Metro Bank Holdings PLC (MTRO) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Metro Bank AGM Call. My name is Stuart, and I will be the operator for your call this afternoon. There will be no questions on this afternoon's call. I will now hand you over to Sir Michael Snyder, Chairman. Please go ahead.

Good afternoon, everyone. I'm Michael Snyder, Chairman of Metro Bank, and a warm welcome to our 2020 Annual General Meeting. As you are well aware, due to COVID-19 and the government's public gathering restrictions and as set out in our notice of meeting, this meeting is being held in a very different format to prior years. Although shareholders are not permitted to physically attend the AGM in person, I'm delighted you have dialed in today via our live audiocast. As published in our notice of meeting, today's audiocast is listen-only, except for the designated speakers of the meeting. Shareholders have been given the opportunity to submit questions to the company in advance, and we will be answering these questions at the end of the formal business of the meeting. A recording of the meeting will be available on our website for a period of 30 days from today. As set out in the notice of meeting, the AGM is being held at the company's registered office. Unfortunately, I'm unable to be physically present at the meeting in Holborn. So in line with the company's articles, I cannot Chair the AGM. I would, therefore, like to introduce my fellow Director and Chief Financial Officer, David Arden, who is appointed Chair of today's AGM; and Sally-Ann James, Metro Bank's General Counsel, both of whom are physically present at the meeting; and our shareholders, therefore, satisfying the quorum requirements. I would also like to introduce my other Board colleagues, who have dialed in today via phone: Daniel Frumkin, our Chief Executive Officer; Monique Melis, our Senior Independent Nonexecutive Director and Chair of our Nominations Committee; Catherine Brown, the Chair of our Remuneration Committee; Michael Torpey, the Chair of our Audit Committee; Ian Henderson, the Chair of our Risk Oversight Committee; and our other Independent Nonexecutive Directors Sally Clark, Paul Thandi, Nicholas Winsor and Anne Grim. Before I hand over to David Arden to begin the formal part of the meeting, I would like to just say a few words. Our ambition to become the U.K.'s best community bank has never been more important. As we all know, across the country and around the world, we're all facing an unprecedented challenge as we respond to COVID-19. At Metro Bank, we are doing everything we can to support our customers, our colleagues and our communities. All our stores and contact centers have remained open with strict social distancing in operation, so we can continue to support customers who need us at this time, alongside our 24/7 digital services. We are working with customers, whose personal business finances have been impacted to ensure that they benefit from the most appropriate support, supporting customers' requests for repayment holidays, participating in the Coronavirus Business Interruption Loan Scheme and intend to participate in the Bounce Back Loan Scheme. We have put in place new processes to help more vulnerable customers. And our colleagues continue to support the local communities in which they operate through a range of volunteering initiatives. On behalf of the Board, I would like to recognize and thank our colleagues across the bank for their continued dedication and commitment to delivering outstanding customer service, even in these most challenging times. Given the inherent uncertainty over the length and scale of the pandemic, it is too early to fully evaluate the impact of the situation. The U.K. response to COVID-19 has featured record-low interest rates and substantial government intervention, both of which are expected to support continued repayment. And Metro Bank benefits from relatively low exposure to unsecured lending and a conservative debt-to-value profile. Nonetheless, we are seeing some short-term economic disruption, which will naturally result in significantly higher credit risk impairments than in years -- recent years, with the actual quantum, depending largely on the magnitude and length of the economic slowdown. We've also seen behavioral changes, such as a reduction in transaction volumes, which may result in lower-than-expected fee income for a while. As mentioned in the first quarter's trading update, the impact of COVID-19 continues to be rapidly evolving and difficult to predict at this time. So an update on the impacts of the pandemic and its economic consequences will be provided at the half year results. While we respond to the current situation, we also continue to remain focused on delivering against our strategic priorities set out in February. I am confident that the bank has a solid platform under the leadership of Dan Frumkin, who was appointed Chief Executive and joined the Board on 19th of February this year. We have also welcomed a number of new Nonexecutive Directors since the last AGM: Michael Torpey, Sally Clark, Ian Henderson, Anne Grim and Nicholas Winsor. They bring invaluable experience to the Board as we, together with the Executive Committee and all of our colleagues, remain focused on delivering on our ambition to become the U.K.'s best community bank. Lastly, I would like to take this opportunity to thank Vernon Hill, Craig Donaldson, Ben Gunn, Roger Farah, Gene Lockhart and Stuart Bernau, who have stepped down from the Board since the last AGM. In particular, I would like to pay tribute to Vernon and Craig's vision and dedication through which Metro Bank grew from a standing start to over 2 million customer accounts. Thank you. And I'll now hand over to David Arden, who will go through the formal business of the meeting. David?

Thank you, Sir Michael, and thank you all for dialing in today. In physical attendance at this meeting are myself and Sally-Ann James. We are both shareholders in Metro Bank PLC. As such, the quorum requirements for the meeting are satisfied, and I now declare the meeting open. Turning now to the formal business of today's meeting. The notice of meeting has been sent out to the shareholders and made available on our website. That notice, including the full text of the resolutions, shall be taken as read. Resolutions 1 to 17, inclusive, are proposed as ordinary resolutions, meaning that for each of those resolutions to be passed, more than half of the votes cast must be in favor. Resolutions 18 to 20, inclusive, are proposed as special resolutions, meaning that for each of those resolutions to be passed, at least 3/4 of the votes cast must be in favor. As stated in the notice of meeting, voting on all the resolutions shall be conducted by a poll. As Chair of the meeting, I will vote on the poll as directed by the large number of shareholders that have submitted valid proxy cards prior to the meeting. The final results of the poll for each resolution, once scrutinized by our registrar, Equiniti, will be published through a regulatory information service and published on the company's website as soon as practicable after the meeting. Thank you all for dialing in today by phone. I now declare the formal part of the meeting closed. We will now move on to our shareholder Q&A. In the notice of meeting, we offered shareholders the opportunity to e-mail questions to the company in advance of the AGM.

We have received 2 questions from verified shareholders, and I will now read them out, along with the company's corresponding answers. I will read the question first, verbatim. Question one. I'd like to know why there's been no director deals. Last buy was from Vernon Hill a considerable while ago, and we all know the share price has been hammered since. At the share price now, do the directors still not have hope in the company, or see it as undervalued? Our response to this is that acquiring shares is an individual decision and will depend on Board members' personal circumstances. However, I would note that since the question was asked, one of our new Board members, Nicholas Winsor, has purchased shares in Metro Bank; and our Chairman, Sir Michael Snyder, has also purchased shares. Moving now on to question 2, which is a 2-part question. Again, I'll read it verbatim. First, is Metro Bank considering coming back to shareholders anytime soon to raise funds, even though shareholders have already faced an equity raise and dilution in May 2019? Secondly, is an asset disposal in the very near term the preferred option to raise much-needed funds due to COVID-19 losses rather than an equity raise? Our answer to this question is short. We have -- in short, we have no appetite to raise equity. Metro Bank was well positioned going into the current situation. We have just completed a comprehensive evaluation of the business, reported strong capital and liquidity metrics, and we hold a low-risk loan portfolio. However, as you would expect, we are mindful of the impact of COVID-19, which has been and continues to be rapidly evolving and difficult to predict with any certainty. As we set out in February, we would consider potential asset disposals and other balance sheet optimization initiatives in order to conserve our equity capital, if needed, and would make any assessment based on the best value for shareholders. We will provide an update on the impacts of the pandemic and its economic consequences at the half year results. That concludes the Q&A session, and we thank you again for joining us today. Good afternoon, and goodbye.

Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect. Goodbye.