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Yes noticed that CET1 not on table which must have been what was voted down originally. A positive spin might be that they want to dilute the T2 debt holders who caused so much trouble before (if we think they were not in cahoots with anyone else...).. Interesting that they say they have discussed with shareholders in advance, but of course not the retail shareholders. But if the other shareholders have been provided with any price sensitive information, some form of public disclosure would need to be imminent.

Interesting RNS. Having been voted down at last AGM they seem to be having a go at dis-applying pre-emption rights again.

Not sure whether is a sign of potential capital raise, or just housekeeping. Anyone have any insights?

On the shrinking book a couple of observations. Firstly, I picked up on the presentation (slide 25) that their core capital requirements have gone up (from 12.9% to 13.7%). On the positive side it means that they have got an ICAAP past the regulator which was a concern given the big bet on commercial. But it makes the room for error even less. The second observation is that for all the talk of a "new strategy" of reshaping the balance sheet etc the reality is that if they had the same RWA as last year (£7.5b) their total capital ratio would be 12.7% (so below requirements). Its like one of those cartoons with people chucking stuff out of a hot air balloon in the hope they avoid hitting the looming mountain. If rates stay up, credit quality holds and they don't have to spend too much fixing the infrastructure they might just make it.

To be fair, even if they don't make it, JGB will likely put in more capital. The question is at what price, and will he have to take whole thing private

I guess you shouldn't forget that the "asset rotation" involves shrinking the balance sheet by £5b (20%). I remember Frumkin talking about the recap allowing them to stretch their legs! More like an amputation. Its not a growth stock, with CET1 at £800m they can't grow quickly. And if you look at the mix shift, they are now very heavily exposed to base rates. I would prefer them to sell, but not sure if there is a buyer at 75% of book value. But all that said, I still think the price should pick up today

It is surprising, with teh results largely as expected, but haven't seen the big volumes yet. I don't believe certain parties will let momentum shift this much. I expect to see some buying later - but who knows

A reasonable set of results with the big "miss" being costs- both "operating" and in particular total, although the latter looks to be a write off of intangibles which is massaging next year and makes no difference to capitalwhich at £808m is as thin as expected. Remarkable to fire 30% of the workforce and end up only £20m less operating cost than last year (most of which they appear to have spent on consultants this year instead!). Net growth in Current Account Balances is a positive surprise although halving run rate sales on retail current accounts to 110k shows what the strategy means for this part of the business. it is clearly hitting non-interest income which has stalled. All in all pretty much as expected. Which I guess means they are a year closer to sustainable profitability without a big mess up- which should be positive to the share price.

Cyberdog, I presume you mean on an underlying basis? WIth £100m loss on mortgage sale running through the books, plus a £17m fine (which I think was unprovisioned) it's going to be a big stat. loss. Plus, I think an underlying profit for the full year is unlikely given the half-year loss of c.£27m. Q4 profit of about £15m is what I think they will focus on.

But anywhichway I don't see it resulting in a big s.p. move down-that would require revised guidance or a capital raise, neither of which looks imminent.

Interested in other views of what delivered performance is expected/required for a material s.p. impact

They did same thing with the mortgage sale (announced just before half years). In that case it allowed them to upgrade guidance and signalled the big upturn in s.p. This is less of a big one (although per previous notes, the mortgage sale was really just smoke and mirrors). I thought it might signal some buying this time round but apparently not. But probably gives more cover to a results announcement that will likely focus on the future rather than having to explain yet another significant statutory loss.

Looks like a reasonable deal for Metro- actually adds to CET1 (£11m) when allowing for provisions release which is better than I thought. Not sure who wants to pay book value for a portfolio yielding 5.3%, but presume its pretty clean (so Metro left with the nasty stuff). Didn't affect guidance, but perhaps will be used as a fig leaf for a bit of buying by related parties (like the mortgages sale). But my rough calcs suggests post this deal, CET1 is down around £800m, in line with the level of 2024 losses suggested previously. So I don't see a lot of room for growth until profits start actually materialising.

2.5% (exit) is indeed the NIM target from July last year, but we are atleast 1 (I make it 2) less rate cuts than were predicted at the time, so they should do better

But anyway I agree that the shareprice movements are hard to reconcile. To me its binary. If it is smooth sailing on a macro level the bank gets to escape velocity (i.e profit of c.£100m+) without needing more equity. At that point it should be worth atleast £1b. It doesn't really matter if they undershoot on commercial (which is Barclays concern). They can make it up with broker mortgages or forward flow. It might take 6-12 months longer but that is not a big deal re total value.

But with either a credit downturn or a need to invest to stabilise infrastructure they will need CET1 because the bank is running on fumes here.

Nim over 2.75%

Operating costs under £500m

Non interest balances over £5.5b

Sorry should have said operating costs

I am surprised by the movement as the re-rate up from low 30's started in the weeks running up to the half years (July 31) albeit the really big moves happened on and around the day

I doubt the negative sentiment is the court case which is old news. Seems more linked to Barclays target price of 80p announced around the time the s.p. came under pressure

TBH I don't know how to view this stock since it feels so open to manipulation. What I expect is that full year 2024 will be a statutory loss of c.£130m with an underlying loss of about £10m. Key things to look out for are:

NIM>2.75% = good performance

Operating costs £5.5bn = good performance

Very interested to see if they disclose how many new current accounts they opened- which was always the key metric but they did not disclose in FY23 or H124. In H1 23 they had opened 103k PCAs (so c.200k annualised) and 23k BCAs (so 46k annualised). If this bank is to be anything other than a dress for sale play, the numbers here need to be above 120k and 35k in my book

Bit of a mixed bag. Like the mortgage book it is another unhedged asset so will be sold at a material discount to par (i.e. will burn more core equity, but the RWA release will improve the ratio). Makes "strategic" sense in that they have given up on unsecured lending so may as well clean it out and fire what is left of the poor Ratesetter staff (it was only 3 years ago that Frunkin was telling us this was the deal of the century, but this will crystalise a material loss over the period of ownership). I do wonder how low the regulator will let CET1 go on an absolute level, but as per note below, regulators look to be in a forgiving mood. It is further concentrating the risk in Commercial lending- typically late cycle plays into this asset class don't end well, but they have rolled the dice.

I have been down on this stock because of poor management, and a strategy that is ex-growth. But if Metro fall out of MREL regime it is a massive upside. Not only saves £50m of NII assuming can pay back most of the sub-debt out of excess liquidity, but takes away the refinancing cliff that was at the heart of the last disaster and removes a major barrier to a non-MREL specialist like Paragon having a look. With rates staying up this management team are getting a lot of luck. They have no excuses now

If you step back to 2019, the core model of attracting current accounts continued to be successful providing a path for long term growth (between 2019 and 2022 current account balances grew from £4b to £8b) However, the £40 per share valuation that we saw in 2018 was predicated on future balance sheet growth being self-funding. The RWA issue put a stop to that. The challenge for new management was how long it would take before the business could self fund balance sheet growth, and whether they would need to raise further equity, alongside MREL before then.

The market clearly heavily discounted their ability to achieve this- the £0.5b valuation on £1.5b of CET1 was 30% of book value. And it turned out they were right. Post the mortgage sale, there is now about £0.8b of CET1 despite £0.25b of new CET1 being raised in 2023. So management have burned through £1b of core equity, shrunk the balance sheet, increased costs from £400m to £500m and will print another £100m+ statutory loss for 2024

This poor performance is made all the more remarkable by the fact that interest rate rises should have transformed the economics of the business. But because of a failure to put product hedges in place, the bank failed to get an immediate benefit, and before the natural repricing of fixed assets played through, they managed to engineer a run, such that current account balances are down below £5b . The replacement of those low cost deposits has eaten up a chunk of the NIM improvement baked in.

However, the situation in 2025 still offers a chance to create value. Higher interest rates mean the original business model is highly profitable- simplistically £15b of deposits at a 2% cost in a 4.5% base rate environment generates £375m of income. Put to work in more productive lending and it should be >50% more on a risk adjusted basis. So with £100m of fee income as well, with no growth (and so no new equity or MREL) even this management team should be able to produce£700m of risk adjusted revenue. Keep costs flat (in real terms) and that should be a c£200m PBT. But at what multiple?

The 90p valuation implies a a £1b valuation in 2027 (5x PE) at an 18% cost of equity. That implies little opportunity for value creating growth. Which I think is right. The 2023 slash and burn essentially destroyed the proven growth model. The 2019 business was #1 for both retail and SME satisfaction and the bank was opening nearly200k new PCAs and 50k new BCAs. They are probably now around half that. Meaning that the platform for sustainable growth at returns above the cost of capital has gone, removing the chance for a decent multiple.

Essentially what should have been a golden goose has been cooked and fed to its wealthy owner. Those that jumped in at 30p made a good call, but getting a big upside from here would require a very different strategy (I suspect the owner is looking inorganic, but that value is unlikely to be shared with e

If you actually read what he said, it was that in the last (2019) capital raise (taking share count to 172m) the price was £3 so MV = c.£520m and now there are 672m shares ay £0.9 so MV= £600m. So give or take, the maths is right, but not sure I agree with the logic of the relationship between 2019 and 2015. The situation in 2019 was very different to today. But I think the comparison is useful in understanding the stock- so I will put some thoughts down in a separate post. People who don't like longer posts can just ignore it.

Metro is by far the most sensitive of the UK banks to rates (upwards positive, downwards negative) because of the high proportion of rate insensitive deposits it holds. So the recent news is a positive and will be based on a more attractive yield curve than that used for guidance at H1. As a matter of interest, the reason why it did not look like they benefitted more from the upswing in rates 2022-2024 is that unlike most banks, they did not lock in spreads with pay fix swaps on their fixed rate mortgages/treasury assets If they had, the bank would have been chucking off >£150m in profits and would not have had to write off £100m selling mortgages priced >150bp above the prevailing 5 year swap rate when written). But the unravelling of the unhedged assets (much more than the change in assets mix ) will ultimately deliver much stronger margins in the medium term.

But I think the point is, if a fund had piled in when the share price was at 30p, but stayed under the 3% limit, it would have had 20m shares worth a total of £6m. The holding would now be worth £20m, but that is a pretty small fund if that was 10%.

Anyway, I think broadly we would agree that there is not much to see here, unless we start to see some shorting or there is some actual news on the stock

Not sure if I am missing something, but not seeing any shorting action (assuming anyone >0.1% net short has to declare it).

It just doesn't feel like there is the free float available for anyone (other than Galinski) to make sizeable returns here. Even Pictet, who were completely on the wrong side of the short at 30p, have only lost £2m by my reckoning.