRO clients, equity, etc.. in short - liabilities) and as you know on a competitive market and volatile economic environment any form of "bank run" can happen/develop very quickly and beyond any control (recent wave of "switch account and get £xxx free", europeans go home after brexit, income falls - you know what segment MTRO clients are in - right?, etc.), creating at least 2 obvious problems: how to get money for those who wants it back and how to finance (MFI regulations by BoE) this "loan book" you keep talking about, not even to mention high and inflexible admin/running costs, defaults/impairments/delays (30d/3m/6m+ etc.) on loan book.. In general this loan book is both: opportunity for a profits (hopefully for shareholders) and something what might drain equity very easily.
Cashflow obviously in this context means net result/long-term profit (although as already mentioned today - there's no prospects of dividend flow in nearest time horizon).. NPV of it, without going too much into number of possible calculation variations from accounting perspective, just in a business sense...
Yuri - my family have been buying and selling a range of businesses for many, many years. Although, that is not in my bag, what I do know is when your buying a business/limited company you get whatever assets tangible and non-tangible are contained within it
Ask anyone of they would like to buy a business for £500m (£3 per share) and get £1.7BN (£10 per share)???? WTF!!! Also a £14,000,000,000 Loan Book!!!
Metro have 2 million customers, which means if that each customer pulled together £180 each, they could turn it to a mutual (2m x £180 = £360m which is????? current market cap.
So Yuri, my point is ..... share price is just sentiment.
Be patient my friend :)
Yuri..... how does discounted cashflow value of future profits capture the CURRENT ASSET VALUE of a £14bn loan book for instance?? - it doesnt, as discounted cashflow analysis is only concerned with future profits.
So the value equation has to be: Current Asset Value + Net present value of Future Profits. Now do that for MTRO and you'll start to see how a premium over book value may be justified given its growth prospects at the hands of a better resourced acquirer.
Yuri - "for some strange reason you're forgetting"... I know your a shorter :)
investor6 - for some strange reason you're forgetting about simple stock market rule of economics: shares on average are priced based on ability to generate profit (value for shareholders) vs other opportunities, aka risk/return and each asset weights in portfolio, in most cases it doesn't matter for how much and who's bought shares, only discounted cashflow matters..
Jinny there have always been different mortgage deals, and contrary to what you may think not everyone with a mortgage wants or knows how to switch to get a better deal. If you switch and only have a mortgage of say £50,000 the fee has the 'effect' of increasing the interest you pay. It is not all about the headline rate, and the client might not meet the criteria e.g. self employed with short trading exp. etc.
You must be one big tw*t to take a mortgage because of £250 cash back. Ffs
5 year fixed resi mortgage at 75% LTV
RBS; 1.65%, £999 fee, plus £250 cashback
MTRO: 2.24%, £999 fee
Eventually £7 to £12
IGNORE most here. Lets not forget between all us posters combined, we won't have more than 1%. Most investors and institutional and have been in the IPO (£22) and placings at £36 and £5. They have an average of £22. Not forgetting BIG V who has alot skin in the game, with 7,391,600 shares, the latin american billionaire who bought £7m (or thereabouts), VH billionaire friends who have invested hundreds of millions.
The small timers here have miniscule shares, maybe 100,000 or possibly more. Some may have bought at £30k at £1.55p and have a hard on for £3 or even £4.
Its all about the FCA. Any fine under £10m and this will fly. The bids will come in and watch this move quickly to £6 and above, with an eventual sale above book value.
Sit back and wait and ignore most on here. This share is held by big c++k investors and they can wait. This is NOT a distressed sale.
Ignore MREL of 9.5%. Astom Martin had a high MREL and there shares are moving and they don;t have many assets to sell. Where as we have lots.
This is controlled markets. They will move out and watch this baby flyyyyyyyyyyy
I honestly have 3 buy to let mortgages with them over the last 4 months, which were the best 5 year fixes (65% Loan to Value), according to my broker.
The others such as HSBC, Lloys, Post Office offered good deals but alot of hassle and I couldn't pay additional amounts back f I wanted to.
Key question is: what takeover price are we expecting? ;-)
IMHO MTRO are charging uncompetitive mortgage rates because they have to in order for the economics to work. It is not where they want to be IMHO. Key question is how much of that mortgage book is due for refinancing in the next few months, because if it stays like this they will lose a lot of mortgage customers to hungry larger rivals. Its a ruthless market
Yes but metro has a far small pot to disperse than the big boys. It makes sense to put your money out at the rate you want rather than join the race to the bottom. I came off my fixed years ago at 6% but can’t be bothered to change as my payments £500 a month. The reason is I bought a commercial property and converted it and at the time the lender was the only one who would entertain, so I’ve stayed loyal to them. Lots of different reasons people don’t go with the cheapest. Fees, penalties, portable, other product links etc....
Alreafy pointed out that big banks have access to capital markets, and yes BOE funding too (which is cheap debt).
MTROs model however, is 100% deposit funded.
Jinny connect the dots, maybe it applies to you too, and I'm not being rude. The BOE had a big part to play in funding the mortgage market in recent years by making money cheap and available to the banks IMHO.
YES - the answer to your question in one word.
MTRO had around £14bn of deposits and £14bn of loans as at Sept 2019.
Stop arguing and educate yourself!! No one knows everything, kerp an open mind.
Illbetabuck..... I strongly suggest you learn more about MTRO before investing. Seriously.
MTROs loan to deposit ratio as at September 2019 was approx 100%. Every £1 borrowed was covered by £1 in deposits.
Dont try to be too clever, you'll trip yourself up!!
The example that was used was 75% LTV which to my mind removes a large element of risk.
Guyssss.... connect the dots here.
How does MTRO fund its mortgages?? Its through deposits. How does the big players fund theirs?? they have benefit of access to capital markets at significantly lower rates than MTRO pays for its deposits. Lloy alone has a near on £300bn resi mortgage book for crying out loud.
MTROs mortgage rates are higher because its costs of funding the mortgages are higher. Its not by choice to charge an uncompetitive rate. MTRO prides itself as a very low risk lender, its default rates are miniscule, so its not going sub prime or thereabouts.
Having had experience of placing mortgages, some of you are getting caught up with the headline rates. Anyone over the age of 40 ought to be aware how unreal current rates are. As Mr cuddo has pointed out the criteria can be very stringent. The MTRO rate still represents a fantastic deal.
Oh and I don't believe its over for MTRO as an Inde', make that call when you see full year figs. GLA
Illbetabuck..... you seem to have selective reading.
Other comparisons have been provided showing that in addition to HSBC, RBS and Santander are substantially lower rates than MTRO. And thats before we talk about Lloyds or Barclays.
Resi mortgages are the core of MTROs lending business, again as I pointed out already, 72% of its loan book is resi mortgages.
All the major lenders have massively increased appetite on mortgages. HSBC alone wants to find additional customers to lend £35bn more to.
On your other point, how does a bank (MTRO in this case) decide it no longer wishes to have anything to do with its core lending business?? Whats the alternative?? Where will it be more competitive to compensate for 72% gap in its lending book??
More comparisons: 2 year Resi fixed mortgage at 75% LTV
RBS: 1.25%, £995 fee
Santander: 1.39%, £999 fee
UNBELIVEABLE THAT MTRO IS OFFERING 2.09%, £999 fee!!!!!
Funding costs advantage of larger players is decisive.
Typo: MTRO 2 year fixed rate is at 2.09% at 75% LTV and £999 fee.
Versus HSBC at 1.34% at 75% LTV and £999 fee
Jinny try getting a HSBC mortgage, they are highly selective and only go for the best credit risks.