Profitability18 Oct 2020 20:29
When I look at their balance sheet, I can see a serious profitability issue.... yes, they have a high physical branch cost but they also have a very low deposit ca80bps base which is positive. The problem is on the asset side imo. You don't need that much expensive branches to fund low margin mortgage business. The advantage of having a lower rate deposit base is not enough for mortgages. They should tap into unsecured loans and credit card market asap. Another thing is infamous MREL. With 9.5% coupon, the effect of this is like £4.15 billion extra deposit to carry on the balance sheet with the same assets... very punitive.
(Disclaimer: I am long and do not take these comments as investment advice. They are just simple thoughts)