Annual Report and Accounts 2024 This is Relationship Banking Welcome Strategic report 1 Summary of the year 2 Our purpose and strategy framework 4 Chair’s statement 6 Operating environment 8 Chief Executive Officer’s statement 10 Business model 14 Key performance indicators 16 Financial review 19 Environmental, social and governance review 28 Non-financial information and sustainability information statement 31 Section 172 statement 32 Task Force on Climate-related Financial Disclosures 42 Risk overview summary 46 Viability statement Governance 49 Corporate governance introduction 50 Board of Directors 52 2024 governance at a glance 54 Board activities and stakeholder engagement 56 Stakeholder engagement 59 Letter from the Designated Non-Executive Director for Colleague Engagement 61 Board leadership and company purpose 63 Board roles and responsibilities 64 Board effectiveness 66 Group Audit Committee report 71 Group Risk Oversight Committee report 74 Group Nomination Committee report 78 Group People and Remuneration Committee report 82 Remuneration at a glance 87 Remuneration for colleagues below Board level 90 Remuneration Policy 103 Annual report on remuneration 118 Directors’ report Risk 122 Risk management framework 123 Risk governance and oversight 125 Financial risks 144 Non-financial risks Financial statements 152 Independent Auditors’ report to the members of Metro Bank Holdings PLC 161 Consolidated statement of comprehensive income 162 Consolidated balance sheet 163 Consolidated statement of changes in equity 164 Consolidated cash flow statement 165 Notes to the financial statements 212 Company balance sheet 213 Company statement of changes in equity 214 Company cash flow statement 215 Notes to the financial statements Additional information 220 Country-by-country report 221 Independent Auditors’ report to the Directors of Metro Bank Holdings PLC 223 Other disclosures 224 Alternative performance measures 229 Abbreviations 230 Shareholder information Evolution 2024 has been a year of evolution as we have pivoted our strategy towards corporate, commercial and SME lending, and specialist mortgages. Focused on growth We remain focused on achieving sustainable profitability and creating value for all our shareholders. We will continue to deliver on our strategy, building relationships and becoming the specialist lender of choice. Read more in the Chief Executive Officer’s statement on page 8 Metro Bank continues to make strong progress. We’re creating a simpler, more agile and digitally enabled bank for the future. Daniel Frumkin Chief Executive Officer Statutory (loss)/profit before tax (£m) Loan-to-deposit ratio (%) Net interest margin (%) Deposits (£b) Underlying loss before tax (£m) Loans and advances (£b) Summary of the year 2024 has been a year of transformation with the Bank returning to underlying profitability in H2, ahead of guidance, thanks to our continued emphasis on cost discipline and balance sheet management. We have positive momentum moving forwards, with a strong pipeline supporting our pivot towards higher yielding corporate, commercial and SME lending, and specialist mortgages – areas where our established relationship banking model positions us to win and create new FANS. Who we are We opened our doors in the summer of 2010 and were the first high street bank to open in the UK in over 100 years. Since then, we’ve built a business that is providing meaningful competition against larger incumbents and offering a compelling alternative for small business and commercial customers. Our approach Our approach is centred on our colleagues and building relationships with our customers and communities. Whether through our network of 75 stores, on the phone through our UK-based contact centres, or online through our internet banking or award-winning mobile app, we offer our FANS a real choice. Our established relationship banking model and focus on our localness informs everything we do and the decisions we make. #2 In-store service for business and personal customers1 3.0m Customer accounts 1. Competition and Markets Authority (CMA) survey carried out in Great Britain by Ipsos and BVA-BDRC between January 2024 and December 2024 – Services in branches. Results at ipsos.com and bva-bdrc.com 2021 2020 2024 2023 2022 (212.1) (311.4) (245.1) (70.7) 30.5 2021 2020 2024 2023 2022 62 75 75 82 79 2021 2020 2024 2023 2022 1.22 1.40 1.92 1.98 1.91 2021 2020 2024 2023 2022 (271.8) (171.3) (50.6) (16.9) (14.0) 2021 2020 2024 2023 2022 16.1 16.4 16.0 15.6 14.5 2021 2020 2024 2023 2022 9.0 12.1 12.3 13.1 12.3 Metro Bank Holdings PLC Annual Report and Accounts 2024 1 Additional information Financial statements Strategic report Risk report Governance Our purpose and strategy framework At Metro Bank, we have always been proud to do things our way. In an age where banking has become less personal and increasingly faceless, we have always stood for something different, and today, it’s that difference that defines the next chapter in our story. Our reason for being, why you and our customers choose us, is because of our people. We exist to empower our customers and communities and we do so with a human approach to banking, whether face to face, over the phone or through our digital channels. We strive to make life easier for our customers by providing exceptional service every time. It’s at the heart of what we do and why we are the ‘relationship banking specialists’. Our AMAZEING behaviours strengthen everything we do and are ingrained throughout our organisation helping us drive our relationship banking approach: • Attend to every detail • Make every wrong right • Ask if you’re not sure – bump it up • Zest is contagious – share it • Exceed expectations • Inspire to create FANS • Nurture for growth • Game change, because we’re a different kind of bank. Our purpose is to empower customers and communities with a human approach to banking. Through delivering exceptional customer service, we turn customers into FANS, who champion us through actively recommending us to friends and family. Our core principles define, guide, and inspire what we do and the experiences we create. This simple purpose guides everything we do as it places the customer and our communities at the heart of all of our decision-making. 1. It’s achieved through our purpose 2. Strengthened by our AMAZEING behaviours Metro Bank Holdings PLC Annual Report and Accounts 2024 2 3. Delivered via our business model 4. Supported by our strategic priorities 5. Measured by our key performance indicators 6. Aligned with performance based remuneration Our purpose and strategy framework continued Our strategic priorities are our day-to-day focus, and are crucial to delivering our long-term success. Our key performance indicators (KPIs) are the metrics we monitor to check we are on track with the delivery of our strategy as well as to assess how our business model is performing. These consist of: • customer accounts • colleague engagement • net promoter score • senior leadership diversity • statutory profit/(loss) • underlying profit/(loss) • total capital plus MREL • cost of deposits • cost of risk • statutory cost:income ratio • return on tangible equity • loan-to-deposit ratio • total shareholder return. Our approach to remuneration for management is based on a simple and clear scorecard in addition to a Long Term Incentive Plan (LTIP) and a Shareholder Value Alignment Plan (SVAP). Scorecard measures are aligned to the four components of our business model with the LTIP and SVAP based upon the successful generation of sustainable long-term value and tangible book growth. Read more about our business model on page 10 Read more about our KPIs on page 14 Read more about our remuneration on pages 78 to 117 Cost Cost discipline to support profitable growth and reinvestment. Balance sheet optimisation Continued focus on risk-adjusted returns. Revenue Create FANS to deliver strong growth. Infrastructure Protect value through safe, scalable infrastructure. Communication Engage colleagues, communities and other stakeholders to tell our story. Our business model is how we create sustainable long-term value for our stakeholders. It involves combining stores and digital channels with exceptional customer service to generate tangible book growth. Integrated model Our model combines delivery through physical and digital channels. Unique culture Our colleagues deliver superior service and are the heart of our relationship banking approach. Service-led core deposits We attract core deposits through our service- led relationship banking model with specific emphasis on our core retail and SME/ commercial franchise. Risk-adjusted returns We are balancing our lending mix through a broad yet simple product offering that is priced proportionate to risk. Metro Bank Holdings PLC Annual Report and Accounts 2024 3 Additional information Financial statements Strategic report Risk report Governance Chair’s statement Dear shareholder 2024 was a year of transformation for the Bank. The first half of the year saw the Bank plan and articulate a strategic pivot to prioritise and grow in higher yielding commercial and specialist lending. As a relationship bank with a distinct and valued service proposition, we believe there is great potential to better serve this market and that we are ideally positioned to deliver. In the second half of the year, we have made significant progress in the delivery of our strategy. We have returned to underlying profitability, reported financial results ahead of guidance and carry real momentum into 2025. To execute our strategy effectively, we have had to make some hard decisions, in particular around our cost model and taking measures that will allow us to invest more in future growth. Some of these decisions included reducing our store hours and making more than 1,000 colleagues redundant across our stores and the wider business. Alongside the cost savings, we also made additional investments to improve our service to continue to provide market-leading services for our customers. For example, we have invested in the automation of services, improving our productivity and our response to customer needs. We have also invested in a strategic collaboration with Infosys, announced in October 2024, which further demonstrates our commitment to long-term investment in digital experience for our customers. In a year of significant change and transformation, our colleagues’ dedication to our customers has remained a constant inspiration for the Board. On behalf of the Board, I remain immensely grateful for the continued trust and support from our shareholders, bondholders, regulators, customers and colleagues. Results The operating environment remained challenging throughout 2024. Despite the economic headwinds, Daniel Frumkin, Chief Executive Officer (CEO) and his executive team have successfully delivered a fundamental transformation of the Bank. Business performance has improved from an H1 underlying loss of £27 million to an H2 underlying profit of £13 million, establishing momentum that we anticipate will continue into 2025 to meet our objective of returning the Bank to sustainable profitability. 2024 also saw the Bank return to the FTSE 250 and receive the first credit rating upgrade in its history. Both are important steps in the Bank’s turnaround. The market reaction to our progress has been positive, with the share price closing on 31 December at £0.94, up 155% year-on-year. As the Bank delivers on its strategic pivot, our priority is to help grow shareholder returns. 2024 was a year of successful transformation, which saw the Bank return to underlying profitability through strong cost management and pivoting towards higher yielding commercial and specialist lending. Relationship Banking is at the heart of what we do and has underpinned the strong momentum delivered in 2024. I remain immensely grateful for the continued trust and support from our shareholders, bondholders, customers and colleagues. Robert Sharpe Chair 4 Metro Bank Holdings PLC Annual Report and Accounts 2024 Regulatory and Compliance I am pleased that the FCA has concluded its enquiries into a legacy issue relating to transaction monitoring systems and controls that began in 2016 and were remediated by 2020. The conclusion of these enquiries draws a line under this and all other outstanding legacy issues, allowing the Bank to entirely focus on the future, building on the solid foundations it has already laid. Governance In 2024, the Bank added four highly experienced directors to the Board with the appointments of Marc Page, Paul Coby, Cristina Alba Ochoa and Jaime Gilinski Bacal. Marc joined the Bank as CFO in September, bringing with him more than 20 years of financial experience, and has already made a positive contribution to the Board and Executive team. Cristina, following her strong contribution as interim CFO, was appointed as a shareholder-nominated Non-Executive Director in October. Jaime, who is a major shareholder of the Bank through his Spaldy Investments Limited vehicle, joined the Board as a shareholder- nominated Non-Executive Director in September. Chair’s statement continued Stakeholder impact We focus on the impact on our stakeholders in all the decisions we make. Delivering the right outcomes to stakeholders is fundamental to empowering customers and communities in line with our human approach to banking. Stakeholder engagement The Board engaged with a range of stakeholders throughout 2024 and looks forward to further engagement throughout 2025 including meeting shareholders at our AGM which will take place on 20 May 2025. Read more in our Stakeholder Engagement on pages 56 to 58 and in our Section 172 Statement on page 31 Read more in the Chair’s Corporate Governance Introduction on page 49 and in our Section 172 Statement on page 31 Where to find out more How governance is supporting our transformation In December, we were joined by Paul as a Non- Executive Director, adding a wealth of FTSE 100 executive and board technology experience which will be important as the Bank grows and develops its offering. Outlook The road ahead for the UK economy is not without uncertainty. Despite expectations of UK growth in 2025, renewed challenges from a higher pace of inflation, increased trade frictions, and a heightened state of economic and geopolitical uncertainty are likely. Notwithstanding these macro challenges, I remain confident in our ability to deliver for our customers. The Bank’s resilience and ability to navigate obstacles, as well as seize new opportunities, remains one of its great strengths and will support delivery of our 2025 objectives. We will continue to champion customer service and traditional banking values of trust, honesty and integrity, delivering excellence in our products and services and nurturing the relationships we value. Finally, I would like to extend my sincere thanks to colleagues past and present, as well as the Board and Executive team for all their hard work and contribution. We have more to do in 2025 to get the Bank to where we all want it to be, but I look forward to the year ahead with confidence and optimism. Robert Sharpe Chair 22 April 2025 Metro Bank Holdings PLC Annual Report and Accounts 2024 5 Additional information Financial statements Strategic report Risk report Governance Operating environment The environment we operate in is both competitive and rapidly changing. This presents us with challenges but also creates exciting opportunities for us as we grow. How we see it The macroeconomic outlook has stabilised in 2024, with the UK economy continuing to be remarkably resilient. Inflation has levelled off at close to the 2% target thanks to earlier falls in energy prices. As a result of this inflation softening, the Bank of England has started reducing base rates. Whilst the outlook is that rates will continue to come down, this will be at a slower pace, and will continue to impact customers in the years ahead as they roll-off lower-cost fixed-rate borrowing. Although this has resulted in an increase in arrears, this has come off a low base. The fiscal expansion announced in the budget will drive a renewed acceleration next year as stronger government consumption and investment feed through. How we are responding Supported by a stable-to-improving macroeconomic outlook and decline in inflation, expected credit loss (ECL) has remained at an adequate level having declined over the course of the year, partially offset by run-off of the personal loan and credit card portfolios and limited arrears, and defaults in the retail mortgage portfolio. In addition, Post Model Adjustments (PMAs) are also being held to reflect economic uncertainty not fully captured in the IFRS9 models as well as the Moody’s macro- economic outlook. In Q3 2024, we took the decision to move away from unsecured retail credit card lending given the return on capital it is providing in the current economic climate. The road ahead for the UK economy is not without uncertainty. Despite expectations of UK growth in 2025, renewed challenges from a higher pace of inflation, increased trade frictions, and a heightened state of economic and geopolitical uncertainty are likely. Notwithstanding these macro challenges, we remain confident in our ability to deliver for our customers. The Bank’s resilience and ability to navigate obstacles, as well as seize new opportunities, remains one of its great strengths and will support delivery of its 2025 objectives. How we see it The UK banking market remains highly competitive in respect of both deposits and lending. For core current accounts, digital-only operators are achieving high levels of customer satisfaction whilst incumbent players continue to deploy switching offers to defend market share. At the same time, average current account balances are stabilising industry-wide as the UK economy exits the worst of the recent inflationary cycle and base rate begins to decline. In the lending market, whilst larger incumbents continue to price mortgages below base rate, we are seeing Net Interest Margin (NIM), Cost of Funding (CoF), and swap rate pressures impact market pricing. Specialist lenders have also had to respond to this, which has resulted in reduced volumes for some market leaders as they seek to protect and grow NIM in an interest rate environment that is expected to remain higher for longer than previously thought. We have also started to see the early signs of consolidation within the industry, which is likely to see market share concentrated further between larger incumbents. How we are responding We are focusing our investment in current accounts, and supporting capabilities, for our corporate, commercial and SME customers where we see our relationship-first proposition differentiating ourselves from our peers. We continue to win new corporate, commercial and SME current accounts and average balances have stabilised following the market-wide shifts of 2022 and 2023. In the lending space, we are focusing our attention on targeting specialist sub-segments of the market which offer relative scale at attractive risk adjusted returns. We believe our target operating model, distribution and lower CoF relative to leading specialists provides a competitive advantage as opposed to continuing to compete within the vanilla/ Advanced Internal Rating-Based (AIRB) space, where structural disadvantages in the capital treatment of residential mortgages compared to larger AIRB-approved competitors persist. How we see it Customer behaviour in 2024 has been marked by the decline in base rate and reduction in inflation and cost-of-living pressures. This has seen customers stabilise the balances they hold in current accounts relative to expenditure and saving. The higher base rate environment, with associated higher savings rates, means the savings market remains highly competitive with ongoing switching behaviours. We have also seen customers making greater use of ISAs as a tax shield, particularly amongst savers with high balances where interest payments exceed the personal savings allowance. We are witnessing the acceleration of digitisation with customers continuing to prefer digital-first channels. This rise in use of new technology also gives rise to increasingly sophisticated fraud. How we are responding In 2024 we have been optimising our deposit base, and associated cost, reflecting the sale of a portfolio of mortgage assets and prudent reduction in excess liquidity held as cash. We continue to invest in current accounts, and supporting capabilities, for our corporate, commercial and SME customers where we see our relationship-first proposition differentiating ourselves from our peers. We expect the current digitisation trend to continue, and we will make disciplined investment choices in response including capabilities to minimise the risk of fraud and financial crime. We remain committed to stores and maintaining a fully integrated offering. Economic and political outlook Competition Customer behaviour Metro Bank Holdings PLC Annual Report and Accounts 2024 6 How we see it The UK regulatory environment has undergone significant changes in recent years and continues to evolve, with further changes on the horizon from key regulatory bodies. Regulatory authorities including the Prudential Regulation Authority (PRA), and Financial Conduct Authority (FCA) have introduced reforms aimed at enhancing financial stability, consumer protection and market integrity. Key regulatory initiatives have included the new Consumer Duty requirements and Basel 3.1 which sees changes to the industry’s capital requirements. We are also continuing to see regulators take a firm approach to misconduct and ensuring fair outcomes for customers. How we are responding We are delivering on a range of comprehensive projects to ensure we remain compliant with changes to the regulatory environment. We are preparing for the introduction of Basel 3.1, the finalisation of the PRA’s Consultation Paper 9/24 on streamlining the Pillar 2A capital framework and the capital communications process, and the Bank of England’s Consultation Paper on amendments to the MREL regime. We proactively engage with our regulators, industry bodies and other stakeholders to help shape the regulatory agenda, provide feedback on proposed reforms and continue to advocate for proportionate and pragmatic regulations that support both innovation and growth, whilst protecting the integrity of the financial system. How we see it The UK’s stringent approach to capital management continues to shape the banking industry. This is particularly true for new and mid-sized challengers like us who remain subject to MREL requirements but unable to leverage the structural advantages of larger players able to benefit from their AIRB status for determining risk-weightings. This makes providing the required return on capital challenging, particularly in mainstream lending, which would benefit from additional competition. With respect to funding, the Bank of England’s continued planned withdrawal of TFSME1 (combined with additional quantitative tightening) will put additional pressure on banks’ funding requirements, with firms needing to either shrink balance sheets or increase their deposits to replace this form of funding. Liquidity will remain a core focus for banks going into 2025, with firms likely to continue to hold excess liquidity over minimum requirements. How we are responding The successful sale of the £2.5 billion portfolio of prime residential mortgage in Q3 2024 was earnings, NIM and capital ratio accretive, and the sale proceeds were used for the early repayment of TFSME1 in Q4 2024. The £584 million unsecured personal loan portfolio sale announced post period-end is capital accretive. Both portfolio sales create additional lending capacity to enable the Bank to continue its asset rotation towards higher yielding assets. The cost of capital remains high, both industry-wide and for us in particular. We are therefore continuing to ensure we optimise our return on regulatory capital when determining our product and pricing strategy. Equally, we are working to ensure we are right-sizing our cost base to aid in the delivery of sustainable organic capital generation. Following the successful deposit campaign launched in Q4 2023, the Bank has been actively managing down expensive tactical deposits to optimise cost of deposits. Cost of deposits at year end was 1.40%, down from a peak of 2.29% in February 2024. We retain high levels of liquidity with a liquidity coverage ratio (LCR) as at 31 December 2024 of 337% (compared to the minimum requirement of 100%). Our strong levels of liquidity provide further opportunity to continue to optimise our deposits and funding position. 1. Bank of England Term Funding Scheme with additional incentives for SMEs. How we see it 2024 was the hottest year on record globally and we are seeing the impacts of climate change both around the world and in the UK. As awareness of the risks and opportunities around sustainability grows, stakeholders are increasingly scrutinising companies’ responses to these sustainability factors. Customers expect the companies they interact with to operate and grow in a sustainable manner and are taking these considerations into account when making purchasing decisions. As well as our own decisions around sustainability within our operations, we recognise the role we play in broader society, primarily through the decisions over who and what we choose to finance and the suppliers we chose to work with. The financial system has a central role in acting as a catalyst for change in broader society and as such can play a significant role in contributing to the transition to a more sustainable and resilient economy. How we are responding We recognise the interconnectedness between sustainable business practices and long-term financial performance and as a result continue to integrate sustainability into all of our core operations and decision- making processes. We remain on track to deliver on our pledge to achieve net zero carbon emissions across Scope 1 and 2 emissions by 2030 and continue to make progress with mitigating our wider Scope 3 emissions. In achieving this, we remain committed to being transparent in respect of our reporting of progress to delivering this. We also recognise the importance of giving back to society and this will continue to be achieved through a range of initiatives which utilise our physical and digital channels. Our corporate governance structure ensures that sustainability remains a key focus as part of our ambition to empower colleagues and communities with a human approach to banking. Regulatory environment Capital and funding regime Focus on sustainability Operating environment continued Metro Bank Holdings PLC Annual Report and Accounts 2024 7 Additional information Financial statements Strategic report Risk report Governance CEO’s statement/FY 2024 business review We have made significant progress in creating a simpler, more agile bank and continued, at pace, the strategic shift towards corporate, commercial and SME lending, and specialist mortgages – a compelling opportunity in an underserved area of the market. We have delivered on an ambitious transformation, delivering £80 million annualised run rate cost savings in FY 2024- primarily from reducing on-shore headcount numbers by more than 30% from 4,458 to 2,972. These cost savings helped offset headwinds and created capacity for investment to support future growth. In Q4 2024, we announced a new partnership with Infosys, a world leader in strategic outsourcing, to enhance digital capabilities, improve automation, and embed further AI capabilities. We continued to optimise the balance sheet, including a £2.5 billion sale of prime residential mortgages in Q3 2024 and a £584 million sale of unsecured personal loans announced post year-end. Both transactions are in line with the Bank’s strategy to reposition its balance sheet, actively manage the asset rotation and enhance risk-adjusted returns on capital. The transactions create additional lending capacity to enable the Bank to continue its shift towards higher yielding corporate, commercial and SME lending, and specialist mortgages. We delivered strong growth momentum supporting our strategy, with corporate, commercial, and SME gross new lending growing by 71% year-on-year. Effective asset rotation has also allowed us to actively manage down excess liquidity, particularly expensive fixed-term deposits, resulting in a significant reduction in cost of deposits throughout the year. Underlying momentum in the franchise remains strong, with 110,000 new personal and 36,000 new business current accounts opened in the year. Successful operational execution has resulted in the Bank outperforming the 2024 guidance and reconfirming all guidance previously provided at half-year results, building to best-in- class performance: • Underlying profit of £13 million in H2’24, beating guidance of profitability during the 4th quarter • Net interest margin at year-end was 2.65%, beating guidance of 2.50% • Cost savings delivered • RoTE guidance reconfirmed to mid to upper single digit in 2025, double digit in 2026 and mid to upper teens thereafter • • Continued NIM expansion driven by asset rotation and cost of deposits, with 2025 exit run-rate expected to be between 3.00% – 3.25%, 3.60% – 4.00% in 2026 and 4.00 – 4.50% in 2027, respectively Continued cost discipline and control, guiding to a 4-5% year-on-year reduction in costs for 2025. Cost to income ratio improves to be between 75% – 70% in 2026, 65% – 60% in 2027 and 55% – 50% in 2028. 2024 has been a transformational year for Metro Bank. It has been a transformational year for Metro Bank as we made substantial progress against our strategy, ending the period ahead of guidance, profitable, and with strong momentum going forward. Delivery in 2024 provides strong growth momentum and proves the Bank’s ability to deliver on an ambitious future strategy. By 2027, we remain committed to generating one of the best returns on tangible equity of any UK High Street bank. Progress on strategic priorities Revenue As part of our strategic shift, corporate, commercial and SME lending, and specialist mortgages in the year. Corporate, commercial and SME gross new lending grew by 71% year-on-year, and we ended 2024 with a credit approved pipeline which was two times larger than at the start of 2024. 78% of new corporate and commercial lending was non-broker led, and c.30% of this came from refinancing existing customers. On average, new originations attracted a margin in excess of 350 bps over base rate, driving year-on- year improvements in yield. Progress in specialist mortgage originations was strong, with the launch of new propositions helping to drive a significant increase in spread over swaps on new mortgage originations. New lending, together with attrition of legacy portfolios at lower yields, has led to a 61 bps year-on-year improvement in overall lending yield. Daniel Frumkin Chief Executive Officer 8 Metro Bank Holdings PLC Annual Report and Accounts 2024 1. Bank of England Term Funding Scheme with additional incentives for SMEs. CEO’s statement/FY 2024 business review continued Following our successful deposit campaign at the end of 2023, we have observed a subsequent decline in balances as we optimise our deposits and cost of funding. The cost of deposits at year-end of 1.40% continues to fall, down from a peak of 2.29% in February 2024, as more expensive fixed term deposits are allowed to attrite. The combined impact of increased lending yields and a lower cost of deposits has resulted in an exit NIM of 2.65%, ahead of guidance of 2.50%, and up 1.13% from nadir of 1.52% in February 2024. Cost Over the past year, we have fundamentally transformed our cost base, reducing operating costs in line with a bank of our size and driving towards sustained profitability. We continue to take a disciplined approach to cost management, with underlying costs down YoY by 4%, despite inflationary pressures. We have delivered £80 million of annualised run rate cost savings in FY 2024, after reducing on-shore headcount numbers by more than 30% from 4,458 to 2,972 within 12 months. We fundamentally repositioned our store and call centre propositions in line with customer usage patterns, and enhanced cost control frameworks. We have driven efficiencies across the business. The Bank established a strong strategic partnership with Infosys to enhance digital capabilities, improve automation, refine data, and embed further AI capabilities. This collaboration has helped make the Bank model more scalable. Infrastructure To drive our next stage of growth, we have strategically invested in platforms and capabilities. Central to this is a collaboration with Infosys which will revolutionise our digital capabilities, including actionable data analytics, automated processes, and compelling digital platforms. Our redesigned store offering empowers colleagues to drive growth in the SME and commercial segments, whilst also driving efficiency and improving customer experience. Our store openings in the North of England are on track, with new stores planned for Chester, Gateshead and Salford in Q2 2025. Back-end processes, particularly around lending and digital customer onboarding, have also improved key customer interactions. We have also built a range of new products and platforms, such as online chat and an enhanced business overdraft via mobile app which will enable customers to engage with us any way they want. We have implemented over 450 technical changes to systems, products and infrastructure – even more than last year – along with upgrading our fraud tools, and our new first line risk function. The Bank also resolved the FCA’s enquiries into transaction monitoring systems and controls that began in 2016 and were remediated by 2020. The conclusion of these enquiries draws a line under this legacy issue, allowing the Bank to move forward and fully focus on the future, building on the solid foundations it has already laid. Balance sheet optimisation We have made significant progress in restructuring our balance sheet to align with strategic growth opportunities, including a £2.5 billion sale of prime residential mortgages in Q3 2024 and a £584 million sale of unsecured personal loans post year-end. The mortgage sale proceeds were used to repay TFSME1, providing further opportunity to continue optimising our funding capabilities. Both transactions are in line with the Bank’s strategy to reposition its balance sheet, actively manage the asset rotation and enhance risk-adjusted returns on capital. Following the successful deposit campaign in Q4 2023, we have worked to reduce our cost of funds and excess liquidity. Overall, customer deposits reduced by 7% at 31 December 2024 to £14.5 billion, down £2.0 billion from the February 2024 peak of £16.5 billion (31 December 2023: £15.6 billion) reflecting the deliberate focus on reducing excess liquidity and cost of deposits. The core deposit base continues to be predominantly retail and SME. Higher cost fixed-term deposits have reduced by 46% year-on-year as deposits from the successful Q4 2023 deposit campaign have started to mature and are being allowed to attrite. Communications We continue to focus on engaging our colleagues, communities and other stakeholders. Our focus on delivering excellent customer service is reflected in the latest independent Competition and Markets Authority survey where we ranked number two for in-store service quality for retail customers, up from third place in August 2024. We were also placed second for service quality, both in stores and in our business service centres. We remain committed to maintaining a physical presence and ensuring that stores remain both accessible and at the heart of local communities. We will be opening three new stores in 2025 in Chester, Gateshead and Salford. Following a year of transformation, we are a leaner organisation, and as part of our continuous improvement, we will keep creating an environment where colleagues can grow, thrive and be their true authentic selves. We continue to focus on our culture of promoting from within, with over 55% of the open positions in the year filled from our existing Metro Bank team. Given our strategic focus on corporate, commercial and SME lending, and specialist mortgages, we have hired additional colleagues into corporate and commercial relationship and credit teams to drive our next stage of growth. Our partnership with the England and Wales Cricket Board went from strength to strength, as we continue to be committed to growing Women’s and Girls’ Cricket. We launched Metro Bank Girls in Cricket Fund contributing in one year to a 21% increase in the number of girls’ teams. We also launched our ‘Relationship Banking specialists’ brand positioning to ensure we are uniquely positioned to serve our corporate, commercial and SME customers. Capital Our capital position continues to strengthen, with the Bank’s MREL ratio 23.0% as at 31 December 2024, up 100bps year-on-year from 22.0% as at 31 December 2023, reflecting the mortgage sale and ongoing focus on capital management whilst optimising risk-adjusted returns on regulatory capital. Post year-end, we announced completion of a £584m personal unsecured loan portfolio sale, resulting in a 31 December 2024 improvement in total capital plus MREL ratio from 23.0% (reported) to 24.5% and CET1 ratio from 12.5% (reported) to 13.4%. We also completed our inaugural £250 million, 13.875% fixed rate reset perpetual subordinated contingent convertible capital securities (AT1) raise in Q1 2025. The successful issuance resulted in a further 31 December 2024 pro forma improvement in Tier 1 capital ratio from 13.4% (post loan sale) to 17.5%. Both transactions were in line with the Bank’s capital management framework and strategy and were aimed at optimising the capital structure and providing further flexibility for growth. Looking ahead 2024 has been a pivotal year for the Bank. We outperformed market guidance and delivered an ambitious transformation plan. However, we know there is more to be done if we are to realise our ambition of generating one of the best returns on tangible equity of any UK High Street bank by 2027. As we move into 2025, we are focused on continuing to grow higher-yielding corporate, commercial and SME, and specialist mortgages, whilst optimising deposits to lower cost of funds and grow revenue. All while maintaining a focus on cost discipline, and a prudent approach to credit risk. With a robust capital base, a growing customer base, and a clear path for future growth, the Bank is well-positioned to capitalise on the opportunities ahead. Daniel Frumkin Chief Executive Officer 22 April 2025 Metro Bank Holdings PLC Annual Report and Accounts 2024 9 Additional information Financial statements Strategic report Risk report Governance is underpinned by... Our model Business model Environmental and social priorities We ensure that our business model and approach is focused on the areas that matter most to our stakeholders. Read more on pages 19 to 41 Risk management We focus on enhancing our control environment and risk capabilities, to balance the risks that need to be taken to deliver on our strategy whilst doing so in a managed and appropriate manner. Read more on pages 121 to 150 Governance We continuously improve our approach to governance. Maintaining a robust governance framework is important in allowing all stakeholders to have confidence that we are making decisions in the right way. Our business model is simple. By delivering great customer service we can attract and grow a sustainable deposit base, allowing us to lend money to help individuals and businesses fund their ambitions. Allowing us to generate... Creating long-term value allowing investment in... Creating FANS who bring... Combined with... Integrated model Unique culture delivers value for... Risk-adjusted returns Service-led core deposits Read more on pages 48 to 120 Read more on pages 56 to 58 Read more on pages 11 to 13 Customers Without the loyalty of our customers we would not exist. Turning our customers into FANS ensures the enduring success of our business. Colleagues We strive to make Metro Bank a great place to work, where colleagues can excel, grow and be themselves. Investors We are committed to being an attractive investment for equity and bondholders. We never take our investors for granted and are working hard to build and maintain trust. Regulators We continue to play our part in ensuring a safe and stable financial system. Suppliers Building a trusted supplier base is key to delivering our ambitions. We want to ensure that as we grow they share in our success. Communities We believe in being truly local through supporting businesses to strengthen local economies, and addressing local issues with initiatives that benefit our neighbours and friends. How we make money We make money through the difference we charge on the loans we issue and the deposits we take, less our operating costs and changes in ECL. Metro Bank Holdings PLC Annual Report and Accounts 2024 10 Progress in 2024 Operating environment Priorities Risks KPIs Integrated model Our integrated model aims to combine delivery through physical and digital channels. We have delivered stand-out service through our stores and digital presence. Our focus in 2024 has been on pivoting towards corporate, commercial and SME lending, and specialist mortgages. In commercial, we have enhanced our business overdraft offering via mobile application and launched revolving credit facilities for larger, more complex businesses. We have also enhanced our digital self-service and onboarding capabilities as well as reviewing internal processes to improve our speed to market. In mortgages, we launched our first truly “specialist” product – limited company buy-to-let, with more to launch throughout 2025. We also made changes to our store opening hours in response to observed changes in customer behaviour though noted some decline in customer satisfaction as customers adjusted to our revised proposition. Competition The UK banking market continues to be very competitive with high levels of innovation. To remain competitive we need to continue to invest in all of our channels to ensure they meet our customer needs. Customer behaviour Customers are continuing to place a strong reliance on in-person service, although the move to digital continues. Focus on sustainability We continue to see strong pressure from all of our key stakeholders to ensure all of our operations are sustainable. We are committed to serving customers through stores, and continue to reassess our store opening hours, based on how and when our customers use our services. We will explore options to further right-size our cost base in the months ahead by assessing all opportunities across the real estate we lease and own. Our plans are progressing with focus on opening smaller sites in strategic locations in the North of England. Although a physical presence remains core to our offering, our focus will be to expand our digital offering to ensure we remain competitive against both larger high-street peers and new digital- first or digital-only entrants. Our principal risks in respect of delivering our integrated model are: • conduct risk • operational risk • strategic risk. We continue to enhance our processes and systems to minimise the risk of operational issues, and to continue delivering on our strategy. Number of accounts (m) 2024 2023 3.0 3.0 Net promoter score (%) Account opening 77 76 2024 2023 Existing customer 19 36 2024 2023 Business model continued Read more about our operating environment on pages 6 to 7 Read more about risk on pages 121 to 150 Read more about KPIs on pages 14 to 15 Metro Bank Holdings PLC Annual Report and Accounts 2024 11 Additional information Financial statements Strategic report Risk report Governance Business model continued Progress in 2024 Operating environment Priorities Risks KPIs Unique culture Our colleagues deliver superior service and are the heart of our relationship banking approach. We pride ourselves on being a bank that puts our colleagues at the heart of what we do. Following a year of transformation, we are a leaner organisation, and, given the backdrop of change both internally and externally, we saw a disappointing but not unexpected drop in our engagement scores. As part of our continuous improvement, we will keep creating an environment where colleagues can grow, thrive and be their true authentic selves. We are focused on being an employer of choice. In 2024, we were awarded the Diversity, Equity & Inclusion Award in the Top 12 Inclusive Employer category at the 2024 British LGBT Awards reflecting our commitment to attract and retain talent from within the diverse communities we serve. Competition The market for talent remains highly competitive, and the high inflationary environment has continued to put pressure on wages. To attract and retain talent, we must remain competitive. We are committed to ensuring our people are our key focus and that recent cost reduction measures do not impact our unique culture — we are focused on continuing to drive our colleague engagement. This includes continuing to support a diverse and inclusive workforce where colleagues can be themselves. We will leverage the assistance of our suppliers to deliver efficient and cost effective opportunities. Our transformation initiatives in 2025 will focus on further automation to free up colleagues’ time and allow them to focus on what they do best — creating FANS. Our principal risks in respect of delivering our unique culture: • conduct risk • legal risk • operational risk • strategic risk. Colleague engagement (%) 75 64 2024 2023 Senior leadership diversity (%) Minority ethnic 21 20 2024 2023 Female 37 38 2024 2023 Service-led core deposits We attract core deposits through our service-led relationship banking model with specific emphasis on our core retail and SME franchise. Throughout 2024 our focus has been three-fold. Firstly, optimising the Bank’s liquidity and cost of deposits in the context of our evolving balance sheet requirements. This has resulted in prudent and deliberate reductions in interest-bearing deposit balances throughout the year resulting in a lower year-end exit cost of deposits of 1.40%, down 0.89% from a February 2024 peak of 2.29%. Secondly, growing our core low-cost relationship current account deposits, with growth across corporate, commercial, business and personal in 2024. Finally, refreshing product availability and fees across our corporate. commercial, business and personal proposition to ensure we remain competitive and the cost of our services are adequately reflected. Competition Interest rates have remained elevated despite two base rate reductions in 2024. Competition for deposits has remained robust, both from challenger banks and larger incumbents. Alongside this, newer digital-only fintechs continue to grow. Regulatory environment The regulatory environment continues to work towards ensuring the fair treatment of customers with a particular focus on vulnerable customers and Consumer Duty. As a deposit-taking institution we proactively engage with our regulators to advocate for regulations that support both innovation and growth. We continue to deliver and implement a range of comprehensive projects to ensure we remain compliant with changes to the regulatory environment. During 2025, we will concentrate on growing our current account numbers, with priority geared towards increasing commercial, corporate and business accounts, where balances tend to be higher and fee earning opportunities are greater. Our principal risks in respect to delivering service-led core deposits are: • conduct risk • financial crime • legal risk • liquidity and funding risk • market risk • regulatory risk • pricing risk. We are actively managing our balance sheet to ensure we retain high levels of liquidity and appropriately hedge our interest rate risk. Alongside this, we continue to enhance our controls and review our products to both protect our customers and ensure we are delivering fair outcomes. Cost of deposits (%) 2024 2023 0.97 1.95 Metro Bank Holdings PLC Annual Report and Accounts 2024 12 Business model continued Progress in 2024 Operating environment Priorities Risks KPIs Risk-adjusted returns We are balancing our lending mix through a broad yet simple product offering that is priced proportionate to risk. Going into the year we took the decision to refocus our attention on commercial and specialist mortgage lending, with a shift away from consumer lending. The £2.5 billion portfolio sale of prime residential mortgages to NatWest Group plc in Q3 2024 demonstrated commitment to the Bank’s strategy to reposition its balance sheet and enhance risk- adjusted returns on capital. The transaction was capital ratio accretive and created additional lending capacity to enable the Bank to continue its asset rotation. Like most banks, a large proportion of our mortgage lending is fixed rate and therefore despite base rates having stabilised we are continuing to see the benefits as older loans mature into a higher rate environment. Competition Competition in the lending space remains strong notably in the SME/ commercial and specialist mortgage markets, where competitors include both larger banks and smaller, specialist lenders. Capital and funding regime The UK’s rigorous capital regime continues to see large financial firms, including ourselves, dependent on capital markets to support regulatory requirements. Economic and political outlook We expect interest rates to fall towards a more normalised level in 2025, but financial pressure on households and an uncertain political outlook remains. We will continue to optimise our balance sheet and utilise our capital stack more efficiently to generate the best possible returns for all stakeholders. We continue to shift our focus away from unsecured personal lending towards corporate, commercial and SME lending, and specialist mortgages, where our manual underwriting capacity is a competitive advantage. Our principal risks in respect of delivering risk-adjusted returns are: • conduct risk • credit risk • market risk • regulatory risk • model risk • capital risk • strategic risk. We take a prudent approach to lending to minimise the risk of losses. We continue to review and update our credit models to support this issue. Cost of risk (%) 0.26 0.06 2024 2023 Loan-to-deposit ratio (%) 79 62 2024 2023 Total capital plus MREL ratio (%) 22.0 23.0 2024 2023 Read more about risk on pages 121 to 150 Read more about our operating environment on pages 6 to 7 Read more about KPIs on pages 14 to 15 Metro Bank Holdings PLC Annual Report and Accounts 2024 13 Additional information Financial statements Strategic report Risk report Governance Key performance indicators Link to business model Components of our business model Our business model is set out on page 10. Further details of each component of our business model can be found on pages 11 to 13, including how our KPIs link to measure our performance for each of these components. Output of our business model The output of our business model is to generate long-term value and create tangible book growth, measured through: • total shareholder return • return on tangible equity. Link to remuneration approach Our approach to remuneration for management is based on a simple and clear scorecard. The scorecard measures are aligned to the four components of our business model to ensure management is focused on these. In addition, we provide an LTIP and SVAP which are linked to our scorecard outcomes of long-term value generation and tangible book growth. Alternative performance measures Where a financial KPI is an alternative performance measure, a reconciliation to the nearest statutory measure can be found on pages 224 to 228. KPI performance during 2024 Our KPIs in 2024 are reflective of a year of transformation and transition as we took proactive steps to position ourselves for future growth and sustainable profitability. Our colleague engagement score is also aligned with this period of change which we recognise has been challenging for some. Building on this remains a focus for us looking ahead. We have maintained a steady portfolio of customer accounts, kept the cost of risk low and managed our capital position to end the year above regulatory minima (including public buffers) for CET1, total capital and total capital plus MREL ratios. As we look forwards into 2025, we will continue to drive our cost of deposits down whilst growing customer accounts and moving steadily into long-term profitability. Our KPIs are the metrics we monitor to check we are on track with the delivery of our strategy, as well as to assess how our business model is performing. Key Score card measure LTIP measure Alternative performance measure Non-financial Customer accounts (m) Colleague engagement (%) S 2024 2023 2022 2.7 3.0 3.0 75 75 64 2024 2023 2022 How we define it Number of active customer accounts. Why it is important Growing our customer accounts is key to our franchise and validates that our approach is working and that our proposition resonates with customers. How we define it The result is taken from our annual Voice of the Colleague survey. Why it is important Attracting and retaining talent is vital to delivering superior service and preserving our culture so we want to ensure colleagues enjoy working for us. Net promoter score (%) S Senior leadership diversity (%) S Account opening Female 2024 2023 2022 85 76 77 2024 2023 2022 41 38 37 Continuing relationships Minority ethnic 33 36 19 2024 2023 2022 19 20 21 2024 2023 2022 How we define it Net promoter score for new account openings and continuing customer relationships. Why it is important Our purpose is to create FANS and ensuring strong ongoing levels of customer satisfaction is important in measuring this. How we define it Proportion of female/minority ethnic colleagues amongst our senior leadership team (Executive Committee and their direct reports). Why it is important Ensuring diversity amongst our senior management ensures we are representative of the communities we serve and our colleagues as a whole. This means we are more likely to make decisions that are beneficial to all our stakeholders and help us deliver on our strategy. Metro Bank Holdings PLC Annual Report and Accounts 2024 14 Financial Statutory (loss)/profit before tax (£m) Underlying loss before tax (£m) S A Total capital plus MREL ratio (%) S 2024 2023 2022 (70.7) (212.1) 30.5 (14.0) (50.6) (16.9) 2024 2023 2022 22.0 23.0 17.7 2024 2023 2022 How we define it Our earnings before tax as defined by International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). Why it is important Achieving sustainable profitability is the key financial measure to demonstrate we are creating long-term value. How we define it Our statutory earnings adjusted for certain items that distort year-on-year comparisons. Why it is important It provides further understanding of the underlying trends in the business. How we define it Our total capital plus MREL expressed as a percentage of risk-weighted assets (RWAs). Why it is important Whilst we measure capital at multiple levels our biggest constraints are at our total capital plus MREL level which we are actively addressing, ending the year above regulatory minima including public buffers. Cost of deposits (%) A Cost of risk (%) A Statutory cost:income ratio (%) A 0.97 1.95 0.20 2024 2023 2022 0.26 0.06 0.32 2024 2023 2022 151 90 106 2024 2023 2022 How we define it Interest expense on customer deposits divided by the average deposits from customers for the year. Why it is important Our ability to attract service-led core deposits is a component of our business model with cost of deposits being a key determinant in measuring this. How we define it ECL expense divided by average gross loans for the year. Why it is important We seek to minimise our cost of risk, balanced with the interest received, to ensure we are optimising our lending. How we define it Total costs (excluding ECL expense) expressed as a proportion of total income. Why it is important Achieving tangible book growth involves achieving profitability and therefore creating positive operating jaws is vital. Statutory cost: income ratio is a useful metric in measuring this. Return on tangible equity (%) L A Loan-to-deposit ratio (%) A Total shareholder return (%) L A (10) (23) 4 2024 2023 2022 79 62 82 2024 2023 2022 (41) (71) 155 2024 2023 2022 How we define it Earnings for the year divided by average tangible shareholders’ equity (total equity less intangible assets). Why it is important This is the strategic output of our business model and how we judge success. How we define it Net loans and advances to customers expressed as a percentage of total deposits. Why it is important As we seek to be a deposit funded bank, ensuring we maintain an appropriate loan-to-deposit ratio is a key measure in managing this. How we define it Total capital gains and dividends returned to investors over a one-year rolling period. Why it is important We want to ensure shareholders are rewarded for their continued investment in us. Metro Bank Holdings PLC Annual Report and Accounts 2024 15 Additional information Financial statements Strategic report Risk report Governance Financial review Summary of the year 2024 was an important year as we pivoted our focus to corporate, commercial and SME lending, and specialist mortgages and took proactive steps across the Bank to position ourselves for further growth and future profitability in the coming years. For the full year ended 31 December 2024, we recorded an underlying loss before tax of £14.0 million, a reduction of 17% from £16.9 million as at 31 December 2023, reflecting the commitment to greater cost discipline and transition to a leaner, more agile operating model designed to most effectively support our customers and better position the Bank for profitability. We recognised a statutory loss before tax of £212.1 million for the full year, largely driven by a one-off loss on the sale of a £2.5 billion mortgage portfolio to NatWest Group plc and various charges relating to the transformation of the business and remediation costs. However, we recognised an underlying profit of £12.8 million in H2 (H1: loss of £26.8 million) that supported a forecast indicative of future profitability. We recognised a deferred tax asset on unused tax losses and subsequently recorded a statutory profit after tax of £42.5 million for the full year (2023: £29.5 million). Our proactive and positive management of our balance sheet and our dedication to the cost reduction programme we outlined at the beginning of the year support the future prosperity of a profitable bank and position us well looking into 2025. Statutory and underlying results Financial information in this report is prepared on a statutory (taken from our financial statements on pages 151 to 218) and underlying basis (which we use to assess performance on a management basis). Further details on how we calculate underlying performance, as well as our other alternative performance measures can be found on pages 224 to 228. Income statement 2024 £m 2023 £m Change % Underlying net interest income 377.9 411.9 (8%) Underlying non-net interest income 125.6 134.6 (7%) Total underlying income 503.5 546.5 (8%) Underlying operating expenses (510.4) (530.2) 4% ECL expense (7.1) (33.2) 79% Underlying loss before tax (14.0) (16.9) 17% Non-underlying items (198.1) 47.4 (518%) Statutory (loss)/profit before tax (212.1) 30.5 (795%) Taxation 254.6 (1.0) 25650% Statutory profit after tax 42.5 29.5 44% Interest income Interest income benefitted from a higher average base rate during the year, increasing 9% to £935.4 million (2023: £855.7 million). Lending income continues to make up the largest proportion of our interest income, though following the sale of a portfolio of prime residential mortgages, this has decreased marginally to £586.2 million (2023: 599.9 million). Asset yields increased to 4.17% (2023: 3.37%) as we pivoted towards more specialist mortgages and sold £2.5 billion of prime residential mortgages. Our remaining retail mortgages are 90% fixed with an average time to reversion of 2.23 years (31 December 2023: 2.41 years). We expect to see further improvements to asset yields and associated income in the years ahead as older balances roll-off and are replaced with new lending at a higher rate. Our commercial lending portfolio income grew, predominantly driven by our floating business loans which have seen greater yields as a result of the higher base rate environment, as well as the continued attrition of lower-yielding commercial real estate. The consumer and Government- backed lending portfolios are in run-off as the Bank continues to pivot its strategy towards corporate, commercial and SME lending, and specialist mortgages. We also saw the benefits of increased rates flowing through to our floating treasury portfolio, as well as the fixed rate treasury assets maturing at an average blended yield of 1% and replaced by assets in line with base rate. Interest expense Interest expense increased by 26% to £557.5 million (2023: £443.8 million). This increase reflected an increase in cost of deposits that followed our deposit campaign in Q4 2023. We sought to increase deposit inflows by launching a range of products such as Instant Access accounts at competitive rates, the impact of which has materialised in 2024 where the average cost of deposits increased to 1.95% (2023: 0.97%) as a result. We actively managed down costly deposits in the latter half of the year, reducing the average cost of deposits from 2.18% in H1 to 1.72% in H2. In January 2024, we repaid a £255 million repurchase agreement with NatWest Group plc, reducing the associated interest expense for the year. We continue to see the impact of the increased cost of funding following our repricing and restructuring of debt securities in 2023. The successful debt refinancing strengthened our balance sheet and enabled us to embed our strategy to pivot to specialist and commercial lending throughout 2024. The launch of products such as Limited Company Buy-to-let represented the realisation of our revised strategy and ability to enhance future earnings through asset growth and risk adjusted returns. Non-interest income Net fee and commission income has increased by £2.8 million to £93.2 million in 2024 (2023: £90.4 million), reflecting nation-wide use of Bank products including safe deposit boxes and Metro Bank cards. Both safe deposit box income and ATM and interchange income remained fairly static at £19.0 million and £40.4 million respectively (2023: £18.2 million and £40.0 million). Service charge and other fee income grew by £1.8 million to £38.6 million (2023: £36.8 million) providing a valuable source of income, whilst having minimal impact on our capital ratios. Operating expenses 2024 2023 Underlying cost:income ratio 101% 97% Statutory cost:income ratio 151% 90% In Q4 2023, we committed to a cost reduction plan to support a return to sustainable profitability. Despite inflationary pressures, we have seen this disciplined approach to cost management materialise into a 4% improvement in underlying operating expenses, year on year and a decrease in general operating expenses from £502.9 million in 2023 to £489 million in 2024. People related costs remain our largest operating expense but reduced to £209.6 million in 2024 (2023: £241.2 million) following difficult decisions to restructure and reduce headcount. This is offset partially by an increase in transformation costs. The provision for the restructure is recognised as part of non-underlying items. Professional fees increased by 19% to £27.7 million (2023: £23.2 million) as we prioritised digital enablement and enhancement to deliver customer initiatives. Information technology costs remained broadly flat at £60.1 million (2023: £59.7 million) reflecting investment into digitising and improving new and existing products and making internal processes more efficient. Metro Bank Holdings PLC Annual Report and Accounts 2024 16 Occupancy expenses are driven by costs associated with our continued store presence. Despite inflationary pressures, costs remained broadly flat at £30.9 million (2023: £31.7 million) reflective of our disciplined approach to cost management. We continuously exercise discipline around cost whilst acknowledging the costs associated with greater investment in diversifying our product capabilities to both boost deposits and transition further into specialist lending. We value our relationship-centric approach to banking and will continue to drive proactive cost management whilst maintaining and growing our physical presence. Non-underlying items 2024 £m 2023 £m Change % Impairment and write-off of property, plant, equipment and intangible assets (44.0) (4.6) (857%) Remediation costs (21.3) – n/a Transformation costs (31.1) (20.2) (54%) Mortgage portfolio sale (101.6) – n/a Holding company insertion costs – (1.8) n/a Cost of capital raise1 (0.1) 74.0 n/a Non-underlying items (198.1) 47.4 (518%) We have recognised non-underlying items of £198.1 million in 2024 (2023: income of 47.4 million) driven by a loss on the sale of the £2.5 billion mortgage portfolio, write offs and impairments of £44.0 million in relation to intangible assets, and transformation. The sale of the mortgage portfolio provides us with additional lending capacity to enable a further shift to high yielding assets in niche markets, supporting our strategic focus to become a specialist lender of choice. Transformation costs consist primarily of the costs associated with restructuring, specifically movements to appropriately size the Bank and make operations and support services more agile and efficient going forwards. Remediation costs refer to any and all costs associated with legal or professional proceedings such as the final conclusion of FCA enquiries. At the end of 2024, we wrote off the outstanding net book value of a number of intangible assets. The larger proportion of the balance related to legacy RateSetter and AIRB models. Expected credit loss expense 31 December 2024 ECL allowance £m Coverage ratio1 % NPL ratio % Retail mortgages 15 0.29% 3.95% Consumer lending 108 14.43% 13.02% Commercial 68 2.06% 6.16% Total lending 191 2.07% 5.48% 31 December 2023 Retail mortgages 19 0.24% 1.87% Consumer lending 108 8.33% 5.94% Commercial 72 2.13% 4.91% Total lending 199 1.59% 3.11% 1. Coverage ratio is calculated using underlying figures. We recognised an expected credit loss expense of £7.1 million in 2024 (2023: £33.2 million), primarily due to improvements in the proportion of commercial lending balances in stage 2 and 3. Some deterioration has been noted in the outstanding retail lending balances due to the macroeconomic environment but our strategic pivot allows us to benefit from the improvements in commercial. We recognised management overlays and adjustments of £18.74 million (2023: £23.4 million) which represents 10% of ECL stock (31 December 2023: 12%). As at 31 December 2024, our coverage ratio was 2.07% (2023: 1.59%) and we believe we remain appropriately provided at this stage in the economic cycle. Balance sheet Lending 31 December 2024 £m 2023 £m Change % Retail mortgages 5,145 7,817 (34%) Consumer lending 745 1,297 (43%) Commercial 3,314 3,382 (2%) Gross lending 9,204 12,496 (26%) ECL allowance (191) (199) 4% Net lending 9,013 12,297 (27%) Net loans and advances to customers ended the year at £9,013 million, down 27% from 12,297 million as at 31 December 2023, in large part driven by the sale of the mortgage portfolio. As a result, retail mortgages represented a smaller proportion of our lending base than in previous years, 56% compared to 63% as at 31 December 2023, as we pivoted our strategy to commercial and specialist lending. The consumer portfolio has decreased from £1,297 million at the end of 2023, to £745 million as at 31 December 2024 driven by the cessation of lending through the RateSetter brand, further supporting our strategic transition. Commercial lending has reduced by a smaller margin than retail and consumer lending, representing a greater proportion of our overall lending base, 36% as at 31 December 2024 compared to 28% as at 31 December 2023. Commercial lending is down to £3,314 million as at 31 December 2024 (31 December 2023: £3,382 million) driven by a run off of government backed lending and Professional Buy-to-Let but is offset by more core commercial lending. Throughout 2024, we have supported our shift to commercial and specialist lending by digitalizing more products and launching products such as Limited Company Buy-to-Let. As we look forward to 2025, commercial lending will be a focus for us specifically those parts of the market where our manual underwriting capacity present a competitive advantage. Treasury portfolio Over the year, we have continued to optimise our treasury portfolio to maximise our risk adjusted return on regulatory capital, particularly as rates have risen. We ended the year with £7,301 million of treasury assets (31 December 2023: £8,770 million), comprising £4,490 million investment securities and £2,811 million cash and balances at the Bank of England (31 December 2023: £4,879 million and £3,891 million respectively). Our investment securities remain high quality and liquid with 75% being either AAA-rated or gilts (31 December 2023: 75%). Other assets Property, plant and equipment ended the year at £711 million, down from £723 million as at 31 December 2023. No new store openings took place in 2024 though we are committed to identifying appropriately sized sites in the North of England that are conveniently located for surrounding businesses. We obtained the freehold of two more stores in 2024, a more cost-effective way of delivering our store-based service-led model. Intangible assets have decreased to £126 million, down from £193 million in 2023, reflecting a more selective approach to investments and write offs including the RateSetter platform in line with the cessation of our RateSetter brand and the AIRB platform. Our investments in 2024 have included Mobile LiveChat and Online Self-serve. Financial review continued 1. Relates to the capital raise in Q4 2023. Metro Bank Holdings PLC Annual Report and Accounts 2024 17 Additional information Financial statements Strategic report Risk report Governance Deposits 31 December 2024 £m 2023 £m Change % Retail customer (excluding retail partnerships) 5,968 7,235 (18%) Retail partnership 1,785 1,708 5% Commercial customers (excluding SMEs) 2,263 2,898 (22%) SMEs 4,442 3,782 17% Total customer deposits 14,458 15,623 (7%) Of which: Demand: current accounts 5,791 5,696 2% Demand: savings accounts 7,534 7,827 (4%) Fixed term: savings accounts 1,133 2,100 (46%) We are committed to being a relationship-focused deposit-driven bank. We ended the year with deposits of £14,458 million (31 December 2023: £15,623 million), a decrease of 7% year on year. A successful deposit campaign at the end of 2023 helped to manage the reduction but increasing the overall cost of deposits. Our overall deposit base remains diversified with a 54%:46% between retail and commercial customers (31 December 2023: 57%:43%) with growth noted within the SME and retail partnership areas, a trend we expect to see continue in 2025. Wholesale funding In 2024, we significantly reduced our TFSME balance from £3,050 million to £400 million, utilizing the proceeds of the mortgage portfolio sale to NatWest to fund the reduction and repay our holding early. Taxation We recorded a tax credit of £255 million (2023: £1.0 million tax charge) in the year. We have unused tax losses totalling £1,073 million which equated to a deferred tax asset of £269 million. £13 million was already recognised so the credit to the income statement in 2024 was £256 million. The future profit projections as per the board approved Long-Term Plan support the recognition of the deferred tax asset. There is no time limit on the utilisation of tax losses. Liquidity Our liquidity position remains strong and in excess of regulatory minimum requirements despite efforts being made to reduce the more costly deposits. We ended the year with a liquidity coverage ratio of 337% (31 December 2023: 332%) and a net stable funding ratio of 169% (31 December 2023: 145%). We hold large amounts of high-quality liquid assets totalling £6,071 million (2023: £6,656 million). This included £2,811 million of cash held at the Bank of England (2023: £3,891 million). Capital 2024 £m 2023 £m Change % CET1 capital 808 985 (18%) RWAs 6,442 7,533 (14%) CET1 ratio 12.5% 13.1% (56bps) Total regulatory capital ratio 14.9% 15.1% (24bps) Total regulatory capital plus MREL ratio 23.0% 22.0% 100bps UK regulatory leverage ratio 5.6% 5.3% 30bps We ended the year with CET1, total capital and total capital plus MREL ratios of 12.5%, 14.9% and 23.0% respectively (31 December 2023: 13.1%, 15.1% and 22%), above regulatory minima, including buffers (excluding any confidential buffers, where applicable), of 9.2%, 10.8% and 21.2%. We noted improvements in our total capital plus MREL ratio in excess of those expected as part of the capital raise, as we actively constrained lending in order to preserve capital. The sale of a portfolio of £2.5 billion of prime residential mortgages to NatWest Group plc in Q3 24 demonstrated further commitment to the Bank’s strategy to reposition its balance sheet and enhance risk-adjusted returns on capital. The transaction was capital ratio accretive and created additional lending capacity to enable the Bank to continue its asset rotation. We ended the year with risk-weighted assets of £6,442 million (31 December 2023: £7,533 million), reflecting the proactive steps to effectively manage our capital position for positive future growth. Looking ahead We took proactive steps to position ourselves for future growth throughout 2024 and will continue to build on that progress as we enter 2025. We will integrate our agile working model in collaboration with Infosys as we simplify and digitise our ways of working to maintain strong cost discipline. We will continue to prioritise a reduction in cost of deposits whilst remaining committed to positive and meaningful relationships with our customers opening new stores and offering more specialist products. Marc Page Chief Finance Officer 22 April 2025 Financial review continued Metro Bank Holdings PLC Annual Report and Accounts 2024 18 Metro Bank Holdings PLC Annual Report and Accounts 2024 Environmental, social and governance review Our strategic pivot towards corporate, commercial and SME lending, and specialist mortgages sits alongside our belief in the ethos of relationship banking which is closely interlinked with ESG. Our customers, communities and colleagues Page 21 Our planet and climate-related disclosures Page 27 Governance, resilience, suppliers, data privacy and security Page 25 A business with strong ESG credentials has a positive impact on the communities it engages with and consumers are increasingly influenced by the ESG performance of the companies they interact with. According to the Federation of Small Businesses there are 5.5 million small businesses in the UK employing over 60% of the UK’s workforce, a total of 16.7 million people. These businesses are seen as the lifeblood of local economies, bringing jobs, services and revenue as well as being an integral part of their communities. The Bank’s strategic pivot with its new focus on relationship banking will help to further improve the prospects for many small and medium-sized businesses. The Bank’s ethos centres on remaining deeply rooted in the communities in which we operate, whether that be through support for local businesses or our participation in local community initiatives and events. Aligned with this is our continued desire to act sustainably and responsibly towards our customers, our communities, our colleagues and our environment; to achieve that we have continued to evolve our ESG activity in order to amplify the work underway across the Bank and further embed a strong and lasting ESG culture. Our customers value us for the high-quality service they receive; our communities benefit from our local engagement, investment and fundraising; our colleagues thrive in our inclusive culture; and we act where possible to make a difference to our environment. Support for communities in 2024 has included: • Lunar New Year – customers being given red envelopes over the Lunar New Year period to use to gift money to friends and family • Easter Egg Appeal – 38 stores taking part in our appeal to donate chocolate eggs to local causes • Eid al-Adha – Eid colleague communities shared stories and educated others on Eid al-Adha and Eid al Fitr • International Women’s Day – 27 stores hosting events in-store and externally • British Legion Poppy Appeal – over 40 colleagues, alongside Armed Forces personnel, raised over £60,000 in support. ESG governance and structure The Board maintains oversight of our ESG strategy and priorities with ESG issues regularly considered by the Executive Committee (ExCo). An ExCo-level ESG Steering Committee meets once a quarter, to ensure the Bank’s approach to ESG is strategic, coordinated and consistent with the direction set by the Board. Following our organisational restructure, strategic requirements and resources were reviewed with the Social and Governance Working Groups operating as workstreams. The Risk Oversight Committee (ROC) has oversight of the framework for managing and reporting the risks from climate change, as set out in the Enterprise Risk Management Framework. ROC can escalate climate-related risk matters to the Board. The Audit Committee reviews our ESG update and disclosures for TCFD requirements as part of its wider role in reviewing our Annual Report and Accounts. Non-Executive Director Nick Winsor has an informal Board role for ESG oversight which includes engaging with senior management on ESG matters. The Chief People Officer is the ExCo member responsible for ESG strategy and the Chief Risk Officer has Senior Management Function (SMF) responsibility for climate change risk. Our focus areas ESG Steering Committee Executive Committee Audit Committee Risk Oversight Committee Board Level Executive Level Nomination Committee People and Remuneration Committee Board Environment Workstreams Social Workstreams Governance Workstreams 19 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Environmental, social and governance review continued ESG materiality and priority themes In 2022, we conducted a materiality assessment of our approach towards current and emerging ESG issues to obtain deeper understanding of our external and internal stakeholders’ views. We used the Global Reporting Initiative approach. Following research and a shortlisting exercise, we asked stakeholders to rank 19 issues, which we mapped against six overarching priority themes. We take account of the results in our considerations of ESG issues. Turning customers and the communities we serve into FANS is central to everything we do. Topics identified via materiality assessment: • customer service and experience – creating FANS • financial inclusion, literacy and education • supporting vulnerable customers • community engagement, investment and fundraising. We work with suppliers who uphold our values and actively assess and monitor the controls they put in place. Topics identified via materiality assessment: • supply chain engagement and responsible procurement • human rights and modern slavery • anti-bribery and corruption. We are committed to an AMAZEING colleague experience, based on an inclusive culture. Topics identified via materiality assessment: • colleague attraction training and development • colleague engagement, health, safety and wellbeing • diversity, equality and inclusion. Good governance, compliance and risk management practices make sure we remain a sustainable, strong and resilient business. Topics identified via materiality assessment: • good governance practices • ethics and compliance • risk management and business resilience. We continue to assess, evolve and mature our data privacy and cyber security capabilities. Topics identified via materiality assessment: • data privacy and cyber security • financial crime and fraud. We are taking the actions required to make positive changes and reduce our impact on the environment. Topics identified via materiality assessment: • climate change • operational environmental efficiency • responsible investment and stewardship • sustainable product innovation. Our customers and communities Our suppliers Our colleagues Governance and resilience Data privacy and security Our planet 20 Metro Bank Holdings PLC Annual Report and Accounts 2024 Environmental, social and governance review continued Our ESG strategy contributes to a number of the United Nations Sustainable Development Goals (UN SDGs) and this is highlighted as appropriate in the following pages. UN SDGs Our Diversity and Inclusion agenda continues to be a focus and to support this we have introduced new mandatory e-learning. Colleagues explore why having a diverse workforce matters and what it means to have a truly inclusive workplace culture. 57 colleagues have started their Learning to Lead journey this year Leader capability is one of our key focus areas and we have invested in all leaders from newly appointed line-managers to our senior team. In May, we launched our compulsory leader learning to give all new leaders a strong foundation in people management. To support this, we relaunched our four people management essentials modules in August. 57 colleagues have started their Learning to Lead journey this year with 79% from corporate functions. 162 store managers and assistant store managers were trained over six weeks to support the new operating model – over 80% attended at least four of the six sessions. Finally, our senior leaders were offered training in building high performing teams through psychological safety (81% attended) and effective decision-making (64% attended). These topics were designed to support our business transformation as part of our Consumer Duty responsibilities. Education Alignment to UN SDGs: We continue to champion financial education and wellbeing within our local communities. Our free Money Zone financial education programme supports children aged 7 to 17 to develop the skills needed to handle money as adults. Since its launch in 2020 we have supported over 250,000 young people to develop their financial literacy skills. Over 400 of our colleagues are trained to host sessions for Key Stages 2 and 3. The Money Zone programme now also covers care leavers and military personnel. We will continue to evolve our financial literacy skills training with our strategic aims in mind. We have been running learning campaigns focused on the capabilities that help drive our strategy such as Learning to Work Week and Digital Skills. The latter are becoming even more important as technology including automation and data analysis advances, and proves crucial in helping us enhance the face-to-face relationships which our FANS value so much. Over 1,000 colleagues engaged in our dedicated internal campaign to explore the current digital initiatives and future possibilities. To support our pivot to relationship banking, we have worked towards building the skills of our business, commercial, and corporate colleagues, with refreshed learning journeys and investment in key credit skills training. Our customers, communities and colleagues Our commitment to the social element of ESG can be best showcased through our community ethos which is interlinked with our recent strategic pivot to corporate, commercial and SME lending, and specialist mortgages. We have developed deep relationships with local and regional businesses around the country, helping them thrive and grow alongside our own business. Responsibility for developing and maintaining those relationships sits across the Bank, from store colleagues working day in, day out in their local communities to local business managers and commercial and regional business banking colleagues. Through this approach we are able to demonstrate promotion of education, employment, equality and equity, and this is echoed in colleague community and internal culture too, which we measure each year in our Voice of the Colleague survey. 21 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 A signatory and active member of the Investing in Women Code, the Bank is keen to support and encourage female entrepreneurs to start up and grow businesses. We have showcased our case studies on the Invest in Women hub – a financial guide for women-led businesses. Key highlights for this year include profiling three female founders and their businesses across cricket grounds and through local and social media as part of our sponsorship with the England and Wales Cricket Board (ECB) to promote women in cricket and business. We have also hosted dozens of complementary business networking and mentoring events across our store network. This year, we transferred a portion of our apprenticeship levy to female-run businesses. We are supporting Encore Environments by funding an apprentice to complete the AAT Level 3 diploma in accounting and Velvet Mortgages through funding two Level 3 mortgage advisor apprenticeships. We also supported two female- led businesses with funding for apprentices to help encourage business growth. As an employer provider, we run a Level 2 and a Level 3 financial services apprenticeship. Of those due to complete their apprenticeship this year, five have passed with one achieving a distinction. We will also be sponsoring colleagues to join our sixth cohort with Cranfield School of Management to work towards achieving an MSc in Sustainable and Digital Banking (Retail) along with a Level 7 senior leader apprenticeship. We have already commenced recruitment for our new stores, opening in 2025, where we will be employing around 30 additional colleagues. We also support a number of jobs indirectly via the many businesses we support in our local communities. Our wellbeing offer for colleagues includes a suite of tools, including our Employee Assistance Programme, and additional support through our health partners as well as the Bank Workers Charity. In 2024, 58% of colleagues who utilised the health care programme completed a Health Review Check to support them in making informed choices about improving their mental and physical wellness. The Bank’s Wellbeing hub is a home for colleagues to explore all topics related their physical health and mental wellbeing; colleagues can read blogs created by their peers, explore our Mental Health First Aid Kit and find out about upcoming wellbeing events such as guided meditation sessions and webinars to managing stress and anxiety. In 2024, the Bank reviewed its health partners with a view to optimising colleague medical provision and value for money. As a result, the Bank made the decision to move from Vitality to Bupa, effective from January 2025. Our inclusion networks have also been responsible for launching game-changing initiatives to enable our colleagues to thrive at work – see Network highlights on page 24. Employment Alignment to UN SDGs: Metro Bank is a multi-award winning organisation. The awards we’ve won in 2024 include: • British LGBT Awards – Top 12 Inclusive Employer • Trans in the City Awards – Trans inclusive organisation • Asset Finance Connect Awards – Social award • UK Sponsorship Awards – Women’s Sports Sponsorship • The Money Age Mortgage Awards – “Large Loans Mortgage Lender of the Year” • British Specialist Lending Awards – “Business Leader: Complex Income Lender” – Charles Morley, Director of Mortgage Distribution • British Specialist Lending Awards – “Lender: Head of Sales” – Joanne Hollins, Head of Mortgage Intermediary Distribution • Elite Woman – “Best Women Mortgage Leaders in the UK” – Joanne Hollins, Head of Mortgage Intermediary Distribution • British Mortgage Awards – “Business Leader: Intermediary Lender (less than £5bn gross lending p.a)” – Charles Morley, Director of Mortgage Distribution As an active supporter of the Armed Forces Community we have re-signed our commitment to the military family through the Armed Forces Covenant. We are currently a holder of the gold award under the Employer Recognition Scheme and will be working towards our recertification in 2026. Colleagues have attended a number of events to support members of the armed forces transition into a new career this year and already have plans for further events in 2025. We have continued to support the annual Royal British Legion, with some colleagues using their Day to Amaze to fundraise on the London Poppy Appeal Day. Environmental, social and governance review continued Armed Forces Business Insights Day 22 Metro Bank Holdings PLC Annual Report and Accounts 2024 Environmental, social and governance review continued In May 2024, we launched The Metro Bank Girls in Cricket Fund with the ambition to triple the number of girls’ teams in England and Wales. The Fund, co-designed with the support of research commissioned with Women in Sport, and jointly funded by Metro Bank and the ECB, focuses on recruiting, educating, supporting, and celebrating the people that make girls’ cricket happen. To help the mission come to life, the Fund provides support to current and potential new coaches and volunteers, female and male, both in clubs with a girls’ section and those starting a new girls’ section. The Fund comprises seven ‘pillars’ of activity designed to help overcome the key barriers holding back growth in girls’ cricket, as well as providing lasting support as people progress through the game to help women and girls succeed both on and off the pitch. In 2024 alone there have been: 70 brand new to cricket volunteers recruited; 168 coaching qualification places created for new learners; 1,130 mentoring hours delivered; 24 coaching resources and tutorials created for coaches; 38 Metro Bank Champion of Girls’ Cricket award winners; and, a 56% to 44% female to male split for the ECB Coach Developer 2024 cohort, making it the first time ever that there have been more women than men. The activity in 2024 contributed to a 21% increase in the number of girls’ teams in 2024, which is making a huge impact to so many of our communities. 2025 will see The Metro Bank Girls in Cricket Fund further supercharged to deliver genuine change for the game, and for the lives of so many young girls. 463 more girls teams in 2024 Transforming the game for girls with The Metro Bank Girls in Cricket Fund Progress in 2024 has included: • becoming a member of the Hidden Disabilities Sunflower Lanyard Scheme with training for customer facing colleagues • introducing the ability to support vulnerable customers through LiveChat without the need to call • improving identification of signs of customer vulnerability through our contact centre automated voice response system • continuing our extensive training programme for all customer facing colleagues to further uplift skills and capabilities in recognising and responding to the needs of vulnerable customers • research into the nature, scale and experiences of existing customers with characteristics of vulnerability • updating our website to improve support content available to our customers • regular vulnerable customer training sessions hosted by external ‘lived experts’ to help improve all colleague awareness and consideration. We always strive to deliver a positive customer experience and right any wrongs. We publish customer complaints data on our website here: www.metrobankonline.co.uk/helpand-support/ forms/give-us-feedback/complaints-data In keeping with our commitment to local communities, every colleague is entitled to a paid day to volunteer – their very own ‘Day to Amaze’ – as a way of supporting good causes in their local areas. Alongside this, our colleagues and local communities raised £115,000 for local, national and international good causes via collections and sponsored activities and events. Equality and equity Alignment to UN SDGs: Recognising the continuing economic challenges faced by many of our customers, we continue to support the UK Government’s Mortgage Charter to offer additional support including for customers struggling to keep up with mortgage payments. Our website also has pointers to a number of resources to help customers with budgeting, boosting their credit score and avoiding fraud and scams. We are committed to financial inclusion and ensuring our customers have access to market leading service and support. We have continued our focus on further enhancing how we consider and support customers with characteristics of vulnerability across all areas of what we do. 52 of our stores are now Safe Spaces 23 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 2024 was the second year of the Bank’s groundbreaking partnership with the ECB as its first-ever Champion of Women’s and Girls’ Cricket. The partnership, developed around a shared commitment to diversity, inclusion and community impact, has gone from strength to strength, with another really strong year of results for both the growth of women’s and girls’ cricket, and for the Metro Bank brand. As a snapshot of activity and impact, 2024 delivered: • 101% increase in women’s international cricket attendance vs the last non-Ashes year in 2022 • 28% increase in the number of women playing cricket in the UK vs 2023 • 155 match days featuring Metro Bank branding across the summer • 6pp increase in brand awareness of Metro Bank amongst cricket fans • launch of The Metro Bank Girls in Cricket Fund, contributing to a 21% increase in the number of girls’ teams vs 2023. Our Voice of the Colleague survey showed that, although the engagement score dropped as anticipated given the scale of transformation and change within the Bank and in the external context, colleagues still value our people-centric, inclusive culture and the chance to share their thoughts — the survey response rate was 5 points above the global benchmark. We also saw our question ‘I have good working relationships with members of my team’ score 5 points above global benchmark, reflecting our new brand positioning and focus on people and relationships, both inside the Bank and out. In 2024, the Bank won several awards in the diversity and inclusion space — see Employment section page 22 — and our five inclusion networks have supported the business as it continues to build on its inclusive culture, highlighting and supporting important events as well as raising money for brilliant causes. We also launched our sixth inclusion network Mforces to support people leaving the military and their families. Environmental, social and governance review continued Network highlights Mbody • worked with our Vulnerable Customer team to support the launch of our membership to the Hidden Disabilities Sunflower Lanyard scheme, supporting our colleagues with hidden disabilities and sharing valuable information, enabling colleagues to become allies for their peers • celebrated World Mental Health Day by facilitating a virtual session in conjunction with Mind to highlight and discuss mental health in the workplace. Mbrace • celebrated Black History Month with colleagues being joined by black artists and poets from the local community and raising funds for Sickle Cell Society • celebrated Diwali raising awareness of how our colleagues mark this special occasion, and collecting funds for Great Ormond Street Hospital • marked other occasions throughout the year, including Eid, Rosh Hashanah, South Asian Heritage Month, Vaisakhi, Holi, and Lunar New Year • focused on educating and awareness-raising by distributing huddle packs on key events to colleagues in our AMAZE Direct call centres and stores. Mfamily • collaborated with Working Families to help identify opportunities to offer even better support to parents, carers, and families and set us apart as an employer of choice • along with WOW, held an event for colleagues to hear from speakers inside and outside Metro Bank about their experiences of being a working parent • focused on celebrating families of all shapes and sizes, promoting career progression for parents/carers and working towards improving family-related policies • held a number of neurodiversity coffee chats to enable colleagues to share their own experiences and support one another • launched the Back to Work Buddy scheme to support colleagues who return to work after family leave and hosted a career and networking event. WOW • renewed membership to the Menopause Friendly Employer scheme and Women in Finance charter • ran mentoring circles, for which a record number of colleagues signed up, supporting colleagues with their personal and professional growth • invited all colleagues to ‘Wear It Pink’ Day in October, with colleagues across the Bank taking part and raising £1,500 for Breast Cancer Awareness. Mpride • led Pride celebrations with a virtual Pride parade which was open to all colleagues • focused on intersectional collaboration across all inclusion networks, creating self-service educational material to promote allyship and raise awareness of LGBTQ+ issues • supported LGBTQ+ charity ‘LGBT Hero’ with fundraising and volunteering opportunities. Mforces • supported colleagues on London Poppy Day alongside the Royal British Legion • facilitated the resigning of the Armed Forces Covenant, demonstrating our commitment to supporting those who have served. 24 Metro Bank Holdings PLC Annual Report and Accounts 2024 Environmental, social and governance review continued Gender pay gap We believe it is important that our team reflects the diverse communities we serve. We continue to make progress in tackling our gender pay gap with both mean and median pay gaps decreasing over a three-year period to 15.9% and 15.7% respectively. The main driver for the pay gap exists due to a disproportionate number of women in senior positions. As at 5 April 2024 15.7% median pay gap 15.9% mean pay gap Read more on our gender pay at metrobankonline.co.uk % Females in SLT (ExCo -1) Female colleagues as % of the workforce Female Directors on the Board 2024 27% 2023 36% 2024 46% 2023 46% Industry 47% 2024 37% 2023 38% Industry 35% Governance and resilience Alignment to UN SDGs: We have always had zero tolerance for bribery and corruption. We continue to deliver regular training to all colleagues on our Anti-Bribery and Corruption Policy and they are encouraged to raise any concerns about the conduct of others or the way the business is run, without fear of unfair treatment under our Whistleblowing Policy. We comply with all applicable sanctions regimes, UK anti-money laundering and anti-terrorist financing legislation and have an implementation framework in place. We do not give or receive improper financial or other benefits in our business operations, nor do we help facilitate tax evasion in any way. We do not tolerate any deliberate breach of financial crime laws and regulations that apply to our business and the transactions we undertake, and we continue to invest in our processes, systems and monitoring. Data privacy and security Keeping our customers safe from fraud and scams is naturally one of our highest priorities. Our ‘scam of the month’ series informs people on how to protect themselves against the latest scams used by the fraudsters. There have been changes this year to support scam victims and this has led to improvements with detection and reimbursing our customers. We continue to be supporters of the Take Five fraud awareness campaign and have been working with Meta/Facebook to help reduce the fraudulent accounts on their platforms. Safe management of personal data is taken seriously and remains a priority for us. In 2024, we focused on responding to an increase in data subjects exercising their rights, while supporting the Bank to reduce operational costs of data management. Recognising the ever-evolving nature of cyber risk, we continue to run a strategic programme that focuses on our capabilities keeping pace. We constantly monitor for emerging threats and new attack methods as well as strive to improve our response capabilities, all of which support operations and resilience. We have a vulnerability management process in place that we aim to adapt and improve as external and internal changes occur. Our comprehensive policies and standards align to ISO 27001 best practice, and we benchmark ourselves against the National Institute of Standards and Technology framework. We are active members of a number of industry forums and provide awareness campaigns to colleagues in addition to annual mandatory cyber security training. 25 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Our suppliers It is important to us that we work with suppliers who uphold our values. We take this seriously – starting when we select a supplier during our procurement processes and running throughout the entire life-cycle of our business relationships. In 2022, we launched our first Supplier Code of Conduct, setting out the expectations we have of our suppliers. In 2025, we will introduce an annual review cycle of the code of conduct to ensure it aligns to our business priorities. We remain committed to using the Financial Services Supplier Qualification System (FSQS) for our suppliers to share information with us and we encourage all our suppliers to become members. FSQS helps our suppliers by reducing duplication of effort in responding to buyer due diligence requests and benefits us by sharing resources. We have made great progress through 2024, inviting a number of our suppliers who have not previously been part of FSQS to join. FSQS includes a subset of ESG questions and we are using this information to inform conversations with our suppliers about their ESG approach during our regular governance. This information is also reviewed as part of our sourcing processes when selecting new suppliers to work with. Our pledge to be net zero for operational, supply chain and financed emissions by 2050 will require us to work even more closely with our suppliers on this topic going forwards. In 2025, we will define the metrics that we will be using to track progress towards this goal. Human rights In line with our brand ethos, we are committed to maintaining positive relationships with our stakeholders including conducting our business in a way that respects human rights. Our policies and practices reflect this, including our Whistleblowing Policy which applies to any information relating to suspected wrongdoing or dangers, and our detailed Modern Slavery Policy. Slavery, servitude, forced labour and human trafficking (modern slavery) is a crime and a violation of fundamental human rights. We have zero tolerance of modern slavery and remain committed to conducting all of our business activities professionally, fairly and with integrity across all of our relationships, including enforcing appropriate systems and controls to ensure, on a risk basis, that modern slavery is not taking place in our business or supply chains. During 2024 we: • published our eighth Modern Slavery Statement, approved by the Board and signed by the CEO (available on our website at www.metrobankonline.co.uk/about-us/ modern-slavery/) • delivered the seventh report of the Modern Slavery Champion to the Board. The report included an update on the progress against the Modern Slavery Statement and Action Plan, and an update on our internal Modern Slavery Working Group. We continue to leverage the FSQS to support due diligence on suppliers before contracting and on an ongoing basis. In 2024, we engaged 1845 active third parties. 0.65% were either based in riskier countries (where the 2023 Global Slavery Index score, an independent assessment of government progress toward UN Sustainable Development Goal 8.7, is less than 50) or were more likely to be exposed to modern slavery risk due to the nature of the services. In accordance with our Modern Slavery Policy, further investigation was conducted, following which all suppliers demonstrated adequate controls to mitigate modern slavery risk. We continue to support our suppliers in relation to the risk of modern slavery, to clearly explain our approach to modern slavery and our expectations of our suppliers. We require suppliers to comply with the Modern Slavery Act 2015 and to ensure that modern slavery is not taking place in their business or supply chains. All colleagues were required to undertake modern slavery computer-based training during 2024. Political neutrality Metro Bank is and will remain politically neutral and it is not our policy to open or close an account due to the political or personal beliefs of an individual or organisation. Taxation We recognise the benefits to society that arise from full participation in the tax system. As with everything we do, we are committed to acting with integrity and honesty as set out by the tax strategy, policies and practices we adopt. We made a total tax contribution in 2024 of £130.2m, which comprised of £69.9m of taxes we paid and £60.3m of taxes we collected on behalf of the government. Taxes paid in the period represent a direct cost to us and are either, charged to our income statement, or capitalised as part of an asset’s cost. Taxes collected are generated by the Bank’s business activity and are part of our indirect contribution to tax revenues. These are the taxes of employees and customers collected during the period in the usual course of business and administered on behalf of the UK government. Further information can be found in our Tax Strategy document available on our website at: www.metrobankonline.co.uk/globalassets/ documents/customer_documents/personal/2024- tax-strategy.pdf Environmental, social and governance review continued Taxes paid (2024) 1 2 3 5 4 6 £m % 1. Irrecoverable VAT and customs duty 37.6 53.8 2. Employer NICs 21.5 30.8 3. Business rates 8.9 12.7 4. Corporation tax – – 5. Land transaction taxes 1.7 2.4 6. Other tax 0.2 0.3 Taxes collected (2024) 1 2 3 60.3m £m % 1. PAYE 40.1 66.5 2. Employee NICs 9.1 15.1 3. Net VAT 11.1 18.4 69.9m 26 Metro Bank Holdings PLC Annual Report and Accounts 2024 Operational emissions road map tCO2e 2030 2023 2024 2022 2021 2020 2019 Scope 1 Scope 2 0 500 1000 1500 2000 2500 3000 3500 4000 Environmental, social and governance review continued Our planet Alignment to UN SDGs: We continue to work to reduce the impact of our operations on the environment. Climate change is a risk both to the Bank and the communities we serve – managing this risk, and helping our colleagues, suppliers, customers and communities also to do so is a key part of our ongoing commitment to being a responsible bank. In recognition of this, we have committed to two headline pledges to reduce our carbon footprint: • to achieve net zero across Scope 1 and Scope 2 emissions by 2030 • to achieve net zero across Scope 3 emissions by 2050. Our Scope 1 and 2 emissions have reduced by 96% from our baseline level in 2019, evidencing strong progress towards achievement of our 2030 pledge. We have identified the key sources driving our residual emissions and continue to assess opportunities to mitigate these ahead of 2030. We are committed to following the carbon mitigation hierarchy and will continue to prioritise prevention, reduction and substitution of our residual emissions, with the remainder being offset via the purchase of high-quality carbon removals. Our stores and offices continue to be assessed and reviewed to ensure that energy efficiency and wider environmental considerations are incorporated into the ongoing management of our estate. As we grow and expand into new communities, we will build these considerations into the plans for our new stores. In 2024, we engaged a third party to conduct an energy audit to identify opportunities for energy efficiency across our estate and in 2025 will submit an Energy Action Plan to the UK Government in line with the requirements of the Energy Savings Opportunity Scheme. We do not have any operations based in high biodiversity habitats. Since 2020, we have sent zero waste to landfill. We source supplies from renewable sources and recycle where possible. We donate surplus office furniture to local charities, reducing the amount of material being disposed of in addition to preventing the carbon emissions that would arise from purchasing equivalent new equipment. This year, we have made another full disclosure of our corporate environmental data via the Carbon Disclosure Project, having made our first full disclosure in 2023. We do not lend directly to businesses that undertake: • metal ore mining, coal mining; peat, oil or gas extraction • fossil fuel power generation • activities that cause deforestation • arms manufacture or military activities. The table below sets out our GHG emissions. 2024 2023 2022 2021 2020 2019 Scope 1 emissions 122 469 179 336 67 319 Scope 2 emissions (location based) 2,532 2,705 2,855 3,327 3,799 4,247 Scope 2 emissions (market based) 32 – – 1,194 729 3,256 Scope 3 emissions (core)1 1,181 1,335 1,397 n/a n/a n/a Scope 3 emissions (all) 72,670 111,205 129,363 155,182 190,333 248,979 Total GHG emissions (location based) 75,324 114,379 132,397 158,845 194,199 253,545 Total GHG emissions (market based) 72,824 111,674 129,542 156,712 n/a n/a Full-time equivalent colleagues (FTE) 3,449 4,281 4,040 4,184 3,850 3,555 Total emissions per FTE 21.1 26.1 32.8 38.0 50.4 71.3 1. This measure covers emissions arising from purchased paper (Cat. 1), Fuel and energy related activities (Cat.3), Waste Generated in Operations (Cat.5) and Business Travel (Cat. 6). Quoted emissions figures are quoted in tCO2e. 27 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Reporting requirement Where to find further information for an understanding of our business and our impacts, including outcomes of our activities Relevant policies and standards that govern our approach (please see policy list on pages 29 to 30 for a description of each policy) Environmental matters Page 27 – Our planet. Page 32 – Task Force on Climate-related Financial Disclosures. • Climate Pledges. • Supplier Management. • Business and Commercial Lending. Colleagues Page 21 – Our colleagues. Page 25 – Gender pay gap. Page 59 – Letter from the Designated Non-Executive Director for Colleague Engagement. Page 103 – Annual report on remuneration. • Diversity and Inclusion. • Recruitment and Selection. • Health and Safety. • Whistleblowing. • Conflicts of Interest. Social matters Page 22 – Our customers and communities. Page 25 – Data privacy and security. Page 25 – Governance and resilience. Page 27 – Our planet. • Climate Pledges. • Supplier Management. • Business and Commercial Lending. • Vulnerable Customers. • Data Protection. • Anti-Tax Evasion. • Anti-Money Laundering/Counter Terrorist Financing. • Business Continuity. • Complaints. Human rights Page 22 – Our colleagues. Page 25 – Gender pay gap. Page 59 – Letter from the Designated Non-Executive Director for Colleague Engagement. Page 103 – Annual report on remuneration. • Modern Slavery. • Outsourcing. • Diversity and Inclusion. Anti-bribery and corruption Page 25 – Governance and resilience. Page 144 – Financial crime risk. • Anti-Bribery and Corruption. Non-financial information and sustainability information statement This statement is prepared in compliance with sections 414CA and 414CB of the Companies Act 2006 and explains where you can find further information about how we do the right thing in relation to our customers, communities, colleagues and the environment. A description of our business model and strategy, as well as the non-financial KPIs relevant to our business can be found on pages 10 to 13. Environmental, social and governance review continued 28 Metro Bank Holdings PLC Annual Report and Accounts 2024 Policy Description ESG priorities Anti-Bribery and Corruption The policy outlines our approach to managing the risk of bribery and corruption and to ensure we conduct business in an honest and ethical way, with a zero-tolerance approach to bribery and corruption. 2 5 Anti-Money Laundering/ Counter Terrorist Financing The policy sets out the systems and controls to identify, assess, monitor and manage financial crime risks and the procedures in place to assess their effectiveness. 1 2 5 Anti-Tax Evasion The policy sets out our zero-tolerance approach to facilitating tax evasion. 1 5 Business Continuity The policy makes sure we are able to continue delivering services to our customers at acceptable levels if something unexpected were to happen. It addresses impacts to the continuity of critical business activities in the case of man-made disasters, natural disasters or other material events. 1 2 3 4 5 Change Risk Management The policy sets out the principals with which the Bank manages the risk of failing to meet planned delivery objectives, desired outcomes, or causing detriment to existing services/customers whilst implementing change. 1 2 3 4 5 Complaints The policy is in place to ensure customer complaints are handled promptly and effectively, with a focus on fair outcomes for our customers and meeting our regulatory obligations when things go wrong. 1 2 Conflicts of Interest The policy provides consistent practical guidance to all relevant parties in relation to the identification, recording and maintenance of actual and perceived conflicts of interest. 2 4 5 Data Management The policy sets out our objectives and expectations in managing data and data governance practices. It makes sure that data is managed, governed, accessed, protected, utilised and disclosed appropriately. It also focuses on the quality of key data elements and their ongoing maintenance. 1 2 3 5 Data Protection The policy is in place to ensure we comply with our data protection obligations and have the adequate level of data protection as prescribed by the General Data Protection Regulation. 1 2 3 5 Diversity, Equity and Inclusion The policy means that we treat our colleagues fairly. It sets out our commitment to having a diverse workforce which reflects our customer base and to employment policies which follow best practice, based on equal opportunities for all colleagues. 1 2 Fraud The policy sets a consistent approach to the deterrence, detection and prevention of internal and external fraud. 1 2 5 Health and Safety The policy protects our customers and colleagues. It recognises our statutory duties and responsibilities under the relevant Health and Safety and Welfare legislation. 1 2 Information Security and Acceptable Use The policy sets objectives, expectations, roles and responsibilities and requirements for protecting both our and customer information and the use of IT assets. 3 5 Policy list Environmental, social and governance review continued Key 1 Our customers and communities 3 Data privacy and security 5 Governance and resilience 2 Our colleagues 4 Our suppliers 6 Our planet 29 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Policy Description ESG priorities Lending and Arrears Management (including Retail, Business and Commercial Lending) These policies set our approach to making lending decisions in a structured, consistent and fair way that is compliant with all relevant regulatory requirements. They define the way we safeguard both ourselves and our customers in pursuit of our goals and how we support our customers during periods of financial difficulty. 1 Modern Slavery The policy describes our approach towards preventing slavery, servitude, forced and compulsory labour and human trafficking in any of our operations or at any of our suppliers and, through them, our supply chains. 1 5 Physical Security The policy protects our customers and colleagues. It defines the measures to protect our premises from security threats and to ensure the personal safety and security of all customers, colleagues and visitors. 1 2 Procurement and Supplier Management The policy ensures that when we rely on an external supplier for key processes and activities, we take the reasonable steps to identify, monitor and mitigate the external supplier risks. 1 4 5 6 Product Governance The policy sets requirements to ensure products and services are developed to address customer needs, have a defined target market, are designed to deliver good customer outcomes and are understood by customers. 1 5 Records Management The policy sets out our objectives and expectations for managing records responsibly and efficiently from creation to disposal, complying with legal and regulatory obligations. 1 2 3 5 Recruitment and Selection The policy relates to all recruitment-related activities and is relevant for all colleagues and any third-party recruitment partners. The policy outlines responsibilities for hiring aligned to our Company objectives/ethos and in accordance with the relevant legislation and regulation. 2 Regulatory Reporting and Disclosure The policy set out the principles, governance and control considerations required for accurate, complete, and timely regulatory reporting. 1 5 Sanctions The policy sets the requirements and approach to managing financial sanctions risks in compliance with applicable sanctions regimes including the prevention, detection and investigation of potential sanctions evasion. 1 5 Share Dealing The policy sets out the approach and process relating to dealing in Metro Bank shares by the Board, colleagues and, where appropriate, third parties. 2 4 5 Technology The policy sets our approach to the management of technology and associated risks across each of the delivery channels, to support our strategic objectives and deliver good customer outcomes. 1 2 3 5 Vulnerable Customer The policy sets out our approach to identifying and interacting with vulnerable customers to ensure we deliver good customer outcomes. 1 2 Whistleblowing The policy encourages colleagues to disclose information, in good faith and without fear of unfair treatment, when they suspect any illegal or unethical conduct or wrongdoing affecting us. 2 5 Environmental, social and governance review continued Key 1 Our customers and communities 3 Data privacy and security 5 Governance and resilience 2 Our colleagues 4 Our suppliers 6 Our planet Policy list continued 30 Metro Bank Holdings PLC Annual Report and Accounts 2024 Section 172 statement Stakeholder engagement is essential to the execution of our purpose to empower customers and communities with a human approach to banking. Our six key stakeholders: Our customers Our colleagues Our communities Our investors Our regulators Our suppliers Our business model is predicated on attracting customers and turning them into FANS. Our reputation and creating FANS is at the core of our values. As a growing business, we need to attract new talent. We also want to ensure our colleagues are happy and engaged so that they provide excellent service to each and every customer. We are proud to be an integral part of the communities we serve. We engage openly and transparently with our investors who help us to grow. Following our regulators’ principles, rules and guidance helps us to put customers at the heart of everything we do. We pride ourselves on doing the right thing, and maintaining the highest values in everything we do, and this extends to the suppliers we work with. The Board must act in accordance with the duties set out in the Companies Act 2006 (‘the Act’). Under section 172 of the Act, the Board has a duty to promote the success of the Company for the benefit of its members as a whole. When making decisions, the Board ensures that it acts in the way it considers, in good faith, would most likely promote success for the benefit of our members, and in doing so has regard to the matters set out in Section 172(1) of the Act. The different needs of stakeholders are considered throughout the whole decision-making process. The Board, at all times, has regard to the impact of material decisions on the different stakeholder groups. However, it is not always feasible to provide pragmatic outcomes for all stakeholders and the Board, at times, has to make decisions based on the competing priorities of stakeholders and the needs of the Bank. More information on the key decisions made by the Board in the year and how stakeholders were considered can be found on page 54. S.172 factor Relevant disclosures Pages (a) the likely consequences of any decision in the long-term • Our purpose and strategy framework • Business model • Strategic priorities • Risk report 2–3 10–13 3 121–150 (b) the interests of the Company’s employees • Non-financial information statement • Our colleagues • Board activity and stakeholder engagement • Letter from the Designated Non-Executive Director for Colleague Engagement 28 22 and 56 54–58 59–60 (c) the need to foster the Company’s business relationships with suppliers, customers, and others • Board activity and stakeholder engagement • Environmental, social and governance review • Our suppliers 54–58 19–30 58 (d) the impact of the Company’s operations on the community and the environment • Board activity and stakeholder engagement • Task Force on Climate-related Financial Disclosures • Environmental, social and governance review 54–58 32–41 19–30 (e) the desirability of the Company maintaining a reputation for high standards of business conduct • Whistleblowing • Anti-bribery and corruption • Audit Committee report • Modern slavery 70 25, 28 and 144 66–70 26 and 70 (f) the need to act fairly between members of the Company • Board activity and stakeholder engagement • 2024 AGM • Share capital 54–58 57 118 31 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 During 2024, we built upon the progress made in previous years by further enhancing and embedding our approach to the management of climate-related risks across both our governance structure and the wider risk management framework, as well as making positive strides on our data and metrics. There remains work to do to further enhance our transition planning, including more granular assessment of the impact of climate-related risks and opportunities on our businesses, strategy, and financial planning, as well as continued evolution of the coverage and application of climate-related metrics as our capabilities and methodologies mature. Task Force on Climate-related Financial Disclosures This section of our annual report includes our climate-related financial disclosures, consistent with the recommendations of the Task Force on Climate-related Financial Disclosures, providing an update on our current progress and areas of future focus. Key points Future developments Page Governance Describe the Board’s oversight of climate-related risks and opportunities. • The Board retains oversight for all climate-related risks and opportunities and has received an annual update on our progress in this regard in 2024. • The Risk Oversight Committee has oversight of the framework for managing and reporting on climate-related risks in line with our Enterprise Risk Management Framework. • The Board will continue its regular oversight, engagement and challenge on climate-related strategy and activity. • Ongoing review of governance framework to ensure continued alignment with regulation and industry-recognised best practice to ensure that an appropriate level of oversight of climate-related risks and opportunities is in place. 19, 35 Describe management’s role in assessing and managing climate-related risks and opportunities. • Overall responsibility for our approach to climate-related risks and opportunities sits with the CEO and is devolved to relevant members of ExCo. • Senior Management Function responsibility under the Senior Managers and Certification Regime sits with the Chief Risk Officer for climate-related risks. • Our Environment Working Group, reporting into the ESG Steering Committee, is accountable for delivering our Net Zero strategy, bringing together stakeholders from across the business. In 2024 it has focused on building out the foundations of a multi-year roadmap, delivery of which will be tracked through the ESG Steering Committee. • Focus on enhancing our data and reporting on climate-related risks via key risk indicators to facilitate improved management assessment of these risks via enhancements to data coverage, reporting and disclosures. • In 2025, management will finalise the roadmap and continue to deliver the actions across workstreams covering risk management and reporting, customer engagement, suppliers, colleague capability, customer communications and brand. 19, 35 Strategy Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term. • Climate-related risks have been identified and assessed as part of a wider review of top and emerging risks and embedded in the Enterprise Risk Management Framework. The most material risk exposures were identified in Credit, Capital and Operational Risk and assigned potential time horizons. • Considerations covering risks and opportunities within our internal operations and our engagement with stakeholders across our value chain are embedded in the ESG materiality assessment for the organisation. • Opportunities to support our customers in achieving their climate-related aspirations are considered in the strategy review and product development process. • Continue to assess and evolve our climate-related strategy in line with the Bank’s wider strategic objectives. • Expand dialogue with customers on climate-related risks and opportunities to ensure we can both manage our risk exposure and best support their transition to a low-carbon economy. • Enhance data capture and quality to support identification, assessment and mitigation of climate-related risks and opportunities and evolve risk capabilities, origination strategy and product suite accordingly. 35–36 32 Metro Bank Holdings PLC Annual Report and Accounts 2024 Task Force on Climate-related Financial Disclosures continued Key points Future developments Page Strategy continued Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning. • The potential impact of climate-related risks and opportunities on our strategy and financial position continues to be considered on an ongoing basis. • Further embedding of climate considerations in our strategic and financial planning processes, with consideration of the necessary tools and methodologies to support delivery of the climate-related strategy. 35–36 Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. • Climate-related stress testing is in place and continues to evolve in maturity. There is a credit impairment overlay process established to cover climate-related risks. • Scenario analysis insights are used to inform the Internal Capital Adequacy Assessment Process and in financial reporting. • Continued enhancement of our modelling capabilities, including integration of Network for Greening the Financial System (NGFS) aligned scenarios developed with Moody’s into our scenario analysis activity. 36, 39 Risk management Describe the organisation’s processes for identifying and assessing climate-related risks. • Climate change has been embedded as a cause into the Enterprise Risk Management Framework, together with frameworks, policies and standards for the relevant principal risks. • To form a view on materiality and assess impacts across different time horizons, we assess each principal risk to identify how climate change could manifest. • Internal modelling capabilities are in place to assess the exposure of our lending portfolios to climate-related risks. Mortgage portfolio data is monitored to understand material climate risk drivers. • Continue to develop methodologies to identify and assess climate-related risks. • Enhanced coverage and quality of climate-related data and monitoring across risk types and processes. • Review of commercial customer population to identify high risk sectors, potential concentrations and associated risks. 37–39 Describe the organisation’s processes for managing climate-related risks. • We have integrated climate-related controls into our credit processes across both retail and commercial lending, with credit assessments for in-scope commercial clients including qualitative climate risk considerations. • We engage closely with our material suppliers to ensure climate-related risks are identified and appropriate controls put in place, as well as doing so as part of our RFP process. • Extend climate scenario analysis to additional portfolios. • Enhance capabilities for mortgage portfolio physical and transition risk data capture to enable enhanced portfolio monitoring. • Further development and embedding of climate-related controls. 37–39 Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management. • Climate-related risks are fully embedded in our Enterprise Risk Management Framework and Three Lines of Defence model, with associated governance structures and defined roles and responsibilities. • Continue to keep pace with evolving industry requirements around risk management, reporting, governance and disclosures. 37–39 33 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Task Force on Climate-related Financial Disclosures continued Key points Future developments Page Metrics and targets Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. • Climate-related metrics across our operations, supply chain and financed emissions are reported on an annual basis via our climate-related disclosures. • The properties securing our lending portfolios are assessed for flood and subsidence risk, as well as EPC distribution. • For financed emissions, intensity metrics covering the Bank’s residential and commercial mortgage lending are disclosed, as is a weighted PCAF data quality score. • Continued review and enhancement of our calculation methodologies for Scope 3 emissions across all categories in line with industry best practice. This includes data enhancements to further improve PCAF data quality levels and increase coverage of portfolio data as well as engagement with suppliers to increase utilisation of activity based methodologies for assessing supplier emissions. • Development of climate-related key risk indicators and further intensity metrics for intra-year monitoring. 27, 39–41 Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas emissions, and the related risks. • Scope 1, 2 and 3 emissions are disclosed within the wider TCFD disclosure, with full disclosure across all applicable Scope 3 categories. Methodological and data quality enhancements were embedded across all Scopes in 2024. • Continued enhancement of emissions calculation methodologies in line with industry best practices. • Define required data enhancements to extend calculation of financed emissions to additional portfolios. 27, 39–41 Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. • We have two overarching net zero targets in place – to achieve net zero emissions across Scope 1 and Scope 2 by 2030 and across Scope 3 by 2050. • We have achieved emissions reductions of 96% across Scope 1 and 2 and 71% across Scope 3 from our baseline year of 2019. • Continued monitoring of performance against these targets and development of interim milestones for sub-categories across all Scopes. 27, 39–41 We have highlighted some key opportunities across different time horizons which we believe will help us to meet our 2030 and 2050 Net Zero pledges. Short-Term Medium-Term Long-Term Delivery of ESOS Energy Action Plan, identifying opportunities to mitigate Scope 1 emissions Introduction of activity based assessment of supplier emissions for our most material supplier relationships Review of origination strategy, product proposition and asset mix to support mitigation of financed emissions Integration of Moody’s Macroeconomic Climate Risk Scenarios into scenario analysis activity Sector and channel based review of climate related risks and opportunities Ongoing identification of new physical and transition risks impacting our portfolio through scenario analysis Review financed emissions calculation methodologies for non-mortgage lending Purchase of high quality carbon removal credits to mitigate residual Scope 1 and 2 emissions Further enhance data capture capability for employee commuting 34 Metro Bank Holdings PLC Annual Report and Accounts 2024 Whilst the changes associated with the transition to a lower-carbon economy pose risks, they also present significant opportunities for organisations focused on climate change mitigation and adaptation solutions. We have an important role to play in facilitating the transition to a low-carbon economy, leveraging the opportunities, and managing the risks we are exposed to from climate change. We are committed to supporting our customers along the journey as they make the transition towards a low-carbon economy, and to enhancing our own capabilities by identifying and managing the potential impact of climate change on the business, as well as exploring ways to reduce the impact that the business has on the environment. We recognise that climate change presents both risks and opportunities to our business model and strategy over short-, medium- and long-term horizons: • short-term (0-1 years): The time horizon for annual financial planning • medium-term (1-5 years): The time horizon for strategic and financial planning cycles • long-term (> 5 years): This timeframe is considered using scenario analysis. Governance Board oversight of climate-related risks and opportunities The Board has ultimate accountability for all climate change risk-related matters. During 2024, the Board has been engaged in the development of our approach, receiving an annual update on the management of climate-related risks and opportunities, as well as a broader annual ESG update. The Board considers climate-related risks and opportunities as part of the annual strategic and financial planning process to ensure our approach to these matters evolves in line with the ongoing evolution of regulation, industry best practice and capabilities. The Risk Oversight Committee (ROC) has oversight of the framework for managing and reporting the risks from climate change, as set out in the Enterprise Risk Management Framework. The Committee can escalate any climate-related risk matter to the Board. The Audit Committee approved the approach to disclosures, in line with TCFD requirements, and reviews climate-related financial disclosures as part of its wider role in reviewing our Annual Report and Accounts. Management’s role in assessing and managing climate-related risks and opportunities Responsibilities for the management of climate- related risks extend across the organisation and its ‘Three Lines of Defence’. As climate risk impacts a significant number of our principal risks, it requires integration with existing control frameworks, policies and strategies. The accountability for our approach to ESG sits with the CEO and is devolved to relevant members of ExCo. The Chief Risk Officer has Senior Management Function responsibility under the Senior Managers and Certification Regime for our approach to managing both financial and non-financial risks arising from climate change, including: • embedding the consideration of climate-related risks into the governance structures • incorporating the risks from climate change into risk management practices • using long-term scenario analysis to inform strategy setting, risk identification and assessment • ensuring that climate-related risks are appropriately disclosed in line with the recommendations of the TCFD. Executive Risk Committee The Executive Risk Committee (ERC) has delegated authority from ROC for overseeing our exposures and approach to managing climate-related risks. In 2024, the Committee received an update on the progress of our approach to managing climate- related risks, including an overview of current regulatory requirements and industry expectations, their expected evolution over the next two years and the implications for the Bank. An overview of the controls mitigating credit-related aspects of climate risk was included, as was an overview of our existing data and reporting capabilities related to financed emissions, benchmarking against peer institutions and updates on our progress towards our Net Zero goals. Credit Risk Oversight Committee The Credit Risk Oversight Committee (CROC) has specific responsibility for oversight of climate- related aspects of credit risk including recommending strategies to adjust the credit risk portfolio to react to changes in the prevailing market or physical environmental conditions. During the year, the Committee received updates on the credit risk aspects of climate change, including climate risk-specific analysis relating to lending portfolios. Asset and Liability Committee The Asset and Liability Committee (ALCO) oversees the effective management of the Bank’s financial risks of capital, funding, liquidity and market risk. The Committee considers the impact, or potential impact, of climate change within its assessment of holding adequate capital and liquidity resources within the respective planning horizons. Task Force on Climate-related Financial Disclosures continued Environment Working Group The Environment Working Group brings together key stakeholders from across the first and second lines of defence to support work to help embed climate risk into the Enterprise Risk Management Framework and support our wider climate-related goals and ambitions. The Environment Working Group is accountable for delivering our net zero strategy and objectives across three strategic focus areas: • managing the impact of climate change on the business • supporting our customers’ transition to a low-carbon economy • reducing the impact that the business has on the environment. The Environment Working Group has focused on building out the foundations of a multi-year roadmap across core business areas and risk management disciplines. Delivery on the roadmap is tracked through the Bank’s ESG Steering Committee and enhancements to the roadmap are informed by our ongoing analysis of risks and opportunities arising from climate change. This will help to accelerate progress and prioritisation, particularly in relation to our climate change response. Strategy 2024 has been a pivotal year for the Bank, with leadership setting out our strategic pillars for the road ahead and colleagues delivering significant levels of transformational change to set the foundations for growth. As we progress through this evolution, we will embed the assessment of climate-related risks and opportunities in the formulation of our strategic approach throughout the business, whether in our own operations, strategic partnerships and supplier relationships or our financing activity. 35 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Task Force on Climate-related Financial Disclosures continued Identifying and managing the impact of climate change on the business The ability to identify, understand and manage risk is critical to our long-term strength and stability and climate risk is no different in this regard. Climate risk does, however, require us to address risks that may manifest over a significantly greater period than that covered by more traditional approaches to risk management. We broadly categorise climate risks into two types: transition risk and physical risk. Within these broad categories, we have identified a number of potential impacts arising from climate change which we monitor over the short-, medium- and long-term. Our initial focus has been to identify and assess risks to the business. The assessment of climate risks is embedded into our key risk process, with controls in place across our lending activity and internal operations. We utilise our internal climate scenario analysis and stress testing capability in line with emerging industry methodologies and have used outputs from initial methodology developments to formulate an initial impact assessment to inform considerations in developing our strategic response. The risks we face in the medium term are primarily transition risks, predominantly arising from developing regulatory and legislative expectations. For example, potential changes to minimum energy efficiency standards applicable to the properties securing our lending may lead to transition risks which could impact the value of these properties or the ability of borrowers to service debt. Physical risks represent a longer-term risk (primarily from changes in climate patterns impacting the physical property securing our mortgage portfolio) and the most material risks are expected to crystallise over the long term. Changes in extreme variability in weather patterns are forecast to lead to increased incidence and severity of physical risk events which, in addition to the disruption felt by customers, can lead to a decrease in the valuations of property taken as collateral to mitigate credit risk. Whilst the nature of our business model means we are not heavily exposed to certain carbon intensive industries, exposures to physical and transition risks may arise within our commercial lending portfolio due to changes in policy, consumer preferences or technology. Our strategic pivot towards corporate and commercial lending will transform our portfolio, impacting both volumes of lending and the channels/propositions through which we deliver that lending to our customers. The nature of our customer base may also evolve, changing our proportional exposure to existing sectors as well as introducing new ones. Through 2025, we will review our sectoral exposures to identify higher-risk sectors as well as climate- related risks and opportunities across the broader portfolio. Additionally, we will further develop our customer engagement model to ensure we are well placed to understand our customers’ climate related ambitions and ensuring we are supporting them with the guidance and financing required to help achieve their goals. Operational risk exposures arise from physical damage to key office locations and physical and transition risks via key suppliers, which could result in business disruption or increased costs. Our strategic collaboration with Infosys represents a significant milestone for the Bank and our transformation journey. Climate considerations were taken into account throughout the RFP process and will continue to be as our collaboration evolves. We will work with Infosys over the coming months to more fully understand their own commitments and progress in the climate space and ensure these are closely aligned with our own. We have worked with Moody’s to define two new climate scenarios which align to a set of scenarios developed by the NGFS. These scenarios will be leveraged in 2025 to refine our approach to climate change scenario analysis. As these methodologies develop, we will be progressively drawing on our scenario analysis to inform strategic planning; providing insight into/for our strategy, business model and financial plans. At present we do not believe risk arising from climate change to have had material impact on the financial statements. Operations We have made substantial progress in reducing the impact of our direct operations on the environment. We have maintained our position of procuring 100% renewable electricity with full backing by REGO certificates.1 Waste levels have reduced materially from our baseline year of 2019 and we are maximising recycling rates, as well as diverting zero waste to landfills. In line with the UK government’s Energy Savings Opportunity Scheme (ESOS), we will deliver an Energy Action Plan in Q1 2025 outlining key actions to be taken across our operational footprint and will consider how these will be integrated into our wider climate roadmap. The actions taken to date have helped us to achieve an overall reduction of 96% across our Scope 1 and 2 emissions from the 2019 baseline, and this keeps us strongly positioned to meet our stated commitment of being net zero across Scope 1 and 2 by 2030. We have identified the activities driving our residual Scope 1 emissions and have considered the actions required to eliminate, reduce or substitute them. Once these steps have been taken, we will assess the level of residual emissions and deliver our full net zero pledge through the purchase of high-quality carbon offsets derived from solutions which are characterised by carbon removal, durable storage and low risk of reversal. 1. 32 tonnes of market based Scope 2 emissions set out in the Emissions summary by Scope and Category table on page 39 are derived from one site where we are a tenant and unable to verify the energy consumption and tariff. We have assessed the consumption as the mean of all other stores and assumed a non-green tariff. 36 Metro Bank Holdings PLC Annual Report and Accounts 2024 Task Force on Climate-related Financial Disclosures continued Risk management Identification and assessment We classify climate-related risks as either physical risks or transition risks. We are exposed to both physical and transition risks arising from climate change. Risks arising from climate change materialise through various channels: 1) through the financial services and support we provide to customers who may themselves be exposed to the climate change 2) the operation of our own infrastructure, business and premises which may be exposed to both transition and physical risks 3) through a deteriorated perception of our brand if we do not adequately support a transition to a low-carbon economy. To form a view on materiality, and to understand the broad financial impacts across different time horizons, the Enterprise Risk Management Framework was assessed through a climate change lens to identify how climate change could manifest in each of our principal risks. Due to the longer timeframes associated with climate impacts, short-, medium- and long-term horizons are being applied to the consideration of impacts. This assessment has been included in the 2024 Internal Capital Adequacy Assessment Process (ICAAP) and identified our top three climate change risks as: credit, capital and operational. Credit risk is the most material climate change risk due to our mortgage portfolio exposures. Our Risk Appetite Statement includes a qualitative statement in relation to climate risk. In support of this appetite, complementary quantitative key risk indicators are being developed and will be assessed with a view to integrating them into risk appetite metrics, where appropriate. Metrics will be further enhanced as data and capability evolves and will leverage scenario analysis outputs. Credit risk Physical risk examples Transition risk examples Time horizon Repayment challenges from obligors due to reduced profitability or asset devaluation because of climatic shifts. Failure to adapt to changes in policy, regulation, and technology resulting in negative impact to customers. Medium term to long term. Mortgages We have controls in place to mitigate against flood risk, subsidence, and landslip in our residential mortgage portfolio. Where it is identified that a property is situated on a flood plain, borrowing is only permitted where a suitable insurance policy is in place. Specific requirements are in place in relation to lending to buy-to-let properties which have an Energy Performance Certificate (EPC) rating below E. In accordance with the Minimum Energy Efficiency Standards Regulations, all buy-to-let properties must have a minimum EPC rating of E. All physical valuations must be completed by registered valuers to utilise their local knowledge and expertise, including the assessment of physical risks and climate-related information. We receive open-source property data for our mortgage portfolio to enhance our portfolio risk identification and monitoring processes. We also review and evolve our secured lending policies and standards in response to the external environment, regulation, investor and other stakeholder interest. Commercial lending Our approach to commercial lending and collateral management incorporates environmental risk considerations. We have additional credit risk assessment requirements for customers operating in carbon-intensive industries. Our Commercial Lending Policy also outlines the prohibited and restricted industries where we have either no or limited appetite to lend. A large proportion of our business lending customers are privately owned and/ or SMEs. Very few lending customers therefore report against voluntary disclosure initiatives such as Carbon Disclosure Project, Sustainability Accounting Standards Board or TCFD. A top-down assessment of sectors (and sub-sectors) which may have a higher likelihood of being impacted by transition risks has been performed. It highlighted that our direct exposure to commercial lending segments with high emissions is relatively low. We continue to enhance and refine this work at both counterparty and sector level, considering both risks and opportunities as we look to support our customers’ responses to climate change. The output will be used to inform the evolution of our credit policies and risk appetite measures to monitor the portfolio transition risk. 37 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Capital and liquidity risk Physical risk examples Time horizon • Our capital position is indirectly subject to climate risk through Bank-wide exposures across all risk types. • Longer-term climate change risks may adversely impact our future revenue through customer behaviour, balance sheet or strategy changes over the longer term in response to climate change risk factors. • Market dislocation could also impact the value or the ability to monetise liquidity buffers or incremental client deposits run-off resulting from transition risk drivers. Medium term to long term. Climate change risk has been considered as part of the 2024 ICAAP. This includes a qualitative assessment of the potential financial implications of climate-related risk, namely transition and physical risks. The ICAAP is a key planning process and facilitates the Board and senior management in identifying, measuring and monitoring our risks and ensures that we hold adequate capital to support our risk profile. Based on our current assessment the capital requirement is not considered to have a material impact over the planning horizon at this time. Consideration of climate risk will continue to be further embedded in key processes where investment decisions are made and the level of climate risk being taken is material. The output of the climate scenario analysis and stress testing is used to inform the understanding of how capital management may be impacted. Climate risk and broader ESG considerations are now reflected in our liquid asset portfolio investment strategy, with implications for securities that can be included in the Liquidity Pool. The 2024 Internal Liquidity Adequacy Assessment Process (ILAAP) outlined the potential funding and liquidity risks that may arise as a result of physical risks or transition risks. The impacts of climate change will continue to be assessed within our prudential statements, namely the ICAAP and ILAAP. Operational risk Physical risk examples Time horizon Business interruptions due to extreme weather events and damage to facilities. Disruptions in supply chain. Medium-term to long-term Transition risk examples Increased operating costs for facilities and higher capital expenditures for resiliency and carbon reduction measures. Climate change is embedded as a cause within the Enterprise Risk Management Framework and our principal risks are assessed through a climate lens. All loss events are recorded in our incident management system, enabling the identification of climate-related risk events. Scenario analysis is performed to assess the potential effects of climate-driven events including disruption to business services, damage to physical assets, and health and safety. Physical risk data has been obtained in relation to key data centres and office/store locations to support our assessment of future risk. The results of the scenario analysis are used to plan, prepare and respond to potential disruptions. There are also plans in place to help resume business operations as quickly as possible in the aftermath of an extreme climate event to minimise operational disruptions. We take steps to integrate climate change considerations into our procurement and supply chain management processes, including exploring different methods to collect environmental performance data from third parties. More broadly, the Operational Resilience programme outlines the requirements (including requirements of suppliers) to respond to business disruption. We will continue to identify, manage and disclose material climate-related risks and their impacts on our strategy and financial planning, in line with the TCFD framework. Task Force on Climate-related Financial Disclosures continued 38 Metro Bank Holdings PLC Annual Report and Accounts 2024 Response Climate change has been embedded as a cause into the Enterprise Risk Management Framework, together with the frameworks, policies and standards for these principal risks. For credit risk, we have also integrated climate risk considerations into both the Business and Commercial Lending Policy and the Collateral Management Policy to aid the embedding, management and monitoring of climate change risk as a cause to our credit risks. Scenario analysis As the understanding and importance of climate risk progresses, climate scenario analysis is becoming an essential capability and risk management tool. Scenario analysis assists the identification, measurement and ongoing assessment of climate risks over the longer term, and the potential threats to our strategic objectives. Throughout 2024, we have used the analysis from the Biennial Exploratory Scenario work conducted in 2021, leveraging the results of that analysis in the corresponding period and using this to inform a Post Model Adjustment (PMA) which is incorporated within our IFRS 9 ECL calculation. In addition, a Climate Risk scenario was formally assessed as part of the 2024 ICAAP, reviewing the potential impact of an extreme weather event causing prolonged physical damage to our stores and a breakdown in the transport infrastructure servicing the stores. Outcomes from these pieces of analysis have indicated that we are considered to have sufficient capital to withstand the losses associated with the climate scenarios that have been assessed. As this capability is established and further developed, the assessment will be run on an ongoing basis to inform scenario planning and monitoring of the portfolio composition to ensure no undue concentrations. The results of the scenario analysis will be used to support the evolution of origination strategies in line with our overarching strategic objectives and risk appetite to factor in climate change risks and opportunities. It will also inform product opportunity assessment and help to identify areas where we could best support customers’ transition to improved energy efficiency or reduction in exposure to physical risks. Metrics and targets Our climate change metrics are anchored to our commitment to achieve Net Zero across our Scope 1 and 2 emissions by 2030, and across all Scopes by 2050. Our emissions data for 2024 is disclosed in the summary table below, outlining year-on-year changes as well as overall progress from our 2019 baseline. In 2024, we have taken positive steps to enhance our metrics, particularly with regards to our financed emissions. For the first time, we have included emissions intensity metrics and a weighted PCAF Data Quality score covering our retail and commercial mortgage portfolios, have disclosed our EPC profile for commercial property and our unmatched EPC profile across both commercial and residential portfolios, as well as including data on subsidence risk for property securing our lending. For supplier emissions, we have transitioned to use of DEFRA Environmentally Extended Input-Output (EEIO) model conversion factors, allowing us to more accurately categorise supplier spend and derive emissions. Additionally, Task Force on Climate-related Financial Disclosures continued Emissions summary by Scope and category Emission Scope Category 2024 % change PY 2023 Scope 1 Fuels (transport) 22 7 20 Gas 82 14 71 Fugitive 19 (95) 378 Total 122 (74) 469 Scope 2 Electricity (market) 32 – – Total Scope 1 & 2 154 (67) 469 % change from 2019 baseline (96) – (87) Scope 3 Cat 1: Purchased goods & services 36,737 (33) 54,986 Cat 2: Capital goods 1,131 (48) 2,155 Cat 3: Fuel & energy activities 853 (6) 903 Cat 4: Upstream transportation 301 (19) 371 Cat 5: Waste 13 36 9 Cat 6: Business travel 272 (36) 423 Cat 7: Employee commuting 3,641 (19) 4,495 Cat 9: Downstream transportation 73 (36) 114 Cat 15: Investments 29,650 (38) 47,749 Total Scope 3 72,670 (35) 111,205 % change from 2019 baseline (71) – (55) Total GHG emissions 72,824 (35) 111,674 % change from 2019 baseline (71) – (55) Emissions figures are quoted in tCO2e and rounded to the nearest whole number (whilst % change is calculated on un-rounded figures). For Scope 3 emissions, categories 8 and 10-14 are assessed not to apply to our operations at this time and are therefore excluded from our analysis. we have transitioned the calculation of supplier emissions for water and paper from spend-based to activity-based, further enhancing the accuracy of emissions calculations. As our approach to transition planning continues to evolve, we will embed further metrics and develop interim targets across key Scope 3 categories, driven by both our data capabilities and our understanding of the climate risks and opportunities within our operations and lending activities. 39 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Operational emissions Greenhouse gas (GHG) reporting is undertaken in line with our obligations under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013, and the Streamlined Energy and Carbon Reporting regulations 2019. GHG emissions are reported in accordance with the GHG Protocol, which sets a global standard for how to measure, manage and report emissions. We report GHG emissions in accordance with the operational control approach. Limitations in the emission data relate to employee commuting, where data for all individuals was not available; and one site where we are a tenant and unable to verify the energy consumption and tariff. For employee commuting the average population values were used to perform the calculation and for energy consumption we have utilised the mean consumption of all other stores and assumed a non-green tariff. We have seen a significant overall reduction in our Scope 1 emissions this year, primarily driven by a 95% reduction in fugitive emissions (those derived from refrigerant and coolant leaks in our HVAC systems) and partially offset by small increases in gas consumption from our Stores and fuel consumption from our vehicle fleet. The ESOS Energy Action Plan to be submitted in 2025 will identify opportunities to mitigate the emissions arising from both the gas and fuel consumption, as well as identifying opportunities to increase the efficiency of HVAC systems such that fugitive emissions are reduced both in terms of overall volume and volatility. We do acknowledge that fugitive emissions will remain present in our Scope 1 profile and as we progress towards achievement of our 2030 commitment, we will utilise high- quality carbon offsets derived from solutions characterised by carbon removal, durable storage and low risk of reversal. Overall, we have achieved a reduction of 96% in Scope 1 and 2 emissions from our baseline year of 2019 and are well-positioned to achieve our 2030 net zero commitment for Scopes 1 and 2. All electricity procured by the Bank across our operations is 100% renewable and backed by REGO certificates, Our location-based emissions are reduced by 40% from our 2019 baseline, reflecting a reduction in energy consumption across our estate over this period. We recognise that our climate impact extends beyond emissions arising from fuel consumption and electricity across our direct operations and that we have a responsibility to understand and address emissions across our wider value chain. Therefore, we have measured our Scope 3 operational emissions in 2024 as set out in the summary table. To enhance our reporting, we have broken down our Scope 3 emissions into their underlying categories. In addition to tracking the emissions for buildings, water and waste consumption are measured across our sites. We have continued to see a reduction in emissions from these sources both year on year and from our baseline in 2019. We have also seen concurrent reductions in paper usage covering both our direct consumption and downstream distribution of paper through customer communications. Supplier Emissions Emissions arising from the goods and services procured from third parties currently represent the largest individual contribution to our emissions, accounting for 50% of our total. Emissions are currently calculated using a spend-based methodology, based on DEFRA EEIO conversion factors which are assessed at a sectoral level. The exceptions to this are water and paper, which are calculated using an activity-based methodology. As our engagement with suppliers on ESG evolves (as outlined in the ESG report), we will improve our ability to expand the scope of our activity-based calculations, further improving the assessment of supplier emissions. In 2025, we will leverage our strategic partnership with Infosys to define and implement activity-based metrics to track our supplier’s progress towards Net Zero and utilise these to assess our own supplier emissions, extending these metrics across our top 5 suppliers (by spend). Financed emissions We remain fully committed to our pledge to make our financing activity and value chain net zero by 2050 to achieve alignment with the 2015 Paris Agreement. Financed emissions are absolute GHG emissions that we finance through our lending and investment activity. For 2024, we have calculated financed emissions from our residential mortgage portfolio (both organic and acquired) and residential and commercial buy-to-let portfolios. In line with last year, we have followed the industry-standard PCAF methodology for calculating financed emissions, however improvements in our underlying data have allowed us to use property-level EPC and floor area data for 77% of our residential portfolio and 53% of our commercial portfolio (by volume), achieving a weighted PCAF Data Quality score of 3.4 and 3.9, respectively. This has allowed us to more accurately assess our financed emissions from these properties. Whilst the notable reduction in financed emissions can be in large part attributed to the reduction in overall balances driven by the £2.5 billion mortgage portfolio sale to NatWest, the data enhancements made this year and the consequent ability to more accurately measure financed emissions has been a contributing factor. The introduction and continued development of emissions intensity metrics and targets is critical to tracking our performance against our climate goals, particularly as the Bank continues through its transformation and growth in lending activity accelerates. With overall balances projected to increase, it is reasonable to expect that our absolute financed emissions could exhibit a concurrent increase. Key to our transition planning and achievement of our 2050 goal will be ensuring that lending activity across portfolios and channels is assessed for climate risk exposure and there is ongoing engagement with customers to support their transition to a low-carbon economy, ultimately ensuring emissions intensity is diminishing in the medium-to-long term. Task Force on Climate-related Financial Disclosures continued In 2025, we will assess how to best extend EPC and floor area data across the unmatched portfolio as well as the necessary enhancements to elevate our PCAF Data Quality score across the overall portfolio. We will also explore the methodologies and data enhancements required to extend our analysis of financed emissions to other lending portfolios, utilising PCAF guidance and methodologies, where available, to gain more comprehensive insight into the impact of our lending activity. 40 Metro Bank Holdings PLC Annual Report and Accounts 2024 Portfolio Metrics The use of EPC data has informed our understanding of the potential impact of transition risk on the property portfolio securing our residential and commercial mortgages. EPC ratings of the mortgage portfolio are monitored to provide a view on the energy efficiency of the housing stock securing our lending. The table alongside shows a summary of EPC ratings on our mortgage book as at the end of 2024, covering both residential and professional buy-to-let. Approximately 77% of mortgaged properties in the residential portfolio and 53% in the commercial portfolio have been matched to an EPC rating, with the most common EPC rating in our mortgage book being D. Approximately 42% of the residential portfolio and 45% of the commercial portfolio are currently rated EPC C or better on an interpolated basis, broadly aligned with the UK property EPC register at 43%. Physical climate risk data was matched for 95% of the properties in the portfolio, with the incremental impact of river, coastal and surface flooding assessed to 2050, and subsidence risk assessed through to 2070. The assessment shows that the flood risk of the properties in our mortgage portfolio is broadly in line with the national average and slightly elevated for subsidence, reflecting our concentration in the Southeast of England. Our scenario analysis results suggest physical risks arising from climate change should have a low impact on our mortgage portfolio over the next 30 years. Improbable Possible Probable Subsidence Risk Metro UK Metro UK Metro UK Residential Risk in 2030 63.69% 80.50% 13.60% 8.50% 22.54% 10.60% Risk in 2070 53.34% 72.30% 10.53% 8.40% 35.96% 19.00% Commercial Risk in 2030 70.13% 80.50% 12.20% 8.50% 17.67% 10.60% Risk in 2070 60.18% 72.30% 10.67% 8.40% 29.15% 19.00% Flood Risk Negligible Low Medium High Residential Rivers and sea 94.35% 3.05% 1.89% 0.70% Surface water 86.77% 8.77% 2.19% 2.27% Commercial Rivers and sea 93.27% 4.04% 2.33% 0.36% Surface water 82.87% 12.91% 2.24% 1.97% Emissions Intensity (tCO2e/£m) 2024 2023 Residential 5.44 6.00 Commercial 5.83 5.60 Task Force on Climate-related Financial Disclosures continued EPC rating % of properties Residential Commercial A <1% <1% B 10% 5% C 22% 19% D 31% 21%1 to <3 months in arrears) have increased by 0.58% to 1.55% at 31 December 2024 (31 December 2023: 0.97%) with 0.39% of the increase due to the mortgage portfolio sale. Accounts that are 3 or more months in arrears have increased by 1.14% from 1.08% at 31 December 2023 to 2.22% at 31 December 2024 with 0.67% of the increase as the result of the mortgage portfolio sale. Increases in arrears have been seen to a greater extent in the legacy acquired portfolios that are in run-off and have greater sensitivity to interest rate rises. The acquired portfolios were not written under Metro Bank credit criteria and do not represent similar arrears profiles to organic lending. Overall, 57% of the portfolio are now on interest rates >4%. Retail mortgage new lending has continued to be of good quality during 2024. The average LTV was 69% (2023: 63%. 2022: 69%) and the proportion of lending with an LTV over 90% was only 1.5%. The limited company buy-to-let product was launched in July 2024; this did not materially impact the volume of lending in 2024 due to the time to complete and the proportion of new lending that is buy-to-let remained low in 2024, increasing to 18% from 7% in 2023 (34% in 2022). Near prime lending has continued to make up a small proportion of new lending (2024: 1.3%) and contributes a small proportion of the portfolio (December 2024: 0.9%). 128 Metro Bank Holdings PLC Annual Report and Accounts 2024 Impairment The ECL allowance has reduced to £15 million in 2024 (31 December 2023: £19 million) with coverage increasing to 0.29% (31 December 2023: 0.24%) as a result of the mortgage portfolio sale. Stage 1 coverage ratio has remained flat (Stage 1: 0.10%). There has been a decrease in coverage ratio in Stage 2 (0.77% in 2023 to 0.68% in 2024) driven by improvements in macroeconomic scenarios resulting in a reduction in modelled ECL. There has also been a reduction in Stage 3 coverage ratio (Stage 3: 4.11% in 2023 to 3.39% in 2024) due to recovery of a large single name case. Interest-only lending Interest-only lending holds the additional risk of balance repayment at the end of the mortgage term. This risk arises principally in the mortgage portfolio where the exposure to interest-only loans stands at £2.7 billion (31 December 2023: £3.8 billion). All borrowers of interest-only facilities are assessed as being able to refinance the lending at the end of the term or have an appropriate repayment plan in place. These loans are also appropriately collateralised with lower LTV thresholds compared to capital and interest mortgage lending. The table below shows the amounts of the retail mortgage portfolio that are subject to either interest only, or capital and interest payments. Table 8: Retail mortgage lending by repayment type (audited) 31 December 2024 (£’million) 31 December 2023 (£’million) Repayment type Retail Owner Occupied Retail BTL Total Retail Owner Occupied Retail BTL Total Interest only 1,330 1,398 2,728 1,933 1,878 3,811 Capital and interest 2,362 55 2,417 3,918 88 4,006 Total 3,692 1,453 5,145 5,851 1,966 7,817 Geographic exposure The geographic distribution of our retail mortgages customer balances is set out in Table 9. All of our loan exposures which are secured on property are secured on UK-based assets. Our current retail mortgages portfolio is concentrated within London and the South East, which is representative of our customer base and store footprint. We are expanding our footprint which will reduce the geographical concentration of lending over time. Table 9: Retail mortgage lending by geographic exposure (audited) 31 December 2024 (£’million) 31 December 2023 (£’million) Region Retail Owner Occupied Retail BTL Total Retail Owner Occupied Retail BTL Total Greater London 1,324 808 2,132 2,040 1,091 3,131 South East 975 283 1,258 1,564 381 1,945 South West 313 63 376 487 87 574 East of England 379 114 493 590 150 740 North West 155 44 199 268 65 333 West Midlands 154 47 201 240 71 311 Yorkshire and the Humber 107 25 132 185 32 217 East Midlands 104 40 144 180 53 233 Wales 67 13 80 111 17 128 North East 34 7 41 60 8 68 Scotland 80 9 89 126 11 137 Total 3,692 1,453 5,145 5,851 1,966 7,817 Collateral Table 10 shows the distribution of the retail mortgage portfolio by DTV. The portfolio DTV profile has increased slightly during 2024 reflecting the changing shape of the portfolio and house price reductions. Table 10: Retail mortgage lending by DTV (audited) 31 December 2024 (£’million) 31 December 2023 (£’million) DTV ratio Retail Owner Occupied Retail BTL Total Retail Owner Occupied Retail BTL Total Less than 50% 1,282 263 1,545 1,994 439 2,433 51 to 60% 601 210 811 1,069 375 1,444 61 to 70% 611 417 1,028 1,044 642 1,686 71 to 80% 761 543 1,304 1,100 493 1,593 81 to 90% 397 16 413 550 16 566 91 to 100% 39 3 42 89 – 89 More than 100% 1 1 2 5 1 6 Total 3,692 1,453 5,145 5,851 1,966 7,817 Financial risks continued 129 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Portfolio level analysis – Consumer Table 11 summarises key credit performance metrics for the consumer lending portfolio. Table 11: Consumer credit performance 31 December 2024 £’million 31 December 2023 £’million Loans and advances 745 1,297 Loss allowance 108 108 Coverage ratio 14.43% 8.33% % loans in Stage 2 20% 24% % loans in Stage 3 13% 6% 90+ days past due 12% 5% Portfolio and credit risk profile Consumer balances have reduced to £745 million as at 31 December 2024 (31 December 2023: £1,297 million) following a cessation of lending through the RateSetter brand and subsequent cessation of the credit card product. The performance of this portfolio is aligned with expectations; increases in arrears and non-performing loans are normal for a rundown portfolio, and as a result of very low levels of write-offs causing an accumulation of cases in arrears. New lending in 2024 remained strong for overdrafts with average income and application scores remaining stable. Impairment The total ECL coverage position for consumer lending has increased to 14.43% as a result of the run-off of the personal loan and credit card portfolios, with an increase in arrears and non-performing accounts as a proportion of the residual portfolio (31 December 2023: 8.3%). Portfolio level analysis – Commercial Table 12 summarises key credit performance metrics for the commercial portfolio. Table 12: Commercial credit performance 31 December 2024 £’million 31 December 2023 £’million Loans and advances 3,314 3,382 Loss allowance 68 72 Coverage ratio 2.06% 2.13% % loans in Stage 2 7% 12% % loans in Stage 3 6% 5% 90+ days past due 2% 2% Table 13: Summary of commercial lending 31 December 2024 £’million 31 December 2023 £’million Professional buy-to-let 283 465 Bounce back loans 346 524 Coronavirus business interruption loans 47 86 Recovery Loan Scheme 260 328 Core commercial lending 1,599 1,341 Total commercial term loans 2,535 2,744 Overdrafts and revolving credit facilities 220 172 Credit cards 7 4 SME Asset Finance Limited and SME Invoice Finance Limited 552 462 Total commercial lending 3,314 3,382 Portfolio and credit risk profile Our commercial lending remains largely composed of term loans secured against property and UK government-supported lending. In addition, commercial lending includes facilities secured by other forms of collateral (such as debentures and guarantees), and SME Asset Finance Limited and SME Invoice Finance Limited. Our commercial balances have decreased from £3,382 million to £3,314 million during 2024 reflecting the reduction in our portfolio of buy-to-let and real estate lending, and reduction in government supported lending. Commercial customers are managed through an early warning categorisation where there are early signs of financial difficulty, thereby allowing timely engagement and appropriate corrective action to be taken. Early warning categories support our IFRS 9 stage classification. The percentage of the portfolio in early warning categories has fallen during 2024, which is reflected in the reduction in the proportion of lending balances in IFRS 9 Stage 2. The proportion of lending balances in Stage 2 has improved from 12% to 7% driven predominantly by accounts being repaid. However, some deterioration within early warning categories has been observed, and the proportion of lending balances in Stage 3 has increased from 5% to 6% in 2024. This is driven by a small number of individual cases in Q4, partially offset by BBLS claims. These individual cases are fully collateralised and therefore ECL is immaterial. Excluding these cases, Stage 3 would be 4.41%. Impairment The ECL allowance has reduced to £68 million in 2024 (31 December 2023: £72 million) with coverage reducing to 2.07% (31 December 2023: 2.13%). The reduced Stage 2 proportion and coverage reflects improvement in the underlying commercial portfolio. Our commercial portfolio consists predominately of SME lending which is reflected in the coverage. The operating environment continues to be challenging and commercial customers may be impacted by the pace at which interest rates change, increasing operating costs and economic uncertainty. We continue to hold appropriate levels of ECL to reflect the higher risk of default. Financial risks continued 130 Metro Bank Holdings PLC Annual Report and Accounts 2024 Interest-only lending Interest-only lending in our commercial loans has remained flat at 30% of total commercial term loans in 2024 (31 December 2023: 30%). Table 14: Commercial term lending – excluding BBLS by repayment type (audited) 31 December 2024 (£’million) 31 December 2023 (£’million) Repayment Type Professional buy-to-let Other term loans Total Professional buy-to-let Other term loans Total Interest only 270 393 663 438 222 660 Capital and interest 13 1,513 1,526 27 1,533 1,560 Total 283 1,906 2,189 465 1,755 2,220 Geographic exposure The below table summarises the geographic distribution of the commercial term loans portfolio. 63% of commercial term loans are to companies in London and the South East (31 December 2023: 71%), which reflects the historical concentration of our store network. We have seen some diversification away from London and the South East during 2024 due to new lending. The following table reflects the geographic distribution of the commercial term loans portfolio excluding BBLS. Table 15: Commercial term lending – excluding BBLS by geographic exposure (audited) 31 December 2024 (£’million) 31 December 2023 (£’million) Region Professional buy-to-let Other – term loans Total Professional buy-to-let Other – term loans Total Greater London 181 813 994 298 852 1,150 South East 48 334 382 88 340 428 South West 10 90 100 15 111 126 East of England 20 200 220 31 122 153 North West 7 115 122 11 106 117 West Midlands 3 185 188 4 101 105 Yorkshire and the Humber 2 11 13 2 17 19 East Midlands 6 55 61 9 44 53 Wales 2 4 6 3 8 11 North East 2 73 75 3 19 22 Northern Ireland 1 1 2 1 2 3 Scotland – 3 3 – 5 5 National 1 22 23 – 28 28 Total 283 1,906 2,189 465 1,755 2,220 Sector exposure We manage credit risk concentration to individual borrowing entities and sector. Our credit risk appetite includes limits for individual sectors where we have higher levels of exposure. There has been an overall reduction in commercial real estate and professional buy-to-let. The following table shows the distribution of the commercial portfolio across business sectors. Table 16: Commercial term lending – excluding BBLS by sector exposure (audited) 31 December 2024 (£’million) 31 December 2023 (£’million) Region Professional buy-to-let Other – term loans Total commercial term loans Professional buy-to-let Other – term loans Total commercial term loans Real estate (rent, buy and sell) 283 414 697 465 509 974 Hospitality – 442 442 – 368 368 Health & social work – 430 430 – 298 298 Legal, accountancy & consultancy – 207 207 – 150 150 Retail – 122 122 – 136 136 Real estate (develop) – 14 14 – 14 14 Recreation, cultural & sport – 82 82 – 72 72 Construction – 36 36 – 48 48 Education – 13 13 – 19 19 Real estate (management of) – 5 5 – 7 7 Investment & unit trusts – 6 6 – 7 7 Other – 135 135 – 127 127 Total commercial term lending 283 1,906 2,189 465 1,755 2,220 Financial risks continued 131 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Collateral DTV is calculated for property and cash backed lending in commercial. As at 31 December 2024, 72% of this secured lending had a DTV of 80% or less, reflecting the prudent risk appetite historically applied. Lending with DTV >100% includes loans which benefit from additional forms of collateral, such as debentures. The value of this additional collateral is not included in the DTV but does provide an additional level of credit risk mitigation. DTV >100% also includes government-backed lending where the facility does not also benefit from property collateral. The proportion of term lending with a DTV >100% in 2024 was 20% (31 December 2023: 20%). The following table shows the distribution of the commercial portfolio DTV. Table 17: Commercial term lending – excluding BBLS by DTV (audited) 31 December 2024 (£’million) 31 December 2023 (£’million) DTV ratio Professional buy-to-let Other term loans Total Professional buy-to-let Other term loans Total Less than 50% 81 578 659 160 707 867 51 to 60% 39 414 453 59 319 378 61 to 70% 59 275 334 105 185 290 71 to 80% 64 65 129 76 79 155 81 to 90% 38 82 120 60 21 81 91 to 100% 1 45 46 2 11 13 More than 100% 1 447 448 3 433 436 Total 283 1,906 2,189 465 1,755 2,220 Government-backed lending The table below summarises government-backed lending. Table 18: Government-backed lending 31 December 2024 No. of loans Drawn balance £’million Average loan amount £’million % of total business lending Bounce Back Loan Scheme 19,313 350 0.02 13.4% Coronavirus Business Interruption Loan Scheme 199 47 0.24 1.8% Coronavirus Large Business Interruption Loan Scheme – – – 0.0% Recovery Loan Scheme1 1,174 260 0.22 10.0% Total government-backed lending 20,686 657 0.03 25.1% 31 December 2023 No. of loans Drawn balance £’million Average loan amount £’million % of total business lending Bounce Back Loan Scheme 22,062 524 0.02 18.8% Coronavirus Business Interruption Loan Scheme 240 86 0.36 3.0% Coronavirus Large Business Interruption Loan Scheme 2 8 3.92 0.3% Recovery Loan Scheme1 1,304 328 0.25 11.6% Total government-backed lending 23,608 946 0.04 33.7% 1. Recovery loan scheme includes £45 million acquired from third parties under forward flow arrangements (31 December 2023: £71 million). The loans are held in a trust arrangement in which we hold 99% of the beneficial interest, with the issuer retaining the remaining 1% (the trust retains the legal title loans). Undrawn commitments At 31 December 2024, we had undrawn facilities granted to retail and commercial customers of £881 million (2023: £718 million). As part of our retail and commercial operations, this includes commitments of £241 million (2023: £327 million) for credit card and overdraft facilities. These commitments represent agreements to lend in the future, subject to certain conditions. Such commitments are cancellable, subject to notice requirements, and given their nature are not expected to be drawn down to the full level of exposure. Financial risks continued 132 Metro Bank Holdings PLC Annual Report and Accounts 2024 Investment securities As well as our loans and advances, the other main area where we are exposed to credit risk is within our Treasury portfolio. At 31 December 2024, we held £4.5 billion (31 December 2023: £4.9 billion) of investment securities, which are used for balance sheet and liquidity management purposes. We hold investment securities at amortised cost or fair value through other comprehensive income (FVOCI) depending on our intentions regarding each asset. We do not hold investment securities at fair value through profit and loss. Table 19: Investment securities by credit rating (audited) 31 December 2024 £’million 31 December 2023 £’million Group Investment Securities held at amortised cost Investment Securities held at FVOCI Total Investment Securities held at amortised cost Investment Securities held at FVOCI Total AAA 3,176 227 3,403 3,400 256 3,656 AA– to AA+ 937 150 1,087 1,003 220 1,223 Total 4,113 377 4,490 4,403 476 4,879 We have a robust securities investment policy which requires us to invest in high-quality liquid debt instruments. At 31 December 2024, 76% of our investment securities were rated as AAA (31 December 2023: 75%) with the remainder rated AA- or higher, the majority of which comprises of UK gilts. Additionally, we hold £2.8 billion (31 December 2023: £3.9 billion) in cash balances, which is either held by ourselves or at the Bank of England. Response We have a strong framework in place, controlling credit risk through a set of quantitative limits that measure the aggregate level and type of credit risk that we are willing to accept to support our business objectives. Limits are supported by a suite of product-level policies and lending criteria which define the parameters within which individual exposures can be approved and which manage new lending within our risk appetite. Credit risk is further controlled through the use of automated decision tools, underwriter approval and monitoring of individual transactions. Independent oversight is provided by the Credit Risk function, and includes independent underwriting of commercial lending, monitoring of performance against limits, ongoing portfolio monitoring and regular portfolio reviews. The 2024 credit risk appetite limits were set with reference to the appetite for credit impairments as well as analysis of past performance, peer comparisons and qualitative approaches using expert judgement. These limits reflect the Bank’s strategy as well as the macroeconomic outlook. We have climate change risk management capabilities in place and have policies that outline prohibited commercial sectors which are of particular concern for climate change. In addition, our policies provide for enhanced borrower assessment where borrowers operate in other carbon-intensive industries. In retail mortgages, there are policies in place to mitigate property risk, including the risks that could result from climate change. These include requirements concerning the durability of the property for the lifetime of the loan, the requirement that properties must be insurable, and limits for lending on certain products where the property has received a low EPC rating. Individual credit decisions are controlled through both quantitative models and review under delegated lending authority depending on the product, materiality, and complexity of the exposure. These assessments consider the potential for future stress in customers’ financial positions. This robust framework continues to support the delivery of our strategy as we continue to grow in commercial and specialist mortgage lending. Mitigation (audited) We mitigate risk through regular monitoring and analysis of our customers and their ability to maintain contractual obligations, as well as the external factors that can impact customer credit risk. We have established credit risk policies and lending criteria, and assess customer affordability under different scenarios where appropriate. We employ specialist expert underwriters in our assessments of our commercial customers and categorise customer risk as part of our Closer Monitoring and Early Warning List. This allows for the early identification of customers who may develop financial difficulties, which have not yet fully materialised. Monthly analysis and reporting provide insight into portfolio credit performance and highlight where deterioration is taking place or is likely to occur. In addition to active management and monitoring of our portfolios and customer affordability, we mitigate credit risk through holding collateral against our retail mortgage and commercial term loan portfolios. Collateral is usually held in the form of real estate, guarantees, debentures and other liens that we can call upon in the event of the borrower defaulting. The management of this is governed by our Collateral Management Policy. At 31 December 2024, 80% (31 December 2023: 80%) of our loans consisted of retail mortgages and commercial term loans, with average debt to value of 59% (31 December 2023: 58%) and 56% (31 December 2023: 55%), respectively. Subject matter experts further mitigate the risk of credit losses through regular review and assessment of cases at an individual level. Specialist teams provide customers with support where financial difficulties are identified, and the use of automated and manual credit assessments help to ensure good customer outcomes and to maximise the likelihood that customers maintain the ability to meet their contractual obligations. Supporting our customers We work with our customers who are in arrears, have payment shortfalls or are in financial difficulties to obtain the most appropriate outcome for both the Bank and the customer. Our primary objective is to ensure that appropriate mechanisms and tools are in place to support customers during periods of financial difficulty, and to minimise the duration of the difficulty and the consequence, costs and other impacts arising. We will always seek to understand the customer’s individual circumstances and ensure a considered, measured, and consistent approach is taken which is, to the best of our knowledge, appropriate for their individual circumstances. Where a customer’s financial difficulty is due to them being impacted by a vulnerable situation, we will seek to provide tailored and flexible solutions and services appropriate to the circumstances of the vulnerability. As part of this process, we have a range of treatments that may be considered to support the customer through the period of financial difficulty, alongside working with them to understand and agree how to return their account to good standing where possible. This includes the forbearance options outlined below. Financial risks continued 133 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Commercial customers who are showing signs of potential financial difficulty are supported through our relationship teams, and where appropriate, our Business & Credit Support team. Each situation is individually assessed, and our preference is to provide flexibility where possible to help a customer avoid financial difficulty and to resume normal contractual obligations. Forbearance may be offered where this is sustainable and appropriate to the nature of the customer’s financial distress. Forbearance When our customers show signs of financial difficulties, we may seek to continue our support through the provision of a concession such as a modification of the terms and conditions of the loan, or a total or partial refinancing of an existing loan. Concessions can often result in more favourable terms than those offered or available under normal circumstances. Such events are considered to be acts of forbearance and are dealt with and monitored in accordance with our forbearance policies and regulatory guidelines. Monitoring/reporting Governance Credit risk is managed within our Enterprise Risk Management Framework, as part of our overarching three lines of defence model. Management of credit risk is split primarily into the first and second lines of defence. The first and second lines are operationally independent and have separate reporting lines. The first line management of credit risk is shared across the Bank’s functions that design, distribute, approve and service credit facilities, referred to in this document as the ‘lending functions’. These are the functions under the management of the Managing Director, Corporate and Commercial Banking, Managing Director, Retail and Business Banking, and the Chief Commercial Officer. The first line lending functions are responsible for proposing and implementing lending propositions and are responsible for conducting lending activity in accordance with credit risk appetite and credit policies and standards. The second line Credit Risk function reports to the Chief Credit Officer who, in turn, reports to the Chief Risk Officer. The Chief Credit Officer, supported by the Credit Risk team, is responsible for: • recommending and overseeing credit risk appetite limits • developing and overseeing credit risk policies and standards • overseeing credit risk strategies in accordance with policies and risk appetite • developing and monitoring credit risk models • providing an independent review and approval of individual commercial credit proposals and renewals of loan facilities • developing and overseeing retail arrears management strategies • managing commercial recoveries strategy and activities • ensuring appropriate IFRS 9 credit provisions are held • monitoring and reporting credit risk performance. Monitoring (audited) The Credit Risk function monitors the risk profile using a broad range of risk metrics, reporting against risk appetite limits and completing regular portfolio reviews. This includes oversight of credit risk performance indicators such as arrears levels, modelled risk measures, such as probability of default and loss given default, and measures of concentration risk. Stress testing is conducted to assess the impact on ECL and RWAs. Credit risk appetite metrics are measured and reported regularly to oversight committees to ensure we remain within risk appetite and continue to support our strategic objectives. These metrics include a focus on particular segments of the portfolio which may be susceptible to or indicative of increased levels of risk, and which are crucial to our strategy. These include modelled risk parameters and performance metrics such as probability of default and loss given default, as well as concentration metrics such as sector or geographical concentration. More granular performance metrics are also tracked to assess the likelihood of potential breaches and their drivers. The limit framework includes early warning thresholds which identify where action may need to be taken to avoid a breach of appetite limits. If necessary, a plan is presented to bring the measurements back to approved levels. A monthly portfolio insight report is presented to ERC and ROC to provide oversight of key indicators and performance trends. This is supplemented by a detailed suite of portfolio-level reports which are reviewed by the Credit Risk Oversight Committee. In addition, we perform regular portfolio asset quality reviews as well as monitoring and reporting on our credit decisioning. We have developed statistical models that utilise both internal and external data for the purposes of estimating ECL under IFRS 9. Commercial customers are also monitored through our Closer Monitoring and Early Warning List to identify the potential risks at an individual level before they materialise and mature. We monitor the effectiveness of our policies and management framework through the various credit risk committees outlined. These committees provide oversight of portfolio quality and help inform on where changes to our strategy or policies are required in response to ongoing developments in the external environment. In addition, we assess and estimate the risks associated with climate change through developed models and we continue to develop our quantitative capabilities to further support our longer-term objectives and increased focus in this area. Future focus Our updates to risk appetite and policies put us in a strong position to deliver on the Bank’s strategy for growth in a way that appropriately manages credit risk. We remain focused on monitoring emerging trends and the impact of macroeconomic pressures on our customers, and we work with our customers to support them where needed. As we develop our future product offering, we will continue to update our credit risk policies, processes and controls to ensure that these remain appropriate for the developing balance sheet and to support sustainable growth. Financial risks continued 134 Metro Bank Holdings PLC Annual Report and Accounts 2024 Capital risk Risk definition Capital risk is the risk that the Bank fails to meet minimum regulatory capital (and MREL) requirements. Management of capital is essential to Metro Bank PLC in the prudent management of its balance sheet, ensuring its resilience under stress and the maintenance of the confidence of its current and potential creditors (including bond holders, the bond market, and customers) and key stakeholders in the pursuit of its business strategy. Risk appetite statement Capital – The Bank has a cautious appetite for capital risk. The Board has determined that the Bank shall be able to maintain a surplus of regulatory capital resources above its total regulatory capital requirement including public buffers, as communicated by the regulator, with a buffer to include the amount of capital identified as required through the Bank’s ICAAP, utilising an appropriate capital stack to support its business objectives, having identified the Bank’s material risks. Leverage – The Bank has a low appetite for leverage ratio risk. The Board has determined that the Bank’s balance sheet shall not be excessively leveraged, such that unintended changes to the Bank’s business plan are required to correct balance sheet leverage. Exposure and assessment Capital risk exposures arise from the depletion of our capital resources and/or surplus which may result from: • increased RWAs • losses • unfavourable changes to regulatory minima or other regulatory rule changes. Our capital risk management approach is centred around ensuring we can maintain appropriate levels of capital to meet regulatory minima and support our strategic objectives under both normal and stress conditions. Capitalisation is a core component of our annual planning process, involving the creation of our budget and Long-Term Plan. This sets our forecast of our capital position through the planning horizon and is further assessed through our ICAAP scenarios where the scale of risks to capital is fully considered and allows the Bank to make informed judgments on risks, the adequacy of capital carried to support them and the overall robustness of our capital risk management approach. Management actions to preserve capital are identified and applied, where relevant to those scenarios. Further details on this process are set out in our viability statement on pages 46 and 47. Capital risk is a core focus and our current and forecasted capital position is monitored in ALCO and ExCo and reported to ROC and the Board. This involves the production of regular reports including reporting actual and updated forecast levels of capital, which are compared to our risk appetite limits for acceptable capitalisation. As set out in our Operating environment on page 6, the regulatory environment in which we operate continues to evolve. Consequently a core component of our capital risk thinking involves horizon scanning of prudential developments, to ensure we continue to monitor potential future capital impacts and anticipate appropriate capital resources. Table 20: Key regulatory metrics and ratios 31 December 2024 31 December 2023 CET1 ratio 12.5% 13.1% Tier 1 ratio 12.5% 13.1% Total capital ratio 14.9% 15.1% MREL ratio 23.0% 22.0% Leverage ratio 5.6% 5.3% Capital resources Capital levels and forecasted capital levels are managed and monitored by the Board and its Risk committees, via ALCO. Following the strengthening of the Bank’s capital position at the end of the prior year, 2024 has seen further capital optimisation actions to re-balance some of the capital ratios. The sale of a portfolio of residential mortgages to NatWest in Q3 supported ending the year with total capital plus MREL of 23.0% (31 December 2023: 22.0%). Although CET1 levels reduced in the short term, the transaction created additional lending capacity to enable the Bank to continue its asset rotation and reflects the proactive steps taken to effectively manage our capital position and support future growth. Our capital resources position for the holding company as at 31 December 2024 is summarised below: Table 21: Regulatory capital (audited) 31 December 2024 £’million 31 December 2023 £’million Share capital – – Share premium 144 144 Retained earnings 1,022 978 Other reserves 17 12 Intangible assets (126) (193) Other regulatory adjustments1 (249) 44 Total Tier 1 capital (CET1) 808 985 Debt securities (Tier 2) 150 150 Total Tier 2 capital 150 150 Total regulatory capital 958 1,135 1. Other regulatory adjustments relates to the deferred tax asset recognised in the year. See note 9 to the financial statements. Financial risks continued 135 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Capital requirement We calculate our capital requirement in line with the regulatory requirements set out in the PRA Rulebook. This consists of a Pillar 1 calculation of RWAs and a Pillar 2A assessment that captures point in time risks not covered by the Pillar 1 calculation. Pillar 1 capital is calculated using the standardised approach and given the strategic pivot to commercial lending, it is not the Group’s intention to resubmit to the PRA to switch to the advanced internal-ratings based approach (“AIRB”). The Group continuously keeps this under review. The Pillar 2A assessment is conducted through the ICAAP process, which is documented and approved by the Board on an annual basis and discussed with the PRA as part of the Supervisory Review and Evaluation Process. Table 22: Capital requirements 31 December 2024 31 December 2023 CET1 Total capital CET1 Total capital Pillar 1 4.5% 8.0% 4.5% 8.0% Pillar 2A 0.2% 0.4% 0.2% 0.4% Total capital requirement 4.7% 8.4% 4.7% 8.4% Capital conservation buffer 2.5% 2.5% 2.5% 2.5% UK countercyclical buffer 2% 2% 2% 2% Total (excluding PRA buffer, if applicable) 9.2% 12.9% 9.2% 12.9% Capital landscape Strategic pivot The implementation of the strategic move towards corporate, commercial and SME lending, and specialist mortgages will naturally lead to higher RWA percentages within the planning horizon. To support this, the timing of RWA growth and profit growth may be supplemented with opportunistic capital market transactions to help ensure capital levels remain at robust and sustainable levels. Basel 3.1 In September 2024, the PRA published the second near-final policy statement and rules covering the implementation of Basel 3.1 standards for credit risk, the output floor, reporting and disclosure requirements in response to consultation paper CP16/22. The implementation of the rules have been delayed by a year to 1 January 2027, but we continue to prepare and based on our current balance sheet lending profile, the RWA impact has been estimated as broadly neutral. Capital framework consultation papers Alongside the Basel 3.1 policy statements, a number of consultation papers were also released covering revisions to the 2A capital framework and simplifying the capital regime. We remain engaged with the consultation process and have fed back our thoughts on whether the gap of standardised banks and IRB model banks is sufficiently closing under current proposals. Resolvability regime and MREL consultation Financial institutions, with total assets greater than £15-25 billion, are subject to stringent MREL ‘bail-in’ requirements meaning that we will need to continue to hold and issue MREL eligible debt. We welcome recent consultation papers revising this threshold up to £20-£30 billion and are actively participating in the consultation process. Risk-weighted assets Our RWAs decreased over the course of 2024 to £6,442 million (31 December 2023: £7,553 million). Table 23: RWAs 31 December 2024 31 December 2023 Exposure Risk density RWAs Exposure Risk density RWAs Loans and advances 9,013 50% 4,529 12,297 46% 5,597 Treasury portfolio 7,301 3% 197 8,770 3% 242 Other assets 1,268 67% 845 1,181 75% 886 Total assets 17,582 32% 5,571 22,248 30% 6,725 Off-balance sheet – – 132 – – 79 Credit risk (exc. CCR) – – 5,703 – – 6,804 CCR, market risk and operational risk – – 739 – – 729 Total RWAs 6,442 7,533 Financial risks continued 136 Metro Bank Holdings PLC Annual Report and Accounts 2024 Response Capital risk management is focused on three key components: • providing sustainable profits that will allow us to generate organic capital growth • the continued optimisation of our balance sheet to both ensure we are maximising our return on regulatory capital and managing our RWAs • continuing to assess the raising of external debt capital, as and when market conditions and opportunities allow. Sustainable profit growth The main long-term approach to management of capital is the sustainable generation of additional capital through the accumulation of profits. The Board and ExCo are focused on ensuring the successful delivery of sustainable profitability. Core to this is the continued delivery of our strategic priorities (as set out on page 3). Balance sheet optimisation Another key mitigation used to manage capital risk is efficient deployment of our existing capital resources. One of our strategic priorities is ensuring we continue to optimise our balance sheet to ensure we maximise our risk-adjusted returns, whilst remaining above regulatory requirements. This approach saw us accelerate our pivot towards commercial lending through the sale of a portfolio of residential mortgages to enhance our capital capacity to allow growth in higher yielding assets. Raising of additional capital We successfully raised capital in Q4 2023 and, as we look to grow, we may from time to time look to raise additional regulatory capital in the form of qualifying debt to support further lending growth in the areas we wish to be competitive in. The ability to raise additional capital, as well as the associated cost, is dependent upon market conditions and perceptions. Monitoring/reporting We measure our capital resources in line with regulatory requirements. The PRA expects prudential reporting, which includes capital reporting, to be as rigorous as that for financial reporting. Over the past few years we have invested in our regulatory reporting systems as well as made enhancements to our control environment to ensure we are continuing to produce accurate and reliable capital reporting and deliver against these expectations. Financial risks continued 137 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Liquidity and funding risk Risk definition Liquidity risk is the risk that we fail to meet our obligations as they fall due. Funding risk is the risk that we cannot fund assets that are difficult to monetise at short notice (i.e., illiquid assets) with funding that is behaviourally or contractually long-term (i.e, stable funding). Risk appetite statement (audited) Liquidity – The Bank has a cautious appetite for liquidity risk. The Board has determined that the Bank shall be able to survive a combined name-specific and market-wide liquidity stress event for at least three months, at a level of severity determined by the Bank’s internal risk appetite stress test, utilising the Bank’s liquidity pool, having identified the Bank’s material liquidity risks. Funding – The Bank has a cautious appetite for funding risk. The Board has determined that the Bank shall maintain a prudent funding profile by using stable funding to fund illiquid assets, without undue reliance on wholesale funding markets, whilst ensuring that funding is not inappropriately concentrated by customer, sector or term, as identified during the Bank’s liquidity stress testing. Encumbrance – The Bank has a cautious appetite for encumbrance risk. The Board has determined that encumbrance of its balance sheet be no greater than 30% of the Bank’s total assets in business-as-usual conditions, and unlimited in relation to any encumbrance relating to repo or use of Bank of England facilities in order to manage through a liquidity stress situation – and to test the adequacy of those facilities from time to time. Exposure and assessment Liquidity risk concerns our ability to meet short-term obligations as they fall due. This requires liquidity management to maintain investor and market confidence in both business-as-usual and stressed environments. Funding risk concerns any mismatch between asset liquidity and how the assets are funded. The primary aim is to ensure assets that are slow to monetise are supported by funding which is behaviourally or contractually stable. Deposits remain our primary source of balance sheet funding and subsequent source of liquidity risk as we seek deposits that are stable and less price sensitive. The volume and type of deposit supports our lending, with any surplus funding invested in prudent liquid assets. During 2024, we managed down surplus levels of deposits and reduced encumbrance levels significantly through repayment of the majority of TFSME following receipts from the proceeds of the mortgage sale. We measure our liquidity and funding resources in line with regulatory requirements, with the key metric for liquidity risk being the liquidity coverage ratio and for funding risk, the net stable funding ratio where we remain well above our minimum regulatory requirements. As at 31 December 2024, our liquidity coverage ratio was 337% (31 December 2023: 368%) and our net stable funding ratio was 169% (31 December 2023: 146%). In order to appropriately manage our liquidity and funding resources, we run an ILAAP exercise which considers the risks that we are exposed to in both normal and stressed conditions. The ILAAP process also sets appropriate limits and determines the Bank’s liquidity risk appetite, and internal liquidity stress scenario. We produce regular reports on the current and forecasted level of liquidity, which are tracked against limits both at the operational level in Treasury and at the Executive level at ALCO. Response (audited) Our liquidity and funding risk management is focused on three key components: • we retain a deposit-funded approach, with a broad customer deposit base covering both retail and commercial customers. This means we are not reliant on wholesale funding, although we continue to utilise a small amount of the Bank of England’s TFSME as an additional stable source of funding • we continue to maintain prudent liquidity levels, and access to contingent liquidity, through the holding of high-quality liquid assets in the form of investment securities with strong credit ratings as well as cash balances held at the Bank of England • we monitor and manage the behavioural maturity of our assets and liabilities on an ongoing basis to ensure we are not taking undue risk. Deposit-funded approach We aim to attract service-led core deposits which are less sensitive to competition within the deposit market. At 31 December 2024, 46% of our deposits came from commercial customers (31 December 2023: 43%) with the remaining 54% (31 December 2023: 57%) coming from retail customers. Additionally, 40% of deposits at year end (31 December 2023: 36%) were in the form of current accounts, with the remainder split between a combination of instant access and fixed-term savings products. Liquidity management We continue to hold a prudent level of liquidity to cover unexpected outflows, ensuring that we are able to meet financial commitments for an extended period. We recognise the potential difficulties in monetising certain assets, so set higher quality targets for liquid assets for the earlier part of a stress period. We have assessed the level of liquidity necessary to cover both systemic and idiosyncratic risks and maintain an appropriate liquidity buffer at all times. Our internal liquidity stress test ensures that we comply with our own risk appetite as well as regulatory requirements. Financial risks continued 138 Metro Bank Holdings PLC Annual Report and Accounts 2024 Table 24: Assets and liabilities by maturity (audited) Table 24 sets out the maturity structure of our assets and liabilities, by their earliest possible contractual maturity date. The contractual maturity will differ from the behavioural maturity characteristics in both normal and stressed conditions. The behavioural maturity of customer deposits is much longer than their contractual maturity. On a contractual basis, such deposits are repayable on demand or at short notice. In reality, they are static in nature and provide long-term stable funding for our operations and liquidity. Equally, our loans and advances to customers, specifically mortgages, are lent on longer contractual terms, but may be redeemed or re-mortgaged earlier. The total balances set out in the analysis do not reconcile with the carrying amounts as disclosed in the consolidated balance sheet. The difference arises from the maturity analysis incorporating all the expected future cash flows (including interest), on an undiscounted basis. 31 December 2024 Group Carrying value Repayable on demand £’million Up to 3 months £’million 3 to 6 months £’million 6 to 12 months £’million 1 to 5 years £’million Over 5 years £’million No contractual maturity £’million Total £’million Cash and balances with the Bank of England 2,811 2,811 – – – – – – 2,811 Loans and advances to customers 9,013 – 460 422 792 4,140 10,816 464 17,094 Investment securities 4,490 – 442 409 240 3,537 132 115 4,875 Total financial assets 16,314 2,811 902 831 1,032 7,677 10,948 579 24,780 Other assets 1,268 – – – – – – 1,268 1,268 Total assets 17,582 2,811 902 831 1,032 7,677 10,948 1,847 26,048 Deposits from customers (14,458) (13,248) (340) (435) (233) (167) – (67) (14,490) Deposits from central banks and repurchase agreements (791) – (180) (109) (78) (500) – – (867) Debt securities (675) – – (42) (42) (906) – – (990) Other liabilities (475) – (5) (5) (10) (90) (86) (270) (466) Total financial liabilities (16,399) (13,248) (525) (591) (363) (1,663) (86) (337) (16,813) Capital (1,183) – – – – – – (1,183) (1,183) Total liabilities (17,582) (13,248) (525) (591) (363) (1,663) (86) (1,520) (17,996) Derivative cash flows – – 2 1 2 8 – – – Cumulative liquidity gap – (10,437) (10,058) (9,817) (9,146) (3,124) 7,738 – – Financial risks continued 139 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Table 24: Assets and liabilities by maturity (audited) continued 31 December 2023 Group Carrying value £’million Repayable on demand £’million Up to 3 months £’million 3 to 6 months £’million 6 to 12 months £’million 1 to 5 years £’million Over 5 years £’million No contractual maturity £’million Total £’million Cash and balances with the Bank of England 3,891 3,891 – – – – – – 3,891 Loans and advances to customers 12,297 – 562 486 911 5,078 15,811 381 23,229 Investment securities 4,879 – 454 117 397 4,110 52 57 5,187 Total financial assets – 3,891 1,016 603 1,308 9,188 15,863 438 32,307 Other assets 1,178 – – – – – – 1,178 1,178 Total assets 22,245 3,891 1,016 603 1,308 9,188 15,863 1,616 33,485 Deposits from customers (15,623) (13,430) (391) (398) (931) (484) – (67) (15,701) Deposits from central banks (3,050) – (39) (39) (67) (3,197) – – (3,342) Debt securities (694) – – (35) (42) (829) (160) – (1,066) Repurchase agreements (1,191) – (308) (512) – (424) – – (1,244) Lease liabilities (234) – (6) (6) (11) (107) (238) – (368) Other liabilities (319) – – – – – – (319) (319) Total financial liabilities (21,111) (13,430) (744) (990) (1,051) (5,041) (398) (386) (22,040) Capital (1,134) – – – – – – (1,134) (1,134) Total liabilities (22,245) (13,430) (744) (990) (1,051) (5,041) (398) (1,520) (23,174) Derivative cash flows – – 2 – (3) 37 1 – – Cumulative liquidity gap – (9,539) (9,265) (9,652) (9,398) (5,214) 10,252 – – Monitoring/reporting We consider the effective and prudent management of liquidity to be fundamental to our ongoing resilience and viability. The Board has overall responsibility for establishing and maintaining an adequate risk management framework, including risk appetites that enable the management of our liquidity and funding risks. We are committed to ensuring that at all times we have sufficient liquidity resources – in terms of both quantity and quality – to ensure we can meet payments as they fall due. The Treasury function has responsibility for our compliance with liquidity policy and strategy. We have a dedicated Prudential Risk team who independently monitor our liquidity and funding risk daily including ensuring compliance with the policies we have developed. A Regulatory Reporting team also monitors compliance with relevant metrics. Financial risks continued 140 Metro Bank Holdings PLC Annual Report and Accounts 2024 Market risk Risk definition (audited) The risk of loss arising from movements in market prices. Market risk is the risk posed to earnings, economic value or capital that arises from changes in interest rates, market prices or foreign exchange rates. Risk appetite statement Our market risk appetite is determined by reference to a number of sub-risk appetites: Earning sensitivity – We have a low appetite for earnings risk, with the Board determining a limit calibrated to ensure net interest income does not exceed an amount recommended and scrutinised by the ALCO and approved by ROC. The limit is calibrated using a 2% instantaneous shock in both directions. Economic value sensitivity – We have a low appetite for economic value risk, with the Board determining a limit calibrated to ensure that a change to the present value of our balance sheet does not exceed an amount as recommended and scrutinised by ALCO and approved by ROC. The limit is calibrated by calculating the impact of a 2% instantaneous shock in both directions. Revaluation risk – We have a low appetite for revaluation risk, with the Board prescribing that we should avoid situations where the potential losses caused by changes in market prices shall not exceed capital held under standard risk weights, taking account of any offsets, determined by our revaluation risk stress scenario. Foreign exchange risk – We have no appetite for foreign exchange risk, with the Board determining that exposures in foreign currencies should not represent a material portion of our capital resources. Exposure and assessment (audited) We do not have a trading book and we do not actively seek to create value through taking interest rate positions. Whilst we support our customers to make payments or hold accounts in foreign currency, we actively avoid exposing our own balance sheet to foreign exchange risk. The primary source of our market risk exposure arises from structural interest rate risk in the banking book mismatch between the fixed rate assets and liabilities and any differences in bases. Interest rate risk in the banking book crystallises in, and is measured through, the sensitivity of our current and future net interest income and our economic value to movements in market interest rates. During 2024, we saw a reduction in the interest rate environment and the Bank remained within approved limits throughout. The Board is responsible for setting market risk appetite. Market risk is mitigated through a risk management framework that allows it to be monitored and managed by first line management and second line risk, with oversight from ALCO. Accordingly, ALCO ensures that steps taken to identify, measure, monitor and control the interest rate risk in the banking book are consistent with the approved strategies and policies. Management limits are set at ALCO for economic value and net interest income sensitivity to ensure prompt action and escalation. Limits and the relevant metrics are also reported to ROC and the Board. The Treasury function has responsibility for managing within our market risk policy and strategy. We have an independent second line Prudential Risk team who independently monitor our market risk daily including ensuring compliance with the policies we have developed. The Prudential Risk team runs additional interest rate risk simulations monthly to assess other threats that may not be evident in the standard parallel shock metrics or supervisory outlier tests. Response (audited) We are not a trading bank and so have a low appetite for those market risks which we do take, with clear limits set for net interest income and economic value sensitivity. These limits are sufficient to allow efficient operational management of financial hedging. Interest rate risk We benefit from natural offsetting between certain assets and liabilities, which may be based on both the contractual and behavioural characteristics of these positions. Where natural hedging is insufficient, we hedge net interest rate risk exposures appropriately, including, where necessary, with the use of derivatives. We enter into derivatives only for hedging purposes and not as part of customer transactions or for speculative purposes. Our Treasury and Prudential Risk teams work closely together to ensure that risks are identified and managed appropriately and that we are well-positioned to avoid losses outside our appetite, in the event of unexpected market moves. Foreign exchange exposure We have very limited exposure to foreign exchange risk. Foreign currency denominated assets and liabilities are matched off closely in each of the currencies we operate, and we eliminate our foreign exchange exposure as far as is practical on a daily basis. In any event the risk is strictly capped at 2% of our capital base. We offer business current accounts in foreign currency and foreign exchange facilities to facilitate customer requirements only. Monitoring/reporting We measure interest rate risk exposure using methods including the following: • interest rate gaps: calculating the net difference between total assets and total liabilities across a range of time buckets • economic value sensitivity: calculating repricing mismatches across our assets and liabilities over the horizon of our balance sheet and then evaluating the change in value arising from an instantaneous 2% change in the yield curve in both directions, taking into consideration any embedded customer optionality. Our economic value sensitivity risk appetite scenario is based on an instantaneous parallel rate movement of 2% at all repricing maturities, which is widely considered severe but plausible. Additionally, we evaluate the PRA’s outlier test in line with regulatory requirements • net interest income sensitivity: calculating repricing mismatches across our assets and liabilities over a one-year horizon and then evaluating the change in net income arising from an instantaneous 2% change in the yield curve in both directions. Our net interest income risk appetite scenario is based on an instantaneous parallel rate movement of 2% at all repricing dates, which is widely considered severe but plausible. We also assess basis risk by considering divergences between the Bank of England base rate and the Sterling Overnight Index Average. (SONIA.). Financial risks continued 141 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Financial risks continued Interest rate risk Table 25 sets out the interest rate risk repricing gaps of our balance sheet in the specified time buckets, indicating how much of each type of asset and liability reprices in the indicated periods, after applying expected pre-repayments in line with our policy. A positive interest rate sensitivity gap exists when more assets than liabilities reprice during a given period. A positive gap tends to benefit net interest income in an environment where interest rates are rising; however, the actual effect will depend on multiple factors, including actual repayment dates and interest rate sensitivities within the periods. The converse is true for a negative interest rate sensitivity gap. Table 25: Behavioural repricing balance sheet 31 December 2024 Up to 3 months £’million 3 to 6 months £’million 6 to 12 months £’million 1 to 5 years £’million Over 5 years £’million Non-interest bearing £’million Total £’million Cash and balances at central banks 2,750 – – – – 61 2,811 Loans and advances to customers 3,407 502 1,053 4,006 44 1 9,013 Investment securities (AC & FVOCI) 1,861 320 130 2,070 109 – 4,490 Other assets – – – – – 1,268 1,268 Total assets 8,018 822 1,183 6,076 153 1,330 17,582 Deposits from customers (7,449) (1,017) (807) (5,185) – – (14,458) Deposits from BoE and Repos (791) – – – – – (791) Debt – – – (675) – – (675) Other liabilities – – – – – (475) (475) Shareholders’ funds (13) (13) (27) (214) – (916) (1,183) Total liabilities (8,253) (1,030) (834) (6,074) – (1,391) (17,582) Interest rate derivatives (123) (150) (50) 373 (50) – – Interest rate sensitivity gap (358) (358) 299 375 103 (61) – Cumulative gap (358) (716) (417) (42) 61 – – 142 Metro Bank Holdings PLC Annual Report and Accounts 2024 Financial risks continued Table 25: Behavioural repricing balance sheet continued 31 December 2023 Up to 3 months £’million 3 to 6 months £’million 6 to 12 months £’million 1 to 5 years £’million Over 5 years £’million Non-interest bearing £’million Total £’million Cash and balances at central banks 3,817 – – – – 74 3,891 Loans and advances to customers 3,803 860 1,499 6,063 71 1 12,297 Investment securities (AC & FVOCI) 2,029 3 154 2,642 51 – 4,879 Other assets – – – – – 1,178 1,178 Total assets 9,649 863 1,653 8,705 122 1,253 22,245 Deposits from customers (6,829) (734) (1,607) (5,897) (556) – (15,623) Deposits from BoE and Repos (4,241) – – – – – (4,241) Debt – – – (544) (150) – (694) Other liabilities – – – – – (553) (553) Shareholders’ funds (24) (23) (47) (374) – (667) (1,134) Total liabilities (11,070) (757) (1,654) (6,815) (706) (1,220) (22,245) Interest rate derivatives (145) (2) – (3) 150 – – Interest rate sensitivity gap (1,589) 104 – 1,887 (434) 33 – Cumulative gap (1,589) (1,485) (1,486) 401 (33) – (4,192) The below shows the sensitivity arising from the regulatory scenario of a +200bps and -200bps parallel interest rate shock for a one-year forecasting period upon projected net interest income. Table 26: NII sensitivity (audited) 200bps increase £’million 200bps decrease £’million At 31 December 2024 19.3 (19.9) At 31 December 2023 (13.8) 14.3 There is no material difference between the interest rate risk profile for the Group and that for the Company. 143 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Financial crime risk Risk definition Financial crime risk is the risk that the Bank’s products and service offerings will be used to facilitate financial crime. Financial crime risks include money laundering, violations of sanctions, bribery and corruption, facilitation of tax evasion, proliferation financing and terrorist financing. Risk appetite statement We have a low appetite for customer relationships or activity that pose a high financial crime risk and have no appetite for customer relationships or activity that violate our sanctions obligations. The nature of our business model as a UK retail bank inherently exposes us to financial crime risk and as a result of this exposure, strong and effective controls are required to mitigate this. We have defined a set of quantitative and qualitative key risk appetite metrics against which we monitor performance. We do not accept customers outside of our financial crime risk appetite and likewise where customers are reassessed and found to be outside of appetite (i.e, where the risks are too great to manage effectively) they are exited. Exposure and assessment Failure to prevent financial crime may result in harm to our customers, the Bank and third parties. In addition, non-compliance with regulatory and legal requirements may result in enforcement action which will have an adverse effect on the Bank from a financial and reputational perspective. Our overall inherent financial crime risk remains the same as last year and continues to be medium based on our annual risk assessment (money laundering and proliferation/terrorist financing, tax evasion facilitation and sanctions inherent risks are rated medium, bribery and corruption inherent risk is rated low). Response We continue to deliver enhancements to our financial crime control framework to ensure that it remains fit for purpose, identifying and mitigating financial crime risk as well as delivering our financial crime strategy. Investment in our systems and controls We delivered strategic enhancements to our financial crime systems throughout 2024 with equal focus on embedding previously implemented controls, as well as strengthening our control framework. Horizon scanning We identify emerging trends and typologies through conducting horizon scanning activity, through information obtained from investigative and intelligence teams and through attending key industry forums (or associations) such as those hosted by UK Finance. As required, we continue to update our control framework to ensure emerging risks are identified and mitigated. Colleague awareness and training Colleague awareness and training continues to be a significant focus to ensure our Financial Crime Framework is implemented effectively. All colleagues have a key role to play in the detection and management of financial crime risk. To this extent, all colleagues receive financial crime training, ensuring they are able to meet their personal obligations as well performing effectively in role. For colleagues in specialist financial crime roles, we invest in their development to improve capabilities through industry- recognised financial crime qualifications. Sanctions compliance We comply with all applicable sanctions regimes. We continue to invest in our sanctions control framework and keep under review the effectiveness of controls we have in place in order to ensure that sanctions risk is managed in line with risk appetite. We will not tolerate any deliberate breach of financial crime laws and regulations (including sanctions) that apply to our business and the activity we undertake. Anti-money laundering and combating terrorist financing prevention We comply with all relevant UK anti-money laundering and combating terrorist financing legislation and have a framework in place to support the implementation and ongoing monitoring of these requirements into our systems and controls. Anti-bribery and corruption and anti-tax evasion compliance We are committed to acting professionally, fairly and with integrity in all our business dealings and relationships and comply fully with the UK Bribery Act 2010 and Criminal Finances Act 2017. We do not give or receive improper financial or other benefits in our business operations, nor do we help facilitate tax evasion. Monitoring/reporting We monitor compliance with policies and standards through a range of activities completed by specialist colleagues. These include quality checking and assurance within operational and first line risk teams, supported by assurance and internal audit reviews of key financial crime controls carried out by second and third line of defence teams. The results of these reviews and the status of follow-up actions are escalated through our governance bodies. Our financial crime risk appetite is reflected in key risk appetite metrics – a set of quantitative metrics, reported monthly through our governance. Where control performance is assessed as outside of our risk appetite, the issue and remediation activity is escalated and tracked through our risk committees. Future focus We are committed to safeguarding the Bank and our customers from financial crime. On 12 November 2024, Metro Bank PLC resolved the FCA’s enquiries into transaction monitoring systems and controls that were in place between 2016 and 2020. The FCA’s enquiries have concluded, resulting in the imposition of a financial penalty of approximately £16.7 million relating to historic deficiencies in the Bank’s transaction monitoring systems and controls. The Bank engaged and cooperated fully with the FCA’s enquiries and accepted the findings. For 2025, management of financial crime risk remains a priority and the Bank is making further enhancements to its control framework to improve alignment to regulatory requirements. The Bank will continue to actively engage with the FCA as part of their ongoing supervision of our systems and controls. Non-financial risks Non-financial risk covers the remaining categories of risk which have the potential to impact the Bank’s operations, service quality and ability to operate in a safe and compliant way. Non-financial risks include financial crime risk, operational risk, conduct risk, regulatory risk, legal risk, model risk and strategic risk. 144 Metro Bank Holdings PLC Annual Report and Accounts 2024 Operational risk Risk definition The risk that events arising from inadequate or failed internal processes, people and systems, or from external events cause regulatory censure, reputational damage, financial loss, service disruption and/or detriment to our FANS. Risk appetite statement We maintain a cautious appetite for operational risk and aim to minimise incidents, losses and adverse customer impacts arising from operational risk issues. We do this by maintaining a resilient infrastructure, including robust systems, employing and training the right colleagues, minimising the impact of external events and having a framework in place to ensure that operational risks are identified, assessed, responded to and monitored. Operational risk events and losses are recorded and assessed, corrective actions completed and steps taken to avoid recurrence. Exposure and assessment We operate with both a physical and a digital presence and are exposed to a broad range of operational risks across our distribution channels, businesses and functions. Operational incidents and other risk events have the potential to cause service disruption and outages, impacting internal processes and customers, as well as leading to financial losses. Operational risks arise from day-to-day business activities and the Bank’s operational resilience is an outcome that we actively monitor and oversee, including through the identification of important business services and setting of impact tolerances. Testing of our resilience capabilities is an established and coordinated activity and the identification and mitigation of potential resilience gaps an integrated practice of our business teams. Whilst we have seen localised operational pressure associated with the Bank’s strategic transformation activities, enhanced programme level operational monitoring has ensured risk impacts have been managed within appetite and timely mitigating steps taken. There has been minimal change-related disruption and customer service levels have been maintained. Comprehensive risk assessments have been completed for our strategic collaboration with Infosys, including establishing our continued operational resilience through the lens of PRA Supervisory Standard 2/21 Outsourcing and third-party risk management. Response Our Operational Risk Management Framework sets the approach we take to the management of operational risks including the performance of Risk and Control Self-Assessments, consideration of a variety of disruption scenarios and recording and management of incidents and resultant operational risk losses. Operational risk is overseen by the Chief Risk Officer and teams in the first and second lines of defence, monitored via reporting to Business Risk Committees, the Non-Financial Risk Oversight Committee run by the second line, ERC and ROC. We aim to minimise incidents and losses arising from operational risk events by maintaining a resilient infrastructure, including robust systems and employing and training the right colleagues. We consider and prepare for a range of potential disruption events and if they do occur, we respond effectively and ensure that operational risk incidents and losses are recorded and assessed, and corrective steps taken to avoid recurrence. In accordance with regulatory requirements, we hold capital appropriate to potential severe yet plausible operational risk exposures, informed by an assessment of a range of operational risk scenarios. We have put in place detailed policies, standards and controls to mitigate the variety of operational risks to which we are exposed. These are designed to both minimise impacts suffered in the normal course of business (expected losses) and to avoid or reduce the likelihood of suffering a large extreme (or unexpected) loss. Fraud We continue to operate in a heightened fraud threat landscape. Scam and unauthorised plastic fraud risk remains elevated, reflected in increased fraud losses this year. Mitigating this risk is a strategic priority with the safety and security of our customers and their money of the highest importance. The Bank deploys a range of preventative and detective measures to mitigate the rapidly evolving threats and has continued to invest in fraud controls, preparing for and abiding by the recently introduced mandatory reimbursement requirements for authorised push payment (APP) fraud claims. Fraud threats and prevention trends are shared with industry peers and we closely monitor the treatment and outcomes of customers that fall victims of fraud in line with our Consumer Duty obligations. Information security and cyber The threat of a successful cyber attack and its potential to disrupt business operations and customer access to services remains high. We have dedicated capability in place to identify, assess and respond to the dynamic threats faced and continue to invest in our security infrastructure including endpoint detection and response capabilities, vulnerability scanning and identity management and intrusion detection tooling. A comprehensive suite of risk and performance metrics are in place to continuously monitor our security posture, protect customer data and minimise the risk of disruption. Technology Our key technology capabilities underpin the Bank’s customer service proposition and operational resilience. Maintaining technology availability and performance is a key priority and we follow well established processes for assessing and prioritising investment to ensure the technology estate remains fit for purpose. Risk and performance reviews of our material third-party technology providers are performed and this year focus has been placed on identifying opportunities to establish a flexible and scalable technology infrastructure fit for the future. The Bank’s strategic collaboration with Infosys is a key enabler both of our growth objectives and ongoing resilience and we continue to keep an open dialogue with our regulators on our technology plans. Non-financial risks continued 145 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Data The effective use and maintenance of our data underpins the success of our strategy as well as our ability to deliver good customer outcomes. Through our data management, data protection and security policies we seek to protect customer data, satisfy legal and regulatory requirements concerning the creation, storage, distribution, usage and deletion of data and manage ongoing data quality. Roles and responsibilities for data ownership are defined, activities to identify and manage our key data are ongoing and we prioritise and remediate the data issues we identify. Third-party We make use of a network of third parties that underpin many of our operational processes and customer service offering. Our procurement and supplier risk policy sets out our approach to managing our third parties and we undertake robust risk assessments in line with regulatory expectations for each of our material outsourcing relationships. These consider our ongoing resilience position and potential impacts on our important business services with the Bank maintaining and testing exit plans to safeguard our operational continuity. Our Supplier Risk team provides ongoing oversight and monitoring of our material third parties in line with regulatory requirements and undertakes independent assurance as required. This year, these activities have been completed for our strategic collaboration with Infosys, with changes to the Bank’s risk exposures identified, assessed and responded to. This partnership is expected to further strengthen the Bank’s resilience and our regulators have been kept up to date throughout. People Our people are central to our relationship banking strategy, meeting and exceeding customer expectations by living our AMAZEING values. Our dedicated People team provides business support in resource management, talent identification and training and the Bank has continued to actively manage its resource mix to ensure we have the right colleagues and capabilities, in the right place, at the right time. Where transformation activity has reshaped the workforce, risks have been carefully considered and support made available to manage the impacts on colleague wellbeing and sentiment. Monitoring/reporting Material operational risk events are identified, reviewed and escalated in line with criteria set out in the Enterprise and Operational Risk Management Frameworks. Incidents and losses are recorded and root-cause analysis is undertaken with action plans implemented to prevent recurrence and continually improve our processes. Quantitative metrics are used to measure our material operational risks and assess our exposure against our stated risk appetite. We conduct regular operational risk scenario workshops to identify severe yet plausible events which could impact us. This enables us to quantify the potential losses that such events could cause and hold sufficient capital against them, as well as highlighting potential areas for ongoing enhancements to our operational risk capabilities. Business Risk Committees manage operational risks at business area level, supported by forums and working groups. Key risk indicators are in place to monitor our operational risk exposures against stated risk appetite and these are reported to the Non-Financial Risk Oversight Committee which further escalates to ERC and ROC where appropriate. Future focus Our operational risk profile will remain under close review as the Bank implements its strategy, with particular focus on management of risks associated with change delivery and increased dependence on our key third-party relationships. The fraud threat landscape is expected to remain elevated and investment in the Bank’s defences will continue. Transformation of our operational activities and technology estate including focus on greater automation will require careful navigation in the context of our risk appetite as we work to unlock the anticipated benefits. Non-financial risks continued 146 Metro Bank Holdings PLC Annual Report and Accounts 2024 Non-financial risks continued Conduct risk Risk definition The risk that our behaviours or actions result in poor outcomes or detriment to customers and/or undermine market integrity. Risk appetite statement We are built around a culture of supporting our customers, offering them a range of relatively simple retail products. We have a low appetite for conduct risk and seek to minimise risks which may result in poor outcomes or lead to customer detriment. Where poor outcomes are identified they must be remediated effectively to minimise risk, prevent recurrence, reduce customer harm, and reasonably avoid foreseeable harm. Exposure and assessment Conduct risk results from the provision of services and products to customers during our normal day-to-day business activities. We are focused on satisfying the requirements of the Consumer Duty, which sets the high expected standard for conduct and the delivery of good customer outcomes. These standards are aligned to our strategic objective to empower colleagues and customers with a human approach to banking and we recognise the important role we play in supporting our customers as expectations and behaviours evolve alongside the external environment and economic conditions. We place particular focus on supporting those customers with additional needs who may be increasingly vulnerable following specific life events, or facing financial difficulties due to the cost-of-living pressures, or who may be the victim of fraudulent activity. Response Conduct risk is considered by all three lines of defence as part of their risk management, oversight and ongoing assurance activities. Our Conduct Risk Framework (with supporting policies and standards) sets out our Conduct Risk Appetite Statement, key regulatory requirements, principles and expectations, approach to risk identification, response and governance. Throughout the course of 2024 we have: • designed and implemented new dashboards and reporting on customer outcomes, providing regular management information to ERC, ROC and the Board • reported and overseen conduct risks and issues in business risk and oversight risk committees, including progress against key customer remediation projects, conduct-related regulatory change initiatives, complaints, vulnerable customers and arrears management • maintained proactive and coordinated engagement with our regulators on key customer initiatives • considered customer profiles, target markets, fair value, customer needs and vulnerability in the context of product and proposition development, ongoing review, and associated appropriate governance • operated programmes of quality assurance and review to assess delivery of good customer outcomes, supported and embedded through training. Monitoring/reporting Conduct risk is measured on a quantitative and qualitative basis, which includes a progress review of top risks and issues under management against key conduct priorities set by the regulators, as well as a defined set of Board-approved risk appetite metrics relating to complaints, arrears management, product performance, colleague training and customer outcome delivery. A clear governance structure is in place which enables escalation of conduct risks through to ERC, ROC and the Board which, in turn, monitor and oversee our performance against risk appetite. We periodically report on key conduct themes including regular updates on the ways we are meeting the requirements of the Consumer Duty. Future focus We will ensure our products and services meet customer expectations and continue to deliver good outcomes, enabling customers to achieve their financial goals. Our internal processes will continue to be regularly reviewed in response to regulatory or organisational changes, including changes associated with our strategic third-party relationships. Ensuring we meet our regulatory requirements and reasonably prevent actual or foreseeable customer harm will remain a top risk priority for all colleagues. 147 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Regulatory risk Risk definition The risk of regulatory sanction, financial loss and reputational damage as a result of failing to comply with relevant regulatory requirements. Risk appetite statement We have a low appetite for regulatory risk and seek to minimise this risk by maintaining robust systems and controls that are designed to meet existing regulatory requirements and to ensure we comply with future changes to the regulatory landscape. Exposure and assessment We are exposed to regulatory risk arising from our normal day-to-day business activities, as well as significant ongoing and new regulatory changes. Consumer and regulatory expectations are high and the regulatory environment is quickly evolving including in response to external factors such as macroeconomic conditions, geopolitical change and technological advances. Response We manage regulatory risk through a combination of clearly defined risk frameworks covering our principal risks, and a comprehensive set of risk appetite measures and limits, together with appropriate compliance policies and standards. We operate a risk-based assurance programme designed to assess areas of the control framework underpinning regulatory compliance, oversight of key regulatory developments and proactive and coordinated engagement with our key regulators. We invest in and develop our core systems and controls to continue meeting existing regulatory requirements and prepare for those that are new. Key areas of focus in 2024 included: • capital • financial crime and fraud • outsourcing and third-party management • operational resilience • Consumer Duty. Monitoring/reporting Regulatory risk is measured on a quantitative and qualitative basis, which includes review of top risks and issues under management against material regulatory initiatives and our relationship with our regulators, as well as a defined set of Board-approved risk appetite metrics relating to our principal risks. This includes measures around major/critical regulatory, financial crime and operational impacts, impairment provisioning, credit, model and capital risk exposure, regulatory breaches, high risk assurance and audit findings, incidents and implementation of material regulatory change. We undertake ongoing horizon scanning to identify and address upcoming regulatory change. As part of this process, we engage proactively with our regulatory authorities as well as industry bodies in respect of any proposed changes. Additionally, a clear governance structure is in place which enables escalation of regulatory risks through to ERC, ROC and the Board who, in turn, monitor and oversee our performance against risk appetite. We periodically report on regulatory themes and key focus areas aligned to the regulator’s strategic priorities, regulatory changes on the horizon and other developments in the regulatory environment. Future focus We continue to place significant focus on overseeing and ensuring compliance with regulatory requirements. We will proactively engage with our regulators, industry bodies and other stakeholders to help shape the regulatory agenda, provide feedback on proposed reforms and continue to advocate for proportionate and pragmatic regulations that support both innovation and growth, whilst protecting the integrity of the financial system. We will review our risk frameworks, appetite limits and monitoring processes to ensure that these remain up to date and reflect current regulatory priorities. Non-financial risks continued 148 Metro Bank Holdings PLC Annual Report and Accounts 2024 Legal risk Risk definition The risk of loss, including to reputation, that can result from lack of awareness or misunderstanding of, ambiguity in or reckless indifference to, the way the law applies to the Directors, the business, and its relationships, processes, products and services. Risk appetite statement We have a low appetite for legal risk, limited to those events where there is a minimal chance of material financial, reputational or commercial negative consequences. Assessment and exposure We are exposed to a range of legal risks in relation to our normal business activities. These risks may arise from: • defective contracts • claims and litigation against us • failure or inability to take appropriate measures to protect intellectual property • failure to comply with specific legislation (e.g., Market Abuse). Given the pervasive and fundamental nature of legal risk, rather than having a separate framework, the methodology for the robust management of legal risk is set out in the Enterprise Risk Management Framework with reporting to ERC and ROC. Response We minimise legal risk via a range of mitigants, including: • in-house legal expertise, maintained via appropriate training and development and specialist recruitment • selective use of expert external legal advice via an approved panel of lawyers • appropriate policy documentation and training related to specific legal requirements • monthly reporting of metrics to measure compliance with our legal risk appetite. Monitoring/reporting A range of key risk indicators are used to measure our exposure to legal risk, including the risk of defective contracts and claims made against us. Details of our material legal, taxation and regulatory matters can be found in note 32 to the financial statements on page 206. Future focus We will continue to ensure that we work within legal parameters for all aspects of our activities and measure performance against risk appetite. Legal risk exposures and response will continue to be reported to ERC and ROC on a regular basis. Model risk Risk definition The risk of potential loss and regulatory non-compliance resulting from decisions that could be principally based on the output of models, due to errors in the development, implementation, or use of such models. Risk appetite statement We adopt a cautious appetite for risk due to errors in the development, implementation or use of models, which we mitigate via effective governance over the specification and design, implementation and running of our models and over model input data. Assessment and exposure We use models to support a broad range of business and risk management activities, including informing business decisions and strategies, measuring and mitigating risk, valuing exposures (including the calculation of impairment), conducting stress testing, and assessing capital adequacy. Model risk is assessed via our Model Risk Index and underlying key risk indicators, which include monitoring of the materiality and complexity of our models. Model risk remains stable, whilst closely managed, with ongoing enhancements to risk governance, risk appetite metrics and scope having been implemented. This has, in turn, helped to mitigate potential increased risk from the impacts and uncertainties arising from macroeconomic challenges. Response The main mitigant to model risk is the robust governance process, including the Model Risk Committee. Internal SME panels may also be convened to opine on contentious issues. The committee monitors the effectiveness of the Model Risk Management Framework. This includes a review of findings in relation to specific modelling processes, escalating to ERC and ROC as appropriate. We have in place a well-qualified independent model validation function that performs model validations prior to model implementation, when a model is changed and on a periodic basis. Monitoring/reporting Our Model Risk Management Framework sets out the roles and responsibilities of the various stakeholders, underpinned by robust governance of model risk supported by model development, monitoring, validation, implementation and risk appetite standards. Exposure against the key risk indicators is reported to MRC, ERC and ROC on a monthly basis and periodic, more detailed assessments are also reported through the risk governance structure. Future focus We continue to enhance and evolve governance of model risk. Whilst we are a standardised bank and do not need to comply by the regulatory deadline, we are working towards complying with the principles of the Bank of England Supervisory Statement SS1/23 ‘Model risk management principles for banks’. Non-financial risks continued 149 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Strategic risk Risk definition The risk of having an insufficiently defined, flawed or poorly implemented strategy, a strategy that does not adapt to political, environmental, business and other developments and/or a strategy that does not meet the requirements and expectations of our stakeholders. Risk appetite statement We have not set a separate risk appetite for strategic risk and instead monitor it via the full range of reporting under our governance structure and direct risk input into the formulation of our strategy and Long-Term Plan, including providing a risk review to support Board approval. Assessment and exposure 2024 was a pivotal year of transformation which has seen the Bank’s strategic focus shift towards corporate, commercial and SME lending and specialist mortgages. We are confident that delivery of the strategy lays the foundations for long term growth but recognise that its success is dependent on our effective execution. Volatility in the external environment, the challenge of safely exploiting opportunities for efficiency and the potential impact of negative external sentiment are all recognised as having the potential to push us off course. We have progressed a programme of organisational change including establishing a strategic collaboration with Infosys designed to unlock both cost and revenue opportunities. Whilst the changes have introduced new or updated existing risks, measures taken have ensured these have been managed within our risk appetite. The Bank has been subject to heightened external media coverage, with elevated reputational risk exposure closely monitored throughout the year. As coverage and sentiment has normalised, this risk has stabilised. Response Strategic risk is considered in everything we do, as having a clear and successful strategy is key to the Bank achieving its goals. The Board completes an annual review of the strategy and Long-Term Plan, supported by a risk assessment reviewed at ROC. During 2024, our focus has been on safely executing the Bank’s strategic transformation programme. Cost management discipline has continued in all areas, process optimisation and reprioritisation has progressed in line with our updated strategic objectives and we have ensured the Bank’s reshaped workforce remains effectively deployed. Monitoring/reporting The Executive team and Board monitor strategy execution risks closely across all business lines and transformation initiatives. We consider strategic risk when applying the Risk Management Framework, with ExCo oversight of execution, challenge by the second line of defence and independent review by our Internal Audit function. The emerging, including strategic, risks the Bank faces are assessed on at least a six-monthly basis. This includes the governance of ESG-related matters, ongoing assessment of the geopolitical and macroeconomic landscape in which we operate and our success in relation to our competitors. Future focus Our established Risk Management Framework is applied to oversee the Bank’s evolving risk profile and we will act to ensure we operate inside our agreed risk appetite. The Bank also continues to conduct horizon scanning against emerging risks with the potential for a severe impact and will adjust its approach accordingly. Non-financial risks continued 150 Metro Bank Holdings PLC Annual Report and Accounts 2024 In this section 152 Independent auditors’ report to the members of Metro Bank Holdings PLC 161 Consolidated statement of comprehensive income 162 Consolidated balance sheet 163 Consolidated statement of changes in equity 164 Consolidated cash flow statements 165 Notes to the consolidated financial statements 212 Company balance sheet 213 Company statement of changes in equity 214 Company cash flow statements 215 Notes to the company financial statements Financial statements 151 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Independent auditors’ report to the members of Metro Bank Holdings PLC Report on the audit of the financial statements Opinion In our opinion, Metro Bank Holdings PLC’s group financial statements and company financial statements (the “financial statements”): • give a true and fair view of the state of the group’s and of the company’s affairs as at 31 December 2024 and of the group’s profit and the group’s and company’s cash flows for the year then ended; • have been properly prepared in accordance with UK-adopted international accounting standards as applied in accordance with the provisions of the Companies Act 2006; and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the Consolidated and Company balance sheets as at 31 December 2024; the Consolidated statement of comprehensive income; the Consolidated and Company statements of changes in equity; the Consolidated and Company cash flow statements for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit Committee. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. Other than those disclosed in note 8, we have provided no non-audit services to the company in the period under audit. Our audit approach Overview Audit scope • The scope of our audit and the nature, timing and extent of audit procedures performed were determined by our risk assessment, the size and risk profile of reporting units, and other qualitative factors (including history of misstatement through fraud or error). • As part of the group audit, we identified four significant components. We conducted full scope audit procedures on Metro Bank Holdings PLC (the company) and Metro Bank PLC, taking into account their respective size and risk characteristics. Additionally, we executed targeted audit procedures on loans and advances in SME Asset Finance Limited and SME Invoice Finance Limited. Key audit matters • Determination of allowance for ECL on loans and advances to customers (group) • Recognition of a deferred tax asset (group) • Carrying values of non-financial assets (group) • Carrying value of investment in subsidiary (parent) Materiality • Overall group materiality: £11.4m (2023: £11.4m) based on approximately 1% of Total Equity. • Overall company materiality: £10.0m (2023: £10.0m) based on 0.9% of Total Equity (2023: 1%). • Performance materiality: £8.5m (2023: £8.5m) (group) and £7.5m (2023: £7.5m) (company). The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Recognition of a deferred tax asset is a new key audit matter this year. Otherwise, the key audit matters below are consistent with last year. 152 Metro Bank Holdings PLC Annual Report and Accounts 2024 Independent auditors’ report continued Key audit matter How our audit addressed the key audit matter Determination of allowance for Expected Credit Losses on loans and advances to customers (group) Refer to page 66 (Audit Committee report), Note 12: Loans and advances to customers and Note 30: Expected credit losses. The determination of the allowance for expected credit losses (ECL) involves management judgement and is subject to a high degree of estimation uncertainty. We performed a risk assessment to identify those assumptions with significant levels of management judgement and for which variations had the most material impact on ECL. In 2024, the level of estimation uncertainty and judgement remained elevated as the UK experienced weak economic growth, continued economic uncertainty and high interest rates. Assumptions were made by management in determining economic scenarios and their probability weightings based on information provided by a third party expert. Management determines the amount of ECL using a number of complex models. In addition, a number of post model overlays are required where the models do not capture all relevant risks. The overlays included adjustments in relation to the impact of interest rates on customer affordability and commercial borrowers which was determined either not to be fully reflected in the economic forecasts or where the modelled output did not fully reflect the impact on credit risk. Across the in-scope portfolios, we identified heightened audit risk in determining the ECL for the following: Retail Mortgages, Consumer unsecured (specifically for RateSetter loans) and Commercial (excluding the small asset finance and invoice finance portfolios, and government backed loans). Our work focused on the following key assumptions and judgements: • Forward-looking economic assumptions used in the models, and the weightings selected by management; • Judgements involved in creating post model overlays to change modelled outputs and the application of those adjustments in response to heightened economic uncertainty and higher interest rates; • Judgements exercised in determining whether a significant increase in credit risk (‘SICR’) should be recognised for Commercial loans where staging is based on a qualitative assessment of credit risk; and • Judgements applied by management in estimating stage 3 individual impairment allowances, specifically in relation to the valuation of collateral. We evaluated the design and implementation of key controls but did not test the operating effectiveness of controls as we did not plan to rely on them. We performed a fully substantive audit. We engaged the support of our credit modelling specialists and performed the following substantive audit procedures in order to assess the performance, methodology and accuracy of the ECL models. We also assessed the appropriateness of management’s key judgements and assumptions in the context of the current economic environment and our wider industry experience. Forward looking information and multiple economic scenarios We used our economic analysis tool developed by our economic and modelling experts utilising data from the Bank of England and independent consensus forecasts. This tool assessed the reasonableness of management’s economic scenarios and associated weightings, giving specific consideration to the current economic environment and severity of forward looking information. We also evaluated the competence, capabilities and objectivity and the work performed by management’s third party expert. Model methodology and post model overlays We critically assessed the methodology used in the in-scope impairment models and evaluated compliance with IFRS 9 requirements. We also tested the key assumptions and judgements which comprise the PDs/LGDs/EADs used in the calculation of provisions. We tested the input of certain data elements into impairment models and management judgemental adjustments, including credit reviews that determine credit risk ratings for commercial customers. Our credit modelling specialists independently rebuilt the commercial loans, retail mortgages and the RateSetter ECL models. This was performed using management’s methodology and we compared the output to management’s modelled ECL output. For the other in-scope portfolios our modelling specialists performed an independent code review to validate that the models were implemented in line with the group’s methodology. Our credit modelling specialists also assessed the results of model monitoring performed by management and independently re- performed the key tests. We critically assessed and tested the judgemental post model overlays applied by management to address the credit risk in the portfolio that was not reflected in modelled outputs. We evaluated and challenged the methodologies, the accuracy of application and the completeness of overlays. Where appropriate, we ran a series of independent scenarios based on alternative assumptions and compared the results to the ECL results produced by management. Significant increase in credit risk (SICR) – Commercial loans To test the judgements in determining whether SICR events have occurred, we evaluated the appropriateness of the SICR criteria being used. For a sample of loans across the Commercial stage 1 and 2 populations we independently assessed the stage allocation against SICR criteria. Individually assessed stage 3 loans For a sample of stage 3 credit impaired loans, we critically evaluated the basis on which the allowance was determined, and the evidence supporting the analysis performed by management. We also independently challenged whether the key assumptions used, such as the recovery strategies and collateral valuations, and ranges of potential outcomes, were appropriate given the borrowers’ circumstances. 153 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Independent auditors’ report continued Key audit matter How our audit addressed the key audit matter Carrying values of non-financial assets (group) Refer to page 66 (Audit Committee report), Note 14: Property, Plant and Equipment and Note 15: Intangible assets. The group’s tangible fixed assets comprised leasehold improvements and Right of Use assets. The group also capitalised as intangible assets certain expenditure in the development of software to support its business strategy. The market value of the group and the 2024 operating performance of the bank indicated that the assets might be impaired. Management evaluated the above non-financial assets for impairment and estimated the recoverable amounts of those assets. As the assets do not generate largely independent cash inflows, they have been incorporated into a relevant cash generating unit (CGU) and the recoverable amount of that CGU has been determined. The CGU relevant to the vast majority of non-financial assets is the ‘retail bank CGU’ within Metro Bank PLC. Management also evaluated whether certain intangible assets were continuing to be used in the business and therefore whether individual impairments were required. The determination of the recoverable amount requires management to estimate the higher of value in use and fair value less costs to sell of the retail bank CGU. This assessment is complex and involves a combination of management judgements and third-party data. The recoverable amount is estimated using forecast cash flows included in management’s 5 year Long Term Plan (‘LTP’), a terminal growth rate and a discount rate. There are methodology judgements required in determining a value in use in compliance with IAS 36 ‘Impairment of assets’. The LTP is also supported by various assumptions relating to compliance with regulatory capital requirements. Management concluded that no impairment of the retail bank CGU existed as at 31 December 2024. However, management determined that certain individual assets should be written off as these were no longer in use by the bank or used in delivering the LTP. The forecast cash flows in the LTP, in particular relating to net interest income, the determination of the discount rate and the assumptions relating to the regulatory capital requirements are key judgements. Due to the magnitude of the balance and the judgements involved in respect of the retail bank CGU, the impairment assessment represents a key audit matter. To address the risk of impairment of the non-financial assets, we performed a number of audit procedures over the assessment performed by management. Our work included the following substantive tests: • Tested the mathematical integrity of the impairment model and agreed the relevant inputs to the Board approved LTP; • Evaluated management’s accounting policy and impairment methodology with reference to IFRS requirements; • Reviewed the forecasts in the LTP and evaluated these for reasonableness. We made inquiries of management, inspected business plans and critically assessed management’s growth assumptions, including those relating to net interest income, using third party evidence where relevant; • Evaluated compliance with regulatory capital requirements and the underlying assumptions during the period of the plan using our regulatory experts. We tested forecast capital ratios, reviewed regulatory correspondence and held discussions with the PRA; • Engaged our valuation specialists in assessing the reasonableness of the discount rate and terminal growth rate; and • Assessed management’s decisions to write off certain intangible assets by reference to the current and expected use of these within the bank. 154 Metro Bank Holdings PLC Annual Report and Accounts 2024 Key audit matter How our audit addressed the key audit matter Recognition of a deferred tax asset (group) Refer to page 66 (Audit Committee report) and Note 9. As at 31 December 2024, the group recognised a deferred tax asset of £269m relating to the utilisation of unused tax losses from past trading activities. A deferred tax asset can be recognised in relation to these losses to the extent that it is probable that there will be sufficient future taxable profits to utilise them. The recognition and recoverability of a deferred tax asset by the group, where there have been significant losses in the recent past, is based on key assumptions about the group’s future profitability over an extended period. The group’s Long-Term Plan (‘LTP’) is the basis of management’s assessment. This includes numerous assumptions including but not limited to future asset growth, interest rates and regulatory capital requirements. Management assessed the inherent risks within the LTP, considered the existence of recent past losses and developments in the group, the uncertainty of forecasts in later years, and applied a risk adjustment to forecast taxable profits. This assessment involves significant estimation uncertainty and represents a key audit matter. Our work focused on the following key assumptions and judgements: • The assumptions used in determining the forecast profits in the LTP, in particular over the next three years, including assumptions about business transformation and regulatory capital requirements; and • The appropriateness of adjustments to reflect the risks in the business plan. To evaluate the recognition of the deferred tax asset, we performed a number of audit procedures over the assessment performed by management. Our work included the following substantive tests: • Evaluated management’s methodology for assessing the recognition and recoverability of the deferred tax asset with reference to IFRS requirements; • Understood and evaluated the reasonableness of the key profit forecast assumptions by making inquiries of management, inspecting business plans, critically assessing management’s growth assumptions and obtaining corroborating evidence; • Reviewed future regulatory capital assumptions using our regulatory experts; • Evaluated the ability of management to forecast profits by comparing past actual profits against budgets; • Assessed the extent of the risk adjustments applied by management to future profits, including in the period beyond the group’s five-year forecasting time horizon; and • Assessed the adequacy of the disclosures related to the recognition of the deferred tax asset, including the disclosure of key judgements and the estimate of the recovery period. Independent auditors’ report continued 155 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Independent auditors’ report continued Key audit matter How our audit addressed the key audit matter Carrying value of investment in subsidiary (parent) Refer to page 66 (Audit Committee report) and Note 3 (page 216). Management reviewed the carrying value of the investment in the subsidiary, Metro Bank PLC, for indicators of further impairment, or reversal of the previously recorded impairment, in accordance with IAS 36 as of 31 December 2024. Management estimated the recoverable amount using the higher of value in use (‘ViU’) or fair value less cost to sell. The methodology used to estimate the recoverable amount is dependent on various assumptions, both short term and long term in nature. These assumptions, which are subject to estimation uncertainty, are derived from a combination of management’s judgement and third party data. The significant assumptions that we focused our audit on were those with greater levels of management judgement and for which variations had the most significant impact on the recoverable amount. These included the compliance of the chosen methodology with IAS 36, the bank’s Long Term Plan (‘LTP’) for 2025 to 2029, in particular the net interest income forecasts, regulatory capital requirements and the discount rate. Management’s assessment resulted in a reversal of the prior year impairment charge. Due to the magnitude of the investment, the impairment reversal and the judgements involved, the impairment assessment represents a key audit matter. We performed a number of audit procedures over the calculation of the carrying value of investment determined by management. We challenged and tested the reasonableness of management’s methodology and key assumptions. Our work included the following substantive tests: • Tested the mathematical integrity of the impairment model and agreed the relevant inputs to the Board approved LTP relating to the subsidiary; • Evaluated management’s accounting policy and impairment methodology with reference to IFRS requirements; • Reviewed the forecasts in the LTP and evaluated these for reasonableness. We made inquiries of management, inspected business plans and critically assessed management’s growth assumptions, including those relating to net interest income, using third party evidence where relevant; • Engaged our regulatory experts in assessing the reasonableness of the risk weighted asset and capital requirements; and • Engaged our valuation specialists in assessing the reasonableness of the discount rate and terminal growth rate. 156 Metro Bank Holdings PLC Annual Report and Accounts 2024 How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate. We performed a risk assessment, giving consideration to relevant external and internal factors, including climate change, economic risks, relevant accounting and regulatory developments, as well as the group’s strategy. We also considered our knowledge and experience obtained in prior year audits of the group. We continually assessed the risks and changed the scope of our audit where necessary. As part of considering the impact of climate change in our risk assessment, we evaluated management’s assessment of the impact of climate risk, which is set out on pages 32 to 41, including their conclusion that there is no material impact on the financial statements. In particular, we considered management’s assessment of the impact on ECL on loans and advances to customers within Metro Bank PLC, which we determined to be most likely to be impacted by climate risk. Management’s assessment gave consideration to a number of matters, including the Biennial Exploratory Scenario climate stress testing performed in 2021. As a result of their assessment, an immaterial model overlay was recognised in 2021, and continues to be held as at 31 December 2024. The group consists of four components. Components that were deemed significant due to their financial reporting risk and/or relative financial significance in the context of the group’s consolidated financial statements were designated as full scope components. We assessed the significance of other components based on their impact on primary financial statement line items, the presence of significant risks of material misstatement, and other qualitative factors, such as a history of misstatements whether due to fraud or error. In the context of our group audit, we conducted full scope audit procedures for Metro Bank Holdings PLC (the company) and Metro Bank PLC. Additionally, we performed targeted audit procedures on loans and advances to customers, as well as on the expected credit loss (ECL) on loans and advances, for SME Asset Finance Limited and SME Invoice Finance Limited. The remaining balances in our professional judgement did not present a reasonable risk of material misstatement, whether individually or in aggregate, and were therefore excluded from further specific audit procedures. We performed other audit procedures, including tests of information technology controls and group-level analytical review procedures. Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: Financial statements – group Financial statements – company Overall materiality £11.4 million (2023: £11.4 million) £10.0 million (£10.0 million) How we determined it Approximately 1% of Total Equity (2023: 1%) 0.9% of Total Equity (2023: 1%) Rationale for benchmark applied The group’s total equity is the most appropriate benchmark as it is linked to the level of regulatory capital which is a key metric for management and users of the financial statements. It also provides a stable benchmark. The company’s total equity has been used as the most appropriate benchmark given its primary purpose is to act as a holding company, not to generate operating profits and therefore a profit-based measure is not relevant. For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2023: 75%) of overall materiality, amounting to £8.5m (2023: £8.5m) for the group financial statements and £7.5m (2023: £7.5m) for the company financial statements. In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.6m (group audit) (2023: £0.5m) and £0.5m (company audit) (2023: £0.5m) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons. Independent auditors’ report continued 157 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Conclusions relating to going concern Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern basis of accounting included: • Understanding the directors’ going concern assessment process, including the preparation and approval of the budget. We obtained management’s Board approved forecast covering the going concern period of assessment of 15 months from the date of these financial statements. We evaluated the forecasting method adopted by the directors in assessing going concern; • Evaluation of management’s financial and regulatory capital forecasts. We checked the mathematical accuracy of the model and evaluated the key assumptions using our understanding of the group and external evidence where appropriate. We used our Prudential Regulatory experts to review the Bank’s risk weighted assets and forecast capital requirement assumptions. We also performed a comparison of the 2024 budget and the actual results to assess the accuracy of the budgeting process; • Evaluation of the appropriateness of management’s severe but plausible scenarios using our understanding of the group and the external environment. We considered the mitigating actions that management identified, including the reduction of costs and slowing down the origination of new loans and advances, and assessed whether these were in the control of management and possible in the going concern period of assessment; • Reviewing management’s stress testing of liquidity and evaluation of the impact on liquidity of past stress events. We substantiated the liquid resources held, and liquidity facilities available to the group, for example, with the Bank of England; • Reviewing correspondence between the Bank and its regulators. We met with the PRA during the audit and understood the PRA’s perspectives on the Bank’s risks and its capital and liquidity position; and • Assessing the adequacy of disclosures in the Going Concern statement in note 1 of the Consolidated and Company Financial Statements and within the Viability statement and going concern section on pages 46 and 47 and found that these appropriately reflect the key areas of uncertainty identified. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s and the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and the company’s ability to continue as a going concern. In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ report for the year ended 31 December 2024 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors’ report. Directors’ Remuneration In our opinion, the part of the Annual Report on remuneration to be audited has been properly prepared in accordance with the Companies Act 2006. Independent auditors’ report continued 158 Metro Bank Holdings PLC Annual Report and Accounts 2024 Corporate governance statement The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: • The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; • The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; • The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this assessment covers and why the period is appropriate; and • The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Our review of the directors’ statement regarding the longer-term viability of the group and company was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the group and company and their environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: • The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the group’s and company’s position, performance, business model and strategy; • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and • The section of the Annual Report describing the work of the Audit Committee. We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors. Responsibilities for the financial statements and the audit Responsibilities of the directors for the financial statements As explained more fully in the statement of Directors’ responsibilities in respect of the financial statements, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the group and industry, we identified that the principal risks of non- compliance with laws and regulations related to the Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA), and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as UK tax legislation and the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting manual journal entries to manipulate financial performance and management bias in accounting estimates. Audit procedures performed by the engagement team included: • Enquiries of the Audit Committee, management, internal audit and the group’s legal counsel, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud; • Evaluation of the design and implementation of controls designed to prevent and detect irregularities relevant to financial reporting; • Reviewing key correspondence and holding discussions with the FCA and the PRA, in relation to the group’s compliance with banking regulations; • Incorporating unpredictability into the nature, timing and extent of our testing; • Challenging assumptions and judgements made by management in respect of the determination of the allowance for expected credit losses on loans and advances to customers, the carrying values of non-financial assets, the carrying value of the investment in subsidiary and the recognition of a deferred tax asset in relation to past trading losses (see related key audit matters); Independent auditors’ report continued 159 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Independent auditors’ report continued • Identifying and testing journal entries including those posted by infrequent or unexpected users, posted to certain account combinations and those posted late in the financial reporting process; and • Identifying and testing significant and unusual transactions and material non-recurring items such as impairments and write-offs. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report. Use of this report This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not obtained all the information and explanations we require for our audit; or • adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or • certain disclosures of directors’ remuneration specified by law are not made; or • the company financial statements and the part of the Annual Report on remuneration to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Appointment Following the recommendation of the Audit Committee, we were appointed by the directors on 25 April 2023 to audit the financial statements for the year ended 31 December 2023 and subsequent financial periods. The period of total uninterrupted engagement is 2 years, covering the years ended 31 December 2023 to 31 December 2024. Metro Bank Holdings PLC is the parent of Metro Bank PLC which we have audited since the year ended 31 December 2010 with the period of total uninterrupted engagement being 15 years, covering the years ended 31 December 2010 to 31 December 2024. Other matter The company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these financial statements in an annual financial report prepared under the structured digital format required by DTR 4.1.15R – 4.1.18R and filed on the National Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides no assurance over whether the structured digital format annual financial report has been prepared in accordance with those requirements. Jonathan Holloway (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 22 April 2025 160 Metro Bank Holdings PLC Annual Report and Accounts 2024 Consolidated statement of comprehensive income For the year ended 31 December 2024 Years ended 31 December Notes 2024 £’million 2023 £’million Interest income 2 935.4 855.7 Interest expense 2 (557.5) (443.8) Net interest income 377.9 411.9 Fee and commission income 3 98.0 95.0 Fee and commission expense 3 (4.8) (4.6) Net fee and commission income 93.2 90.4 (Loss)/gain on sale of assets2 4 (101.4) 2.7 Other income1 5 35.6 143.9 Total income 405.3 648.9 General operating expenses 6 (489.0) (502.9) Depreciation and amortisation 14, 15 (77.3) (77.7) Impairment and write-offs of property, plant, equipment and intangible assets 14, 15 (44.0) (4.6) Total operating expenses (610.3) (585.2) Expected credit loss expense 30 (7.1) (33.2) (Loss)/profit before tax (212.1) 30.5 Taxation 9 254.6 (1.0) Profit for the year 42.5 29.5 Other comprehensive income for the year Items which will be reclassified subsequently to profit or loss: Movement in respect of investment securities held at fair value through other comprehensive income (net of tax): • changes in fair value 28 3.4 2.4 Total other comprehensive income 3.4 2.4 Total comprehensive profit for the year 45.9 31.9 Profit per share Basic (pence) 36 6.3 13.8 Diluted (pence) 36 6.3 13.4 1. Other income includes a £100 million gain on debt extinguishment (note 5). 2. (Loss)/gain on sale of assets includes £101.4 million loss on sale of £2.5 billion residential mortgage portfolio (note 4). The accompanying notes on pages 165 to 211 form an integral part of these financial statements. 161 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Consolidated balance sheet As at 31 December 2024 Years ended 31 December Notes 2024 £’million 2023 £’million Cash and balances with other banks 11 2,811 3,891 Loans and advances to customers 12 9,013 12,297 Investment securities held at fair value through other comprehensive income 13 377 476 Investment securities held at amortised cost 13 4,113 4,403 Derivative financial assets 21 16 36 Property, plant and equipment 14 711 723 Intangible assets 15 126 193 Prepayments and accrued income 16 93 118 Deferred tax assets 9 240 – Other assets 17 82 108 Total assets 17,582 22,245 Deposits from customers 18 14,458 15,623 Deposits from central banks 19 400 3,050 Debt securities 20 675 694 Repurchase agreements 10 391 1,191 Derivative financial liabilities 21 1 – Lease liabilities 22 205 234 Deferred grants 23 13 16 Provisions 24 11 23 Deferred tax liability 9 – 13 Other liabilities 25 245 267 Total liabilities 16,399 21,111 Share premium 26 144 144 Retained earnings 27 1,022 978 Other reserves 28 17 12 Total equity 1,183 1,134 Total equity and liabilities 17,582 22,245 The accompanying notes on pages 165 to 211 form an integral part of these financial statements. The financial statements and accompanying notes were approved by the Board of Directors on 22 April 2025 and signed on its behalf by: Robert Sharpe Daniel Frumkin Chair Chief Executive Officer 162 Metro Bank Holdings PLC Annual Report and Accounts 2024 Consolidated statement of changes in equity For the year ended 31 December 2024 Called-up share capital £’million Share premium £’million Merger reserve £’million Retained earnings £’million FVOCI reserve £’million Share option reserve £’million Total equity £’million Balance as at 1 January 2024 – 144 – 978 (11) 23 1,134 Profit for the year – – – 43 – – 43 Other comprehensive income (net of tax) relating to investment securities designated at fair value through other comprehensive income – – – – 4 – 4 Total comprehensive income – – – 43 4 – 47 Equity–settled share based payment charges – – – – – 2 2 Transfer of b/f share option reserve – – – 1 – (1) – Balance as at 31 December 2024 – 144 – 1,022 (7) 24 1,183 Balance as at 1 January 2023 – 1,964 – (1,015) (13) 20 956 Profit for the year – – – 29 – – 29 Other comprehensive income (net of tax) relating to investment securities designated at fair value through other comprehensive income – – – – 2 – 2 Total comprehensive income – – – 29 2 – 31 Net share option movements – – – – – 3 3 Cancellation of Metro Bank PLC share capital and share premium – (1,964) – 1,964 – – – Issuance of Metro Bank Holdings PLC share capital – – 965 (965) – – – Bonus issuance 965 – (965) – – – – Capital reduction of Metro Bank Holdings PLC share capital (965) – – 965 – – – Shares issued – 150 – – – – 150 Cost of shares issued – (6) – – – – (6) Balance as at 31 December 2023 – 144 – 978 (11) 23 1,134 Notes 26 26 27 28 28 The accompanying notes on pages 165 to 211 form an integral part of these financial statements. 163 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Consolidated cash flow statement For the year ended 31 December 2024 Years ended 31 December Notes 2024 £’million 2023 £’million Reconciliation of profit/(loss) before tax to net cash flows from operating activities: (Loss)/profit before tax (212) 31 Adjustments for non-cash items 37 (359) (376) Interest received 948 834 Interest paid (585) (370) Changes in other operating assets 3,320 744 Changes in other operating liabilities (4,497) (235) Net cash (outflows)/inflows from operating activities (1,385) 628 Cash flows from investing activities Sales, redemptions and paydowns of investment securities 1,017 1,870 Purchase of investment securities (630) (816) Purchase of property, plant and equipment 14 (41) (12) Purchase and development of intangible assets 15 (19) (26) Net cash inflows from investing activities 327 1,016 Cash flows from financing activities Repayment of capital element of leases 22 (22) (23) Issuance of new shares 26 – 150 Cost of share issuance 26 – (6) Issuance of debt securities 20 – 175 Cost of debt issuance 20 – (5) Net cash (outflows)/inflows from financing activities (22) 291 Net (decrease)/increase in cash and cash equivalents (1,080) 1,935 Cash and cash equivalents at start of year 11 3,891 1,956 Cash and cash equivalents at end of year 11 2,811 3,891 The accompanying notes on pages 165 to 211 form an integral part of these financial statements. 164 Metro Bank Holdings PLC Annual Report and Accounts 2024 Notes to the consolidated financial statements 1. Basis of preparation and significant accounting policies This section sets out the Group’s (‘our’ or ‘we’) accounting policies which relate to the financial statements as a whole. Where an accounting policy relates specifically to a note then the related accounting policy is set out within that note. All policies have been consistently applied to all the years presented unless stated otherwise. 1.1 General information Metro Bank Holdings PLC (the ‘Company’) is the holding company of Metro Bank PLC, which provides retail and commercial banking services in the UK. Metro Bank Holdings PLC is a public limited liability company incorporated and domiciled in England and Wales under the Companies Act 2006 (Company number 14387040) and is listed on the London Stock Exchange (LON:MTRO). The address of its registered office is One Southampton Row, London, WC1B 5HA. 1.2 Basis of preparation The consolidated financial statements of the Company together with its subsidiaries (the ‘Group’) have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the UK, interpretations issued by the IFRS Interpretations Committee and the Companies Act 2006 applicable to companies reporting under IFRSs. The consolidated financial statements of the Group and Company were authorised by the Board for issue on 22 April 2025. The financial information has been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities at fair value through profit or loss and other comprehensive income. Fair value is defined as the price that would be received or paid in an orderly transaction between market participants at the measurement date. Certain disclosures required under IFRS 7 ‘Financial instruments: disclosures’ and IAS 1 ‘Presentation of financial statements’ have been included within the Risk report on pages 121 to 150. Where information is marked as audited, it is incorporated into these financial statements and it is covered by the Independent auditor’s report. The Directors consider that it is appropriate to continue to adopt the going concern basis of accounting in preparing the financial statements. In reaching this assessment, the Directors have considered projections for the Group’s capital and funding position as well as other principal risks. As part of this process the Directors have considered and approved the Group’s most recent Long-Term Plan including severe but plausible downside scenarios. The Directors also considered the key assumptions and uncertainties that feed into these plans alongside management actions and mitigants that would be available if required. Under all scenarios considered, the Directors believe the Group to remain a going concern on the basis that it maintains sufficient resources (including liquidity and capital) to be able to continue to operate for the foreseeable future (considered to be at least 15 months from the date of these financial statements). The Directors do not consider there to be any material uncertainties with regards to the assessment on going concern. Further details on the assessment undertaken by the Directors is set out in the Viability statement and going concern section on pages 46 and 47. Basis of consolidation Our consolidated financial statements include the results for all entities which we control (details of our subsidiaries can be found in note 3 to the Company financial statements on page 217). Controlled entities are all entities to which we are exposed, or have rights, to variable returns from our involvement with the entity and have the ability to affect those returns through our power over it. An assessment of control is performed on an ongoing basis. Our controlled entities are consolidated from the date on which we establish control until the date that control ceases. The acquisition method of accounting is used to account for business combinations other than those under common control. Post-acquisition, income and expenses are included in the consolidated income statement on a line-by-line basis in accordance with the accounting policies set out herein, adjusting for any intra-group transactions which are eliminated in full upon consolidation. In publishing the Company financial statements here together with the Group financial statements, we have adopted the exemption in section 408(3) of the Companies Act 2006. This means we have chosen not to present a Company statement of comprehensive income and related notes as part of these financial statements. Insertion of Metro Bank Holdings PLC To meet the Bank of England’s resolution requirements, on 19 May 2023, Metro Bank Holdings PLC was inserted as the new ultimate holding company and listed entity of the Group. Prior to this date Metro Bank PLC was both a banking entity and the ultimate parent company of the Group, but has subsequently become a 100% subsidiary of Metro Bank Holdings PLC. The insertion of Metro Bank Holdings PLC was treated as a business combination under common control, with the Group controlled by the same parties both before and after the insertion. Combinations under common control are outside the scope of IFRS 3 ‘Business Combinations’ and accordingly, the insertion was not recognised at fair value and no goodwill or fair value acquisition adjustments were recognised. The Group had instead applied the predecessor accounting approach as this most faithfully represented the substance of the facts and circumstances of the series of transactions that comprised the insertion of Metro Bank Holdings PLC. In applying this approach, the Group had used the carrying amounts in Metro Bank PLC’s consolidated financial statements at the date of transfer to determine the value of the assets and liabilities transferred. 165 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 1.3 Functional and presentation currency These financial statements are presented in pounds sterling (£), which is our functional currency. All amounts have been rounded to the nearest £1 million and £0.1 million for balance sheet and income statement line items respectively, except where otherwise indicated. 1.4 Cash flow statement The cash flow statement shows the changes in cash and cash equivalents arising during the year from operating activities, investing activities and financing activities. The cash flows from operating activities are determined by using the indirect method. Under that method, loss before tax is adjusted for non-cash items and changes in other assets and liabilities to determine net cash inflows or outflows from operating activities. Cash flows from investing and financing activities are determined using the direct method which directly reports the cash effects of the transactions. 1.5 Changes in accounting policies and presentational amendments During the year, there have not been any changes in any accounting policies or disclosures that have had a material impact on our financial statements. 1.6 Future accounting developments IFRS 18 will replace IAS 1 Presentation of Financial Statements and applies for annual reporting periods beginning on or after 1 January 2027. Whilst early application of the standard is permitted, the Group has not early adopted them in preparing these consolidated financial statements. The Group is still in the process of assessing the potential impact of this standard on presentation and disclosures. 1.7 Segmental reporting IFRS 8 ‘Operating Segments’ requires operating segments to be identified on the basis of internal reports and components of the Group which are regularly reviewed by the Chief Operating Decision Maker to allocate resources to segments and to assess their performance. For this purpose, the Chief Operating Decision Maker of the Group is our Board of Directors. The Board considers the results of the Group as a whole when assessing the performance of the Group and allocating resources, owing to our simple structure. Accordingly, the Group has a single operating segment. We operate solely within the UK and, as such, no geographical analysis is required. We are not reliant on any single customer. 1.8 Foreign currency translation Transactions in a foreign currency are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Monetary items denominated in a foreign currency are translated using the closing rate as at the reporting date. Non-monetary items measured at historical cost denominated in a foreign currency are translated with the exchange rate as at the date of initial recognition; non-monetary items in a foreign currency that are measured at fair value are translated using the exchange rates at the date when the fair value was determined. Foreign currency differences arising on translation are recognised in other income. Gains and losses arising from foreign currency transactions offered to customers are also recognised in other income. 1.9 Critical accounting judgements and estimates The preparation of financial statements in conformity with IFRS requires us to make material judgements as well as estimates which, although based on our best assessment, by definition will seldom equal the actual results. Management believes that the underlying assumptions applied at 31 December 2024 are appropriate and that these consolidated financial statements therefore present our financial position and results fairly. The areas involving a higher degree of complexity, judgement or where estimates have a significant risk of resulting in a material adjustment to the carrying amounts within the next financial year are: Area Estimates Judgements Further details Recognition of deferred tax assets Estimates are based on the Long-Term Plan (which include inherent uncertainties) Availability of future taxable profit against which tax losses carried forward can be utilised Note 9 Measurement of ECL Multiple forward- looking scenarios Significant increase in credit risk Use of MOs and PMAs Note 30 Impairment of non- financial assets n/a Key assumptions used for VIU calculations Note 15 Notes to the consolidated financial statements continued 166 Metro Bank Holdings PLC Annual Report and Accounts 2024 2. Net interest income Accounting policy We recognise interest income and expense for all interest–bearing financial instruments within ‘interest income’ and ‘interest expense’ in the income statement using the effective interest rate method. The effective interest rate method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate we estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but do not consider future credit losses except for POCI assets. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. For loans that are credit impaired, interest income is calculated on the carrying amount of the loan net of credit impairment. Interest income 2024 £’million 2023 £’million Cash and balances held with other banks 193.1 120.9 Loans and advances to customers 586.2 599.9 Investment securities held at amortised cost 126.1 118.6 Investment securities held at FVOCI 18.3 6.8 Interest income calculated using the effective interest rate method 923.7 846.2 Derivatives in hedge relationships 11.7 9.5 Total interest income 935.4 855.7 Interest expense 2024 £’million 2023 £’million Deposits from customers 303.6 147.8 Deposits from central banks 124.2 161.3 Debt securities 84.8 55.7 Lease liabilities 12.4 13.1 Repurchase agreements 26.5 50.1 Interest expense calculated using the effective interest rate method 551.5 428.0 Derivatives in hedge relationships 6.0 15.8 Total interest expense 557.5 443.8 3. Net fee and commission income Accounting policy Fee and commission income is earned from a wide range of services we provide to our customers. We account for fees and commissions as follows: Product or service Nature, timing and satisfaction of performance obligations and payment terms Service charges and other fee income We levy a range of standard charges and fees for account maintenance or specific account services. Where the fee is earned upon the execution of a significant act at a point in time, for example CHAPS payment charges, these are recognised as revenue when the act is completed for the customer. Where the income is earned from the provision of services, for example an account maintenance fee, this is recognised as revenue over time when the service is delivered. Safe deposit box Revenue is recognised over the period the customer has access to the box from the date possession is taken. Safe deposit box fees are billed on either a monthly or annual basis with a standard set price payable dependent on the size of the box. ATM and interchange fees Where we earn fees from our ATMs or from interchange this is recognised at the point the service is delivered. Expenses that are directly related and incremental to the generation of fee and commission income are presented within fee and commission expense. As disclosed in note 1, we provide services solely within the UK and therefore revenues are not presented on a geographic basis. Revenue is grouped solely by contract-type as we believe this best depicts how the nature, amount and timing of our revenue and cash flows are affected by economic factors. 2024 £’million 2023 £’million Service charges and other fee income 38.6 36.8 Safe deposit box income 19.0 18.2 ATM and interchange fees 40.4 40.0 Fee and commission income 98.0 95.0 Fee and commission expense (4.8) (4.6) Total net fee and commission income 93.2 90.4 Notes to the consolidated financial statements continued 167 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 4. Loss/gain on sale of assets 2024 £’million 2023 £’million Investment securities held at amortised cost – 2.9 Loan portfolios (101.4) (0.2) Total net (loss)/gain on sale of assets (101.4) 2.7 Loan portfolio sales The loss on sale relates to £2.5 billion of prime residential mortgages sold to NatWest Group plc. Metro Bank completed the sale on 30 September 2024. We will continue to service the loans until the contractual migration date recognising an amount payable of £47 million as at 31 December 2024 in other liabilities (note 25). 5. Other income Accounting policy Other income is accounted for as follows: Product or service Nature, timing and satisfaction of performance obligations and payment terms Foreign currency transactions Gains on foreign currency transactions is the spread earned on foreign currency transactions performed for our customers along with any associated fees. It is recognised at the point in time that the exchange is executed. Rental income Rental income is primarily earned from the letting out of surplus space in some of our properties. The revenue is recognised on a straight-line basis over the life of the lease. Deferred grant income Deferred grant income relates to amounts recognised in relation to the amounts drawn down against the Capability and Innovation Fund (C&I) award (further details of which can be found in note 23). Income is recognised in line with the delivery of the commitments we agreed to as part of the bid. Other income Other income primarily consists of hedge ineffectiveness, foreign currency differences arising on translation and movements in financial assets and liabilities held at fair value through profit and loss. 2024 £’million 2023 £’million Foreign currency transactions 29.7 34.0 Rental income 1.3 1.1 Deferred grant income 3.4 2.4 Gain on debt extinguishment – 100.0 Other 1.2 6.4 Total other income 35.6 143.9 Gain on debt extinguishment As part of the capital package which completed in November 2023, a 40% haircut was agreed with bondholders on our Tier 2 debt securities, which saw their £250 million of existing notes replaced with £150 million of new notes. This resulted in a gain of £100 million. Notes to the consolidated financial statements continued 168 Metro Bank Holdings PLC Annual Report and Accounts 2024 6. General operating expenses 2024 £’million 2023 £’million People costs (note 7) 209.6 241.2 Information technology costs 60.1 59.7 Occupancy costs 30.9 31.7 Money transmission and other banking-related costs 49.3 49.2 Transformation costs 31.1 20.2 Remediation costs 21.3 – Capability and Innovation Fund costs1 3.4 2.4 Legal and regulatory fees 9.0 7.0 Professional fees2 27.7 23.2 Printing, postage and stationery costs 7.5 7.2 Travel costs 1.4 1.5 Marketing costs 9.4 7.7 Costs associated with capital raise 0.1 26.0 Holding company related costs – 1.8 Other 28.2 24.1 Total general operating expenses 489.0 502.9 1. C&I costs represent the non-capitalisable costs of delivering the C&I digital commitments. It includes £2.4 million (2023: £1.9 million) of people costs. These are included within C&I costs rather than people costs to better reflect their nature. In addition to these costs the grant income recognised in note 5 is also used to offset property costs relating to the store commitments delivered. 2. Professional fees are shown net of both amounts capitalised and amounts included within the transformation costs, remediation costs and C&I costs lines. Information technology costs Information technology costs include costs expensed in relation to software licences, support from third-party providers, back up costs and cloud computing costs. Occupancy costs Occupancy costs consist of the non-IFRS 16 property costs of occupying our stores and offices, including rates, utilities and property maintenance costs as well as irrecoverable VAT on lease payments. Money transmission and other banking-related costs Money transmission and other banking-related costs are made up of the overheads relating to servicing our deposits and lending that do not constitute either part of the effective interest rate, or fee and commission expense. Professional fees Professional costs includes £12.3 million (2023: £7.3 million) of R&D costs not capitalised. This does not include any costs of colleagues working on these projects that are include in the people costs line. Including these costs we spent £25.1 million (2023: £25.1 million) on R&D costs not capitalised. Included within legal and regulatory fees is £0.13 million (2023: £0.06m) in respect of the Financial Services Compensation Scheme (FSCS) levy. Transformation, remediation, Capability and Innovation Fund, costs associated with capital raise and holding company insertion costs Remediation costs include £16.7 million in relation to the FCA fine following the resolution of enquiries into transaction monitoring systems and controls that began in 2016 and were remediated by 2020. Transformation costs include redundancy costs within the year and those related to the strategic collaboration with Infosys. Further details on other transformation, remediation, Capability and Innovation Fund and business acquisition and integration costs can be found on page 227. Notes to the consolidated financial statements continued 169 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 7. People costs 2024 £’million 2023 £’million Wages and salaries1 174.0 201.7 Social security costs1 20.7 21.8 Pension costs1 12.9 14.5 Equity-settled share-based payments 2.0 3.2 Total people costs 209.6 241.2 1. Amounts are net of people costs which are capitalised as well as those relating to C&I (see note 23) as these costs will be offset against the C&I grant income (note 5). Amounts are also net of people costs relating to our restructuring. Most of the cost was provided for in 2023, and details of provision and drawdown can be found in note 24. The average monthly number of persons employed during the year was 3,455 (2023: 4,286). 2024 2023 Customer-facing 1,437 1,985 Non-customer-facing 2,018 2,301 Total number of persons employed 3,455 4,286 Pension costs We operate a defined contribution pension scheme for our colleagues. Contributions to colleagues’ individual personal pension plans are made on a contractual basis, with no further payment obligations once the contributions have been paid. These contributions are recognised as an expense when they fall due. Payments were made amounting to £13.7 million (2023: £15.4 million) to colleagues’ individual personal pension plans during the year. This includes pension contributions that were capitalised as well as those relating to colleagues working on C&I which are not included in the figures above. 8. Fees payable to our auditors During the year, the Group (including its subsidiaries) obtained the following services from our auditors, PricewaterhouseCoopers LLP: 2024 £’000 2023 £’000 Audit of the Group and Company financial statements 105 54 Audit of the financial statements of the Company’s subsidiaries 2,783 2,309 Audit-related assurance services 162 144 Other assurance services – 555 Total fees payable to our auditors 3,050 3,062 Of the audit fees above, £125 thousand relates to the prior financial year. Notes to the consolidated financial statements continued 170 Metro Bank Holdings PLC Annual Report and Accounts 2024 9. Taxation Accounting policy Current tax Our current tax comprises the expected tax payable or receivable on the taxable profit for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Where we have tax losses that can be relieved only by carry-forward against taxable profits of future periods, a deductible temporary difference arises. Those losses carried forward are set off against deferred tax liabilities carried in the balance sheet. Deferred tax Deferred tax is recognised in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the balance sheet and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. The principal differences arise from trading losses, depreciation of property, plant and equipment and relief on research and development expenditure. We recognise a deferred tax asset to the extent that it is probable that future taxable profits will be available against which they can be used and deferred tax liabilities are provided on taxable temporary differences. Deferred tax assets and liabilities are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised or the deferred tax liability settled. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets against current tax liabilities and where the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle on a net basis. Tax expense The components of the tax expense for the year are: 2024 £’million 2023 £’million Current tax Current tax – (0.1) Adjustment in respect of prior years – – Total current tax credit/(expense) – (0.1) Deferred tax Origination and reversal of temporary differences 254.1 (0.5) Effect of changes in tax rates – (0.4) Adjustment in respect of prior years 0.5 – Total deferred tax credit/(expense) 254.6 (0.9) Total tax credit/(expense) 254.6 (1.0) Notes to the consolidated financial statements continued 171 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 9. Taxation continued Reconciliation of the total tax expense The tax expense shown in the income statement differs from the tax expense that would apply if all accounting losses had been taxed at the UK corporation tax rate. A reconciliation between the expense and the accounting profit/(loss) multiplied by the UK corporation tax rate is as follows: 2024 £’million Effective tax rate % 2023 £’million Effective tax rate % Accounting (loss)/profit before tax (212.1) 30.5 Tax credit/(expense) at statutory tax rate of 25% (2023: 23.5%) 53.0 25.0% (7.2) 23.5% Tax effects of: Non-deductible expenses – depreciation on non-qualifying fixed assets (3.0) (1.4%) (2.5) 8.3% Non-deductible expenses – investment property impairment – – – – Non-deductible expenses – remediation – – – – Non-deductible expenses – other (7.7) (3.6%) (0.8) 2.6% Impact of intangible asset write-off on research and development deferred tax liability – – 0.1 (0.3%) Share-based payments (0.2) (0.1%) (1.2) 3.9% Adjustment in respect of prior years 0.6 0.3% – – Current year losses for which no deferred tax asset has been recognised – – (15.4) 50.5% Losses offset against current year profits – – 1.1 (3.6%) Movement in recognised DTA for unused tax losses 211.9 99.9% 1.8 (5.9%) Effect of changes in tax rates – – (0.4) 1.3% Income not taxable – – 23.5 (77.0%) Tax credit/(expense) reported in the consolidated income statement 254.6 120.0% (1.0) 3.3% The effective tax rate for the year is 120.0% (2023: 3.3%). The main reasons for this, in addition to the reported accounting loss before tax for the year, are set out below: Non-deductible expenses – other This mainly relates to the FCA fine and intangible asset amortisation and impairment upon which a tax deduction is not available. Share-based payments During the year, the Bank share price increased from £0.37 to £0.94. This had the impact of increasing the deferred tax asset, resulting in a deferred tax credit. The charge to the income statement (upon which a tax deduction is not available) is higher than the deferred tax credit, resulting in a small increase in the total tax charge. Adjustment in respect of prior years Following the filing of our 2023 corporation tax return we reduced our R&D deferred tax liability following a decrease in qualifying capital R&D expenditure. Notes to the consolidated financial statements continued 172 Metro Bank Holdings PLC Annual Report and Accounts 2024 9. Taxation continued Deferred tax assets A deferred tax asset must be regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not there will be suitable tax profits from which the future of the underlying timing differences can be deducted. The following table shows deferred tax recorded in the statement of financial position and changes recorded in the tax expense: 31 December 2024 31 December 2023 Unused tax losses £’million Investment securities and impairments £’million Share- based payments £’million Property, plant and equipment £’million Intangible assets £’million Total £’million Unused tax losses £’million Investment securities and impairments £’million Share- based payments £’million Property, plant and equipment £’million Intangible assets £’million Total £’million Deferred tax assets 269 1 1 – – 271 14 2 1 – – 17 Deferred tax liabilities – 3 – (31) (3) (31) – 4 – (29) (5) (30) Deferred tax assets (net) 269 4 1 (31) (3) 240 14 6 1 (29) (5) (13) 1 January 14 6 1 (29) (5) (13) 12 7 1 (26) (6) (12) Prior year movement (1) (1) – – 1 (1) Income statement 256 – – (2) 1 255 2 (1) – (3) 1 (1) Other comprehensive expenses – (1) – – – (1) – – – – – – 31 December 269 4 1 (31) (3) 240 14 6 1 (29) (5) (13) Offsetting of deferred tax assets and liabilities We have presented all the deferred tax assets and liabilities above on a net basis within the balance sheet on page 162. This is on the basis that all our deferred tax assets and liabilities relate to taxes levied by HMRC and we have a legally enforceable right to offset these. Further details on our offsetting of financial assets and liabilities can be found in note 33. Deferred Tax on unused tax losses Deferred tax assets are recognised only to the extent it is probable that future taxable profits will be available against which the assets can be utilised. Under current law there is no expiry date for UK trading losses not yet utilised. An assessment has been undertaken, taking account of any deferred tax liabilities against which the reversal can be offset and using the Board’s latest Long-Term Plan forecasts, to assess the level of future taxable profits. The forecasts are consistent with those used in the Value-in-Use (VIU) calculations. However, the Bank’s Long-Term Plan contains inherent execution risks, including regulatory changes, market volatility, and operational factors. These uncertainties require ongoing monitoring and regular stress testing to ensure the bank maintains sufficient resilience throughout the plan’s implementation. Whilst loss making in the recent past, the Bank returned to an underlying profit in H2 2024 and has made sufficient progress in the execution of its transformation plan that it is now projected to generate sufficient future taxable profits to fully utilise its remaining tax losses. The plan assumes an improvement in net interest margin (driven by the strategic pivot to higher yielding lending, a lower cost of deposits and current market expectations of future interest rates) and continued cost discipline and control. Further details of the progress the Group has made against its strategic objectives and the risks faced by the Bank are explained in the Strategic Report. For the purposes of assessing the utilisation of the tax losses and estimating the period over which the losses will be utilised, the forecasts have been adjusted to reflect the inherent risks of the Bank and the environment in which it operates. These include external macro-economic factors such as base rates, operating costs and the extent of credit losses. As a result, we have recognised a deferred tax asset of £269 million (2023: deferred tax asset £14 million) on unused tax losses totalling £1,073 million leading to a credit to the income statement of £256 million. The value of the deferred tax asset in respect of tax losses is expected to be fully recovered by 2035. A 10% annual reduction in forecast profits each year would increase the estimated recovery period by 1 year. Notes to the consolidated financial statements continued 173 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 10. Financial instruments Accounting policy Repurchase agreements Where we sell financial assets subject to sale and repurchase agreements, the financial assets are retained in their respective balance sheet categories, however they become encumbered and are not available for transfer or sale. The associated liabilities are included in the repurchase agreements line. The difference between the sale and repurchase price of repurchase agreements is treated as interest and accrued over the life of the agreements using the effective interest method as set out in note 2. Other financial instruments Our accounting policies in respect of our other financial instruments can be found in their respective notes, where applicable. Our financial instruments primarily comprise customer deposits, loans and advances to customers and investment securities, all of which arise as a result of our normal operations. The main financial risks arising from our financial instruments are credit risk, liquidity risk and market risks (price and interest rate risk). Further details on these risks can be found within the Risk report on pages 121 to 150. The financial instruments we hold are simple in nature and we do not consider that we have made any significant or material judgements relating to the classification and measurement of financial instruments under IFRS 9. Cash and balances with other banks, trade and other receivables, trade and other payables and other assets and liabilities which meet the definition of financial instruments are not included in the following tables. Classification of financial instruments 31 December 2024 Fair value through profit and loss £’million FVOCI £’million Amortised cost £’million Total £’million Assets Loans and advances to customers – – 9,013 9,013 Investment securities – 377 4,113 4,490 Derivative financial assets 16 – – 16 Liabilities Deposits from customers – – 14,458 14,458 Deposits from central bank – – 400 400 Debt securities – – 675 675 Derivative financial liabilities 1 – – 1 Repurchase agreements – – 391 391 31 December 2023 Fair value through profit and loss £’million FVOCI £’million Amortised cost £’million Total £’million Assets Loans and advances to customers – – 12,297 12,297 Investment securities – 476 4,403 4,879 Derivative financial assets 36 – – 36 Liabilities Deposits from customers – – 15,623 15,623 Deposits from central bank – – 3,050 3,050 Debt securities – – 694 694 Repurchase agreements – – 1,191 1,191 Notes to the consolidated financial statements continued 174 Metro Bank Holdings PLC Annual Report and Accounts 2024 10. Financial instruments continued Financial assets pledged as collateral We have pledged £1,034 million (2023: £6,110 million) of the financial assets left as encumbered collateral which can be called upon in the event of default. Of this, £445 million (2023: £1,311 million) is made up of high-quality securities and £589 million (2023: £4,799 million) is from our own loan portfolio. This does not include cash balances pledged as collateral which are shown separately within note 17. LIBOR replacement On 1 January 2022 SONIA. (Sterling Overnight Index Average.) replaced LIBOR (London Inter-bank Offered Rate) as the industry standard sterling interest rate benchmark. As at 31 December 2024 all of our market-facing derivative flows are executed against SONIA, we hold £0 million (31 December 2023: £47 million) of mortgages that are either exposed, or revert to synthetic LIBOR. 11. Cash and balances with other banks Accounting policy Cash and balances with other banks consists of both cash on hand and demand deposits, both at other banks as well as the Bank of England. In addition, it includes highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Investment securities are only classified as cash equivalents if they have a short maturity of three months or less from the date of acquisition and are in substance cash equivalents, e.g. debt investments with fixed redemption dates that are acquired within a short period of their maturity. Where cash is pledged as collateral and as such is not available on demand this is included within other assets within note 17. 31 December 2024 £’million 31 December 2023 £’million Unrestricted balances with the Bank of England 2,585 3,642 Cash and unrestricted balances with other banks 111 191 Money market placements 115 58 Total cash and balances with other banks 2,811 3,891 The expected credit loss held against cash and balances with the Bank of England is £0.1 million (31 December 2023: £0.1 million). Notes to the consolidated financial statements continued 175 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 12. Loans and advances to customers Accounting policy Loans and advances to customers are classified as held at amortised cost. Our business model is that customer lending is held to collect cash flows, with no sales expected in the normal course of business. We aim to offer products with simple terms to customers, and as a result, all loans comprise solely payments of principal and interest. Loans are initially recognised when cash is advanced to the borrower at fair value – which is the cash consideration to originate the loan including any transaction costs – and measured subsequently at amortised cost using the effective interest rate method, which is detailed further in note 2. Interest on loans is included in the income statement and is reported as ‘Interest income’. Expected credit losses (ECL) are reported as a deduction from the carrying value of the loan. Changes to the ECL during the year are recognised in the income statement as ‘Expected credit loss expense’. 31 December 2024 31 December 2023 Gross carrying amount £’million ECL allowance £’million Net carrying amount £’million Gross carrying amount £’million ECL allowance £’million Net carrying amount £’million Consumer lending 745 (108) 637 1,297 (108) 1,189 Retail mortgages 5,145 (15) 5,130 7,817 (19) 7,798 Commercial lending 3,314 (68) 3,246 3,382 (72) 3,310 Total loans and advances to customers 9,204 (191) 9,013 12,496 (199) 12,297 Further information on the movements in gross carrying amounts and ECL can be found in note 30. An analysis of the gross loans and advances by product category is set out below: 31 December 2024 £’million 31 December 2023 £’million Overdrafts 39 40 Credit cards 20 28 Term loans 679 1,219 Consumer auto-finance 7 10 Total consumer lending 745 1,297 Residential owner occupied 3,692 5,851 Retail buy-to-let 1,453 1,966 Total retail mortgages 5,145 7,817 Total retail lending 5,890 9,114 Professional buy-to-let 283 465 Bounce back loans 346 524 Coronavirus business interruption loans 47 86 Recovery loan scheme1 260 328 Core commercial lending 1,599 1,341 Commercial term loans 2,535 2,744 Overdrafts and revolving credit facilities 220 172 Credit cards 7 4 SME Asset Finance Limited and SME Invoice Finance Limited 552 462 Total commercial lending 3,314 3,382 Gross loans and advances to customers 9,204 12,496 1. Recovery loan scheme includes £45 million acquired from third parties under forward flow arrangements (31 December 2023: £70 million). The loans are held in a trust arrangement in which we hold 99% of the beneficial interest, with the issuer retaining the remaining 1% (the trust retains the legal title loans). Notes to the consolidated financial statements continued 176 Metro Bank Holdings PLC Annual Report and Accounts 2024 13. Investment securities Accounting policy Our investment securities may be categorised as amortised cost, FVOCI or fair value through profit and loss. Currently all investment securities are non-complex, with cash flows comprising solely payments of principal and interest. We hold some securities to collect cash flows; other securities are held to collect cash flows, and to sell if the need arises (e.g. to manage and meet day-to-day liquidity needs). Therefore, we have a mixed business model and securities are classified as either amortised cost or FVOCI as appropriate. We do not categorise any investment securities as fair value through profit and loss. Settlement date accounting is used when recording financial asset transactions where a trade is settled through the regular settlement cycle for that particular investment. Investment securities held at amortised cost Investment securities held at amortised cost consist entirely of debt instruments. They are accounted for using the effective interest method, less any impairment losses. Investment securities held at FVOCI Investment securities held at FVOCI consist entirely of debt instruments. Investment securities held at FVOCI are initially recognised at fair value, which is the cash consideration including any transaction costs, and measured subsequently at fair value with gains and losses being recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the investment security is derecognised. Interest is calculated using the effective interest method. 31 December 2024 £’million 31 December 2023 £’million Investment securities held at FVOCI 377 476 Investment securities held at amortised cost 4,113 4,403 Total investment securities 4,490 4,879 Investment securities held at FVOCI 31 December 2024 £’million 31 December 2023 £’million Sovereign bonds 149 220 Covered bonds 83 112 Multi-lateral development bank bonds 145 144 Total investment securities held at FVOCI 377 476 Investment securities held at amortised cost 31 December 2024 £’million 31 December 2023 £’million Sovereign bonds 875 938 Residential mortgage-backed securities 876 954 Covered bonds 478 594 Multi-lateral development bank bonds 1,576 1,729 Asset backed securities 308 188 Total investment securities held at amortised cost 4,113 4,403 Further information on the ECL recognised on investment securities can be found in note 30. Notes to the consolidated financial statements continued 177 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 14. Property, plant and equipment Accounting policy Property, plant and equipment Our property, plant and equipment primarily consists of investments and improvements in our store network and is stated at cost less accumulated depreciation and any recognised impairment. We depreciate property, plant and equipment on a straight-line basis to its residual value using the following useful economic lives: Leasehold improvements Lower of the remaining life of the lease or the useful life of the asset Freehold land Not depreciated Buildings Up to 50 years Fixtures, fittings and equipment 5 years IT hardware 3 to 5 years We keep depreciation rates, methods and the residual values underlying the calculation of depreciation of items of property, plant and equipment under review to take account of any change in circumstances. All items of property, plant and equipment are reviewed at the end of each reporting period for indicators of impairment. Right-of-use assets All of our leases within the scope of IFRS 16 ‘Leases’ (other than those of low value) relate to our stores and head office properties. Upon the recognition of a lease liability (see note 22 for further details) a corresponding right-of- use asset is recognised. This is adjusted for any initial direct costs incurred, lease incentives paid or received and any restoration costs at the end of the lease (where applicable). The right-of-use asset is depreciated on a straight-line basis over the life of the lease. All right-of-use assets are reviewed at the end of each reporting period for indicators of impairment. Investment property Investment property is also stated at cost less accumulated depreciation and any recognised impairment. Depreciation is calculated on a consistent basis with that applied to land and buildings as set out above. 2024 Investment property £’million Leasehold improvements £’million Freehold land and buildings £’million Fixtures, fittings and equipment £’million IT hardware £’million Right-of-use assets £’million Total £’million Cost 1 January 2024 12 256 386 23 10 279 966 Additions – 1 37 – 2 1 41 Disposals – – – – – (25) (25) Transfers – (13) 13 – – – – 31 December 2024 12 244 436 23 12 255 982 Accumulated depreciation 1 January 2024 8 79 42 21 4 89 243 Depreciation charge – 5 12 1 4 12 34 Impairments – – – – – 1 1 Disposals – – – – – (7) (7) Transfers – (3) 3 – – – – 31 December 2024 8 81 57 22 8 95 271 Net book value 4 163 379 1 4 160 711 Notes to the consolidated financial statements continued 178 Metro Bank Holdings PLC Annual Report and Accounts 2024 14. Property, plant and equipment continued 2023 Investment property £’million Leasehold improvements £’million Freehold land and buildings £’million Fixtures, fittings and equipment £’million IT hardware £’million Right-of-use assets £’million Total £’million Cost 1 January 2023 12 261 372 22 8 283 958 Additions – – 9 1 2 – 12 Disposals – – – – – (4) (4) Transfers – (5) 5 – – – – 31 December 2023 12 256 386 23 10 279 966 Accumulated depreciation 1 January 2023 8 69 34 20 2 77 210 Depreciation charge – 13 5 1 2 13 34 Disposals – – – – – (1) (1) Transfers – (3) 3 – – – – 31 December 2023 8 79 42 21 4 89 243 Net book value 4 177 344 2 6 190 723 Fair value of investment property Our investment property typically consists of shops and offices which are located within the same buildings as some of our stores, where we have acquired the freehold interest. As at 31 December 2024 our investment property had a fair value of £4 million (31 December 2023: £4 million). The fair value has been provided by a qualified independent valuer. Impairments During the year, impairment indicators were identified in respect of other items of our property, plant and equipment. The assets, which included our stores, were tested for impairment. We do not consider individual stores to be cash generating units (CGU), on the basis that they do not generate sufficiently independent cash flows. Instead all of our stores and associated assets are deemed to belong to our retail bank CGU. Further details on the impairment testing of our CGUs can be found in note 15. The recoverable amount of the retail bank CGU was found to be in excess of its carrying amount and as such no impairment was recognised. Transfers Transfers represent costs associated with the previous improvements made to the two (2023: one) leased stores which have been purchased during the year. Contractual commitment for the acquisition of property, plant and equipment As at 31 December 2024, we had no contractual commitments relating to the acquisition of property, plant and equipment that are not reflected in the tables (31 December 2023: £nil). Notes to the consolidated financial statements continued 179 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 15. Intangible assets Accounting policy Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over our interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. For the purpose of impairment assessment, goodwill acquired in a business combination is allocated to each of our CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is not amortised, however, it is tested for impairment at the end of each reporting period. The recoverable amount of a CGU is the higher of its fair value less cost to sell, and the present value of its expected future cash flows. If the recoverable amount is less than the carrying value, an impairment loss is charged to the income statement. Goodwill is stated at cost less accumulated impairment losses. Any impairment is recognised immediately as an expense and is not subsequently reversed. Other intangible assets Software includes both purchased items and internally developed systems, which consist principally of identifiable and directly associated internal colleague, contractor and other costs. Purchased intangible assets and costs directly associated with the development of systems are capitalised as intangible assets where there is an identifiable asset which we control and which will generate future economic benefits in accordance with IAS 38 ‘Intangible Assets’. Costs to establish feasibility or to maintain existing performance are recognised as an expense. Intangible assets are amortised on a straight-line basis within the income statement using the following useful economic lives: Core banking software1 up to 20 years Other banking software 3 to 10 years Software licences licence period Brands 5 years All intangible assets are reviewed at the end of each reporting period for indicators of impairment. 1. Core banking software consists of our central banking transaction platform. The original platform was assessed as having a 20-year life due to it being the central component of our digital infrastructure. It was upgraded during 2019 with the upgrade assessed as having a 15-year life. 2024 Goodwill £’million Brands £’million Software £’million Total £’million Cost 1 January 2024 10 2 355 367 Additions – – 19 19 Write-offs – – (85) (85) 31 December 2024 10 2 289 301 Accumulated amortisation 1 January 2024 – 1 173 174 Amortisation charge – – 43 43 Write-offs – – (42) (42) 31 December 2024 – 1 174 175 Net book value 10 1 115 126 2023 Goodwill £’million Brands £’million Software £’million Total £’million Cost 1 January 2023 10 2 338 350 Additions – – 26 26 Write-offs – – (9) (9) 31 December 2023 10 2 355 367 Accumulated amortisation 1 January 2023 – – 134 134 Amortisation charge – 1 43 44 Write-offs – – (4) (4) 31 December 2023 – 1 173 174 Net book value 10 1 182 193 Software Software consists of both internally generated and externally acquired assets. As at 31 December 2024, externally acquired licences had a net book value of £5 million (31 December 2023: £9 million). Out of our total intangible assets, £20 million of software assets were under the course of construction at 31 December 2024 (31 December 2023: £34 million). Notes to the consolidated financial statements continued 180 Metro Bank Holdings PLC Annual Report and Accounts 2024 15. Intangible assets continued Write-offs The write-offs in the year consisted primarily of software and applications that are no longer being used and are no longer providing any further economic benefits. Goodwill and impairment testing of cash generating units An impairment test on the carrying value of the assets in our CGUs has been undertaken. As at 31 December 2024, we had two main CGUs being the retail bank and our SME Asset Finance Limited and SME Invoice Finance Limited businesses and no changes have been made to our CGUs during the year. Both of our CGUs contain goodwill and as such are tested annually for impairment. Additional impairment indicators were identified in relation to the retail bank CGU in relation to both its intangible assets as well as property, plant and equipment (see note 14). 31 December 2024 £’million SME Asset Finance Limited and SME Invoice Finance Limited 4 Retail bank 6 Total 10 The recoverable amount for both CGUs was determined by a Value-in-Use (VIU) calculation. The VIU was higher than their carrying value and therefore no impairment charge has been recognised for the current year (2023: no charge). The VIU calculation is based on our Board-approved Long-Term Plan which covers the five year period from 2025 to 2029 inclusive. Our Long-Term Plan is constructed using our best estimate of the future performance of the business. The plan incorporates market-based forecasts of interest rates and inflation, loan growth assumptions, costs, and our assessment of the impact of Basel 3.1 regulatory changes. The Long-Term Plan is built on the assumption that we remain appropriately capitalised to fund our anticipated growth. We have determined that we will be able to meet the appropriate regulatory requirements, which has been based on an analysis of both our existing and planned capital structure. This is consistent with the assessment undertaken by the Directors in respect of assessing viability, which can be found on pages 46 to 47. The profitability for each CGU per the Long-Term Plan is adjusted for non-cash items (including depreciation and amortisation), capital expenditure and long-term funding costs (which are reflected in the discount rate) and certain cash flows which are not permitted to be included under IAS 36, to establish the cash flows for the VIU. In the outer years beyond the Long-Term Plan period, we have assumed a terminal growth rate of 2% is reached by year six. The terminal growth rate of 2% represents the predicted long-term GDP growth rate of the UK economy (the only market both CGUs operate in). The VIU cash flows are compared to the carrying value of the CGUs, which exclude long term debt. A pre-tax discount rate of 13.82% (31 December 2023: 14.7%) has been used for the VIU calculation. The discount rate is based on our post-tax weighted average cost of capital of 11.36% (which is grossed up to a pre-tax rate), based on the cost of equity and long term debt, weighted by the market value of the equity and debt. The VIU is most sensitive to changes in the projected profitability per the Long-Term Plan and the discount rate applied (which are dependent on the assumptions regarding capital outlined above). If adjusted independently of all other variables, reasonable changes to the assumption in either of these factors over the next 12 months would not cause the recoverable of either CGU to fall below its carrying amount. Notes to the consolidated financial statements continued 181 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 16. Prepayments and accrued income 31 December 2024 £’million 31 December 2023 £’million Prepayments 36 42 Accrued income1 56 75 VAT receivable 1 1 Total prepayments and accrued income 93 118 Current portion 93 118 Non-current portion – – 1. Includes accrued interest receivable. 17. Other assets 31 December 2024 £’million 31 December 2023 £’million Cash pledged as collateral 53 50 Amounts owed by group undertaking 1 – Other1 28 58 Total other assets 82 108 Current portion 27 55 Non-current portion 55 53 1. Other balance primarily comprises customer transactions in process or items in the course of collection over year end. 18. Deposits from customers 31 December 2024 £’million 31 December 2023 £’million Deposits from retail customers 7,753 8,943 Deposits from commercial customers 6,705 6.680 Total deposits from customers 14,458 15,623 31 December 2024 £’million 31 December 2023 £’million Demand: current accounts 5,791 5,696 Demand: savings accounts 7,534 7,827 Fixed term: savings accounts 1,133 2,100 Total deposits from customers 14,458 15,623 As at 31 December 2024, 40% of deposits from customer consisted of instant access current accounts (31 December 2023: 36%). Fixed term saving accounts made up 8% of balances (31 December 2023: 13%). 19. Deposits from central banks Deposits from central banks consist of amounts drawn down under the Bank of England’s Term Funding Scheme with additional incentives for SMEs (TFSME). 31 December 2024 £’million 31 December 2023 £’million Amounts drawn down under TFSME 400 3,050 Deposits from central banks 400 3,050 The bank repaid £2,650m of TFSME in 2024, with the remaining drawdowns of £400m to mature in 2027. Notes to the consolidated financial statements continued 182 Metro Bank Holdings PLC Annual Report and Accounts 2024 20. Debt securities Accounting policy Debt securities in issue are recognised initially at fair value, being proceeds less transaction costs. Subsequently, debt securities are measured at amortised cost using the effective interest method. We assess the criteria for the modification and extinguishment of debt securities in accordance with IFRS 9. A substantial modification of the terms of an existing financial liability or a part of it is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. We determine a substantial modification by performing a quantitative and qualitative prospective assessment. Name Issue date Currency Amount issued £’million Coupon rate Call date Maturity date Fixed rate reset callable (MREL) notes 30/11/2023 GBP 525 12.00% 30/04/28 30/04/29 Fixed rate reset callable subordinated (Tier 2) notes 30/11/2023 GBP 150 14.00% 30/04/29 30/04/34 2024 £’million 2023 £’million 1 January 694 571 Issuances – 675 Redemption – (500) Haircut – (100) Costs associated with issuance – (5) Movements in micro hedging (20) 50 Unwind of issuance costs 1 3 31 December 675 694 The fixed rate reset callable notes (MREL), which are listed on the London Stock Exchange, constitute subordinated and unsecured obligations. The notes have a call date of 30 April 2028, where they may be redeemed at par. If not called, the interest rate will be reset and fixed based on a benchmark gilt plus a credit spread of 7.814%. The notes are contractually obliged to mature on the maturity date of 30 April 2029. The fixed rate reset subordinated callable notes (Tier 2), which are listed on the London Stock Exchange, constitute subordinated and unsecured obligations. The notes have a call date of 30 April 2029, where they may be redeemed at par. If not called, the interest rate will be reset and fixed based on a benchmark gilt plus a credit spread of 9.822%. The notes are contractually obliged to mature on the maturity date of 30 April 2034. 21. Derivatives Accounting policy In accordance with our risk management strategy, to the extent not naturally hedged, we use interest rate swaps to manage our exposure to interest rate risk. On adoption of IFRS 9 we chose to continue applying the hedge accounting rules set out in IAS 39 ‘Financial Instruments: Recognition and Measurement’ as we often chose to employ dynamic portfolio hedge accounting of interest rate risk across fixed rate financial assets and fixed rate financial liabilities. Where we are using interest rate swaps to hedge the changes in fair value attributable to the interest rate risk of a recognised asset or liability that could affect profit or loss, we apply fair value hedge accounting. If there is an effective hedge relationship, the hedged item is adjusted for fair value changes in respect of the hedged risk. These fair value changes are recognised in the income statement together with the fair value movements on the hedging instrument (the interest rate swaps). Hedge accounting is discontinued when a hedge ceases to be highly effective, a derivative expires or is sold, the underlying hedged item matures or is repaid, or periodically if a new underlying hedged item or hedging instrument is added to the hedge relationship. Where a fair value hedge is de-designated (either due to becoming ineffective or as part of our dynamic approach to hedge accounting) any hedge adjustments accrued to that point are amortised over the remaining life of the hedged item. At the inception of every hedge, we produce hedge documentation which identifies the hedged risk, hedged item and hedging instrument. This documentation sets out the methodology used for testing hedge effectiveness. Notes to the consolidated financial statements continued 183 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 21. Derivatives continued We use derivatives as part of our approach to hedging interest rate and foreign exchange exposure. Our derivative financial instruments are analysed in the table below. 31 December 2024 31 December 2023 Notional contract amount £’million Carrying amount Notional contract amount £’million Carrying amount Asset £’million Liability £’million Asset £’million Liability £’million Interest rate swaps – Designated as hedging instruments 1,253 16 – 1,205 36 – Interest rate swaps – Designated as held at fair value through profit and loss 502 7 (7) 1,200 31 (31) Foreign currency swaps – Designated as held at fair value through profit and loss 50 – (1) 63 – – Total 1,805 23 (8) 2,468 67 (31) Derivative netting (502) (7) 7 (1,200) (31) 31 Grand total 1,303 16 (1) 1,268 36 – Hedge accounting Our hedging strategy is driven by micro hedges, where the hedged item is a identifiable asset or liability. The designated risk components of hedged items are benchmark interest rate risk. Other risks such as credit risk and liquidity risk are managed separately and are not included in the hedge accounting relationship. The changes in the designated risk component usually account for the largest portion of the overall change in fair value of the hedged item. Micro fair value hedges We use this hedging strategy on fixed rate assets and liabilities held at fair value through other comprehensive income and amortised cost as well as on our fixed rate debt issuance. Hedge ineffectiveness Hedge ineffectiveness within fair value hedges can occur due to a number of potential sources, such as non-zero derivative designated in a hedge relationship; mismatches between contractual terms such as basis, timing, principal and notionals; or change in credit risk of interest rate swaps. The total ineffectiveness on our fair value hedges are recognised in note 5. Offsetting derivatives The Tier 2 and MREL debt held until renegotiation in late 2023 were designated as hedge items in fair value hedge relationships to manage our exposure to interest rate risk. Following the renegotiation of our debt in November 2023, these hedge relationships were de-designated. We entered into equal and opposite interest rate swaps with a notional of £600 million to fully offset the interest rate swaps used to hedge the old MREL and Tier 2 debt securities. Cash flows are offset at a central clearing party and both set of swaps will mature at the same time. Further details are included in note 33. Master netting arrangement and collateral We either receive or provide collateral related to our hedging arrangements. As at 31st December 2024, we provided collateral of £1 million (2023: received £11.4 million) which is reflected in note 17. Notes to the consolidated financial statements continued 184 Metro Bank Holdings PLC Annual Report and Accounts 2024 21. Derivatives continued Summary of hedging instruments in designated hedge relationships The amounts relating to items designated as hedging instruments in fair value hedge relationships to manage our exposure to interest rates are: 31 December 2024 31 December 2023 Notional contract amount £’million Carrying amount Notional contract amount £’million Carrying amount Asset £’million Liability £’million Asset £’million Liability £’million Interest rate swaps 1,253 16 – 1,205 36 – Total derivatives designated as fair value hedges 1,253 16 – 1,205 36 – Summary of hedged items in designated hedge relationships The items designated as hedged items in fair value hedge relationships to manage our exposure to interest rates are: 31 December 2024 31 December 2023 Carrying amount Accumulated amount of fair value hedge adjustments included in the carrying amount of the hedged item Carrying amount Accumulated amount of fair value hedge adjustments included in the carrying amount of the hedged item Assets £’million Liabilities £’million £’million Assets £’million Liabilities £’million £’million Fixed rate debt issuance2 – (675) (4) – (694) (24) Fixed rate investment securities at FVOCI3 293 – (8) 238 – (7) Fixed rate investment securities at amortised cost4 271 – – 271 – 1 Fixed rate loans1 1 – – 3 – – Total hedges designated as fair value hedges 565 (675) (12) 512 (694) (30) 1. Hedged item and the cumulative fair value changes are recorded in loans and advances to customers. 2. Hedged item and the cumulative fair value changes are recorded in debt securities in issue (see note 20). 3. Hedged item and the cumulative fair value changes are recorded in investment securities held at FVOCI. 4. Hedged item and the cumulative fair value changes are recorded in investment securities held at amortised cost. Summary of ineffectiveness from designated hedge relationships Total hedge ineffectiveness recognised in profit or loss for the designated fair value hedge relationships is a loss of £2.0 million (2023: gain of £5.6 million). Notes to the consolidated financial statements continued 185 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 22. Leases Accounting policy At the inception of a contract we assess whether the contract contains a lease. At the commencement of a lease we recognise a lease liability and right-of-use asset (see note 14 for further details). The lease liability is initially measured as the present value of the future lease payments discounted at the rate implicit in the lease (where available) or our incremental cost of borrowing. Generally we use our deemed incremental cost of borrowing as the discount rate. Following initial recognition, the lease liability is measured using the effective interest method. Where we are reasonably certain to exercise a break in the lease, only the lease payments up until the date of the break are included. We subsequently remeasure the lease liability when there is a change to an index or rate used or when there is a change in expectation that we will exercise a purchase option or break clause or if we extend the lease. When such an adjustment is made to the lease liability a corresponding adjustment is made to the right-of-use asset. Irrecoverable VAT on lease payments is excluded from the lease liability and is taken to the income statement over the period which it is due. This is included within note 6, General operating expenses, under ‘occupancy expense’. We have elected not to recognise a lease liability and right-of-use assets for any leases that have a term of less than 12 months, or are for an asset which is deemed to be of low value (item is worth less than £5,000). For these leases, the lease payments are recognised as an expense in the income statement on a straight-line basis over the life of the lease. All of our leases within the scope of IFRS 16 (other than those of low value) relate to our stores and head office properties. Lease liabilities 2024 £’million 2023 £’million 1 January 234 248 Additions and modifications 1 – Disposals (20) (4) Lease payments made (22) (23) Interest on lease liabilities 12 13 31 December 205 234 Current 19 22 Non-current 186 212 Right-of-use assets All of our disclosures relating to right-of-use assets, including our accounting policy, can be found in note 14. Disposals The disposals during the year relate to two stores (2023: one store) where we purchased the freehold during the year. Following the purchase, both the lease liabilities and right-of-use assets relating to the stores were derecognised. Additionally, we derecognised one of the leases relating to three stores we closed during 2024 following the surrendering of this lease back to the landlord. Minimum lease payments Future undiscounted minimum payments under lease liabilities, exclusive of VAT, as at 31 December are as follows: 31 December 2024 £’million 31 December 2023 £’million Within one year 20 22 Due in one to five years 74 83 Due in more than five years 101 145 Total 195 250 Low value and short leases During the year ended 31 December 2024, £0.04 million (2023: £0.3 million) was recognised in the income statement with respect to assets of low value or a lease of less than 12 months. Notes to the consolidated financial statements continued 186 Metro Bank Holdings PLC Annual Report and Accounts 2024 22. Leases continued Future income due under non-cancellable property leases We lease out surplus space in some of our properties. The table below sets out the cash payments expected over the remaining non-cancellable term of each lease, exclusive of VAT. Receivable 31 December 2024 £’million 31 December 2023 £’million Within one year 1 1 Due in one to five years 2 3 Due in more than five years 3 3 Total 6 7 Finance lease receivables Through our SME Asset Finance Limited and SME Invoice Finance Limited businesses we lease a variety of assets to third parties, which typically consist of plant, machinery and vehicles. These rentals typically cover the assets’ useful economic life and as such any residual value is minimal. Amounts receivable are classified as loans and advances to customers and are categorised within our SME Asset Finance Limited and SME Invoice Finance Limited businesses lending per the breakdown provided in note 12. 31 December 2024 31 December 2023 Total future minimum payments £’million Unearned finance income £’million Present value £’million Total future minimum payments £’million Unearned finance income £’million Present value £’million Within one year 6 (1) 5 6 (1) 5 Due in one to five years 11 (1) 10 10 (1) 9 Due in more than five years – – – – – – Total 17 (2) 15 16 (2) 14 23. Deferred grants Accounting policy Grants are recognised where there is reasonable assurance that we will both receive the grant and will be able to comply with all the attached conditions. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to the purchase of an asset, it is recognised directly against the cost of the asset. 2024 £’million 2023 £’million 1 January 16 17 Released to the income statement (3) (1) 31 December 13 16 Our only deferred grant relates to amounts awarded in relation to the Capability and Innovation Fund which formed part of the RBS alternative remedies programme. The programme was aimed to increase competition in the UK business banking marketplace. Notes to the consolidated financial statements continued 187 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 24. Provisions Accounting policy We recognise provisions when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive obligation that has arisen as a result of past events and for which a reliable estimate can be made. The provision is measured at its current present value. Provision Description Customer remediation We are committed to doing the right thing but occasionally we identify issues that have caused detriment as a result of our actions. Where we have to refund costs to customers we provide for this at the point the obligation arises. The amounts recognised include any associated interest due. Dilapidations Dilapidations provisions are recognised in regard to certain properties we lease. The majority of our stores and offices have an automatic right to renewal at the end of the lease under the provisions of the Landlord and Tenant Act 1954. Where this is the case we do not provide for restorations on these sites since we have no intention of vacating at the end of the lease term. For sites that are outside the Landlord and Tenant Act 1954, or sites within the Landlord and Tenant Act 1954 where we think there is a chance we will vacate a site at the end of its lease, a provision is made for dilapidations. The provision is made in line with the underlying obligations contained within the lease. Legal and regulatory Provisions are made relating to the outcome of legal cases and regulatory investigations based on our best estimate of settlement following consultation with our lawyers and advisors. The inclusion of a provision does not constitute any admission of wrongdoing or legal liability. Details of individual cases are provided where these are material to our financial statements and disclosure would not be prejudicial to the outcome of the case. Onerous contracts Onerous contract provisions are recognised when the unavoidable costs of meeting the obligations under the contract exceed the economic benefits we expect to be received under it. The provision is recognised as the net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. Restructuring Restructuring provisions are recognised at the point we have developed a detailed formal plan and we have raised a valid expectation that it will be implemented. This is typically at the point the plan is announced to affected colleagues. Other provisions Other provisions consist of other sundry amounts that are provided for in the ordinary course of our business. 2024 Restructuring £’million Customer remediation £’million Dilapidations £’million Onerous contracts £’million Legal and regulatory £’million Other provisions £’million Total £’million 1 January 2024 15 3 1 2 – 2 23 Additions 8 – – 3 – – 11 Released (1) (2) – – – – (3) Utilised (20) – – – – – (20) 31 December 2024 2 1 1 5 – 2 11 2023 Customer remediation £’million Dilapidations £’million Legal and regulatory £’million Onerous contracts £’million Restructuring £’million Other provisions £’million Total £’million 1 January 2023 1 1 – 2 – 3 7 Additions 2 – – – 15 – 17 Released – – – – – (1) (1) Utilised – – – – – – – 31 December 2023 3 1 – 2 15 2 23 No provision has been recognised in relation to any of the contingent liabilities set out in note 32. All additions for both the current and prior year have been recognised in the income statement, with the exception of the £2 million provision for dilapidations in 2021 and a further £0.3 million provision for dilapidations in 2024. This was recognised as an addition to the right-of-use assets (see note 14). Dilapidations The amounts provided in respect of dilapidations are calculated based on assessments by an independent qualified valuer. They represent the best estimate of the present value to restore the site to the condition required under the lease. As the date restoration is required may be up to 25 years in the future, there is uncertainty in this estimation. Additionally, for sites that are outside the act, should we be successful in renewing the lease at the end of its term, it is possible that the provision recognised may not be utilised. Onerous contract Onerous contracts primarily relate to the non-rental costs of fulfilling property contracts from which we will no longer benefit, including closed stores and head office space. The provision is determined with reference to the occupancy costs from the date of closure through to the next lease break. Rental costs on these sites from which we will receive no future economic benefits are represented by an impairment to the right of use asset. The which have either been surrendered back to the landlord or fully sublet for the remainder of the lease term. Notes to the consolidated financial statements continued 188 Metro Bank Holdings PLC Annual Report and Accounts 2024 25. Other liabilities 31 December 2024 £’million 31 December 2023 £’million Trade creditors 1 1 Taxation and social security costs 8 8 Accruals1 107 146 Deferred income 24 37 Other liabilities 105 75 Total other liabilities 245 267 Current portion 211 253 Non-current portion 34 14 1. Includes accrued interest payable. 26. Called-up share capital Accounting policy On issue of new shares, incremental directly attributable costs are shown in equity as a deduction from the proceeds. As at 31 December 2024, we had 673.0 million ordinary shares of 0.0001p (31 December 2023: 672.7 million) authorised and in issue. Called-up ordinary share capital, issued and fully paid The called-up share capital reserve is used to record our nominal share capital. At 31 December 2024, our called-up share capital was £672.98 (31 December 2023: £672.68). 2024 £’million 2023 £’million 1 January – – Bonus issuance – 965 Capital reduction – (965) 31 December – – Share premium The share premium reserve is used to record the excess consideration of any shares we have issued over the nominal share value. 2024 £’million 2023 £’million 1 January 144 1,964 Cancellation of Metro Bank PLC share premium – (1,964) Share issuance – 150 Cost of share issuance – (6) 31 December 144 144 Redeemable preference shares As at 31 December 2024, in addition to the share capital set out above, Metro Bank Holdings PLC has £50,000 of redeemable preference shares which were issued to Robert Sharpe (Chair) and Daniel Frumkin (Chief Executive Officer) upon the initial incorporation of the legal entity on 29 September 2022. As at 31 December 2024, these shares have not yet been redeemed. Notes to the consolidated financial statements continued 189 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 28. Other reserves Merger reserve 2024 £’million 2023 £’million 1 January – – Issuance of Metro Bank Holdings PLC share capital – 965 Bonus issuance – (965) 31 December – – Share option reserve The share option reserve is used to record movements in relation to share options awarded under our Deferred Variable Reward and LTIP. 2024 £’million 2023 £’million 1 January 23 20 Equity-settled share-based payment charges (note 7) 2 3 Transfer of b/f share option reserve (1) – 31 December 24 23 Fair value though other comprehensive income reserve The FVOCI reserve is used to record changes in the fair value of investment securities designated at FVOCI. When investment securities held at FVOCI are sold, any accumulated gains or losses are transferred to the income statement. 2024 £’million 2023 £’million 1 January (11) (13) Changes in fair value 5 3 Deferred tax movements (1) (1) 31 December (7) (11) Treasury shares We have a small number of shares held in treasury relating to awards originally granted to key members of management in 2016 in recognition of their significant contribution to the successful listing on the London Stock Exchange. The final tranche of these awards vested in April 2021 and the remaining balance represents awards that did not vest owing to the original conditions of the grant not being fulfilled. These are held by an employee benefit trust, which is consolidated within the Bank’s financial statements. The balance on the reserve is less than £1 million (31 December 2023: less than £1 million) and therefore has not been separately disclosed as a component of reserves due to its immaterial size. 26. Called-up share capital continued Insertion of Metro Bank Holdings Plc As set out in note 1, on 19th May 2023, Metro Bank Holdings PLC became the listed entity and new holding company of Metro Bank PLC. As part of the insertion of Metro Bank Holdings PLC, the existing listed share capital and share premium of Metro Bank PLC was cancelled and the share capital and share premium amounts transferred to retained earnings. Metro Bank PLC subsequently issued the same number of new unlisted 0.0001p ordinary shares from retained earnings to Metro Bank Holdings PLC. Each existing holder of Metro Bank PLC share was issued with an equivalent number of new shares in Metro Bank Holdings PLC, with the nominal value of 0.0001p, as part of a share for share exchange. The difference between the new nominal share capital in Metro Bank Holdings PLC and the net assets of Metro Bank PLC was recognised in a merger reserve. This merger reserve was capitalised through the allotment of 964,505,616 million special shares of 0.0001p each, which were then subsequently reduced to provide the Metro Bank Holdings PLC with distributable reserves. In November 2023, we issued 500.0 million of ordinary shares for consideration of £150 million. Associated costs of £6 million have been offset against the amount raised. 27. Retained earnings Retained earnings records our cumulative earnings since our formation, including the accumulated earnings of our subsidiaries since they were acquired. 2024 £’million 2023 £’million 1 January 978 (1,015) Profit for the year 43 29 Cancellation of Metro Bank PLC share capital and share premium – 1,964 Issuance of Metro Bank Holdings PLC share capital – 965 Capital reduction of Metro Bank Holdings PLC share capital – (965) Transfer of b/f share option reserve 1 – 31 December 1,022 978 No dividends were paid or declared during the year (2023: none). Notes to the consolidated financial statements continued 190 Metro Bank Holdings PLC Annual Report and Accounts 2024 29. Share-based payments Accounting policy The grant date fair value of options awarded to colleagues is recognised as an expense over the period in which colleagues become unconditionally entitled to the options. The expense (representing the value of the services received by us) is measured by reference to the fair value of the awards granted on the date of the grant. The cost of the colleague services received in respect of the awards granted is recognised in the consolidated income statement over the period that the services are received, which is the vesting period. Graded vesting is applied where relevant. Vesting conditions are limited to service and performance conditions. For performance-based schemes, the relevant performance measures are projected to the end of the performance period in order to determine the number of options expected to vest. This estimate of the performance measures is used to determine the option fair value, discounted to present value. The Group revises the number of options that are expected to vest, including an estimate of lapses at each reporting date based on forecast performance measures. The impact of the revision to original estimates, if any, is recognised in the income statement, with a corresponding adjustment to equity. The fair value of colleague awards plans is calculated at the grant date using Black-Scholes and Monte Carlo models. The resulting cost is charged to the income statement over the vesting period. The value of the charge is adjusted to reflect expected and actual levels of vesting. We provide share award schemes to colleagues as part of their remuneration packages, and we operate a number of share-based compensation schemes, namely the DVRP and LTIP. The granting of awards is designed to provide incentives to colleagues to deliver long-term returns. No individual has a contractual right to participate in the plans or to receive any guaranteed benefits and the granting of awards remains at the discretion of the People and Remuneration Committee. Standard share options are granted for no consideration, are not pensionable and carry no voting rights. Long Term Incentive Plan The LTIP is the primary long-term incentive scheme for the members of our ExCo. It was approved by shareholders at the 2021 AGM. Under the plan, annual awards, based on a percentage of salary, may be offered. The extent to which an award vests is measured over a three-year period (four years for the initial awards granted in 2021) against financial targets, which consist of return on tangible equity and relative total shareholder return, as well as continued employment within the Group. Deferred Variable Reward Plan The DVRP was first introduced in 2010 and the latest plan was approved by shareholders at the 2021 AGM. Although originally designed for all colleagues, the plan is now operated for senior managers, primarily consisting of members of the our ExCo and other Material Risk Takers. Under the current rules participants are required to defer a proportion of any bonus paid into nominal price awards, a proportion of which vest immediately and the remainder of which vest over seven years. There are no further performance conditions on these shares, other than continued employment. All awards under the DVRP are subject to a one-year holding period; once exercised and all awards have a life of 10 years from the date of grant. More information in relation to both the DVRP and LTIP is available within the Remuneration Report. Awards outstanding The table below summarises the movements in the number of options outstanding and their weighted average exercise price: 2024 2023 Number of options ‘000 Weighted average exercise price £ Number of options ‘000 Weighted average exercise price £ Outstanding at 1 January 16,235 5.24 13,326 6.61 Granted 613 0.00 3,429 0.001 Exercised (559) 0.00 (259) 0.03 Lapsed (1,278) 7.54 (261) 10.46 Outstanding at 31 December 15,011 5.03 16,235 5.26 Exercisable at 31 December 7,608 9.92 7,931 10.54 1. Nominal price awards with exercise price of 0.0001p. The average share price during 2024 was 52p (2023: 94p). For share options exercised during the financial year, the weighted average share price at the date of exercise was 67p (2023: 118p). All our options are equity settled and we have no legal or constructive obligation to repurchase the shares or settle the options in cash. Exercises of awards granted are satisfied via the issuance of new shares. Total share-based compensation charges totalled £2.0 million in the year ended 31 December 2024 (2023: £3.2 million). Notes to the consolidated financial statements continued 191 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 29. Share-based payments continued Fair value of options granted The number of options outstanding at year end was as follows: 2024 2023 Exercise price Number of options ‘000 Weighted average remaining contractual life years Number of options ‘000 Weighted average remaining contractual life years £0.001 9,174 7.7 10,255 8.7 £0.002 570 9.6 – – £0.93 1,972 5.3 2,011 6.3 £7.94 651 4.2 654 5.2 £12.00 – 0.0 – 0.0 £13.00 – 0.0 60 0.2 £13.50 – 0.0 616 0.8 £14.00 194 n/a 194 n/a £16.00 615 n/a 611 n/a £20.00 445 1.2 444 2.2 £32.73 633 2.2 633 3.2 £35.36 757 3.2 757 4.2 Total 15,011 6.2 16,235 7.3 1. Nominal price awards with exercise price of 0.0001p. 2. Nominal price awards with exercise price of 0.001p. The total fair value of options granted in 2024 was £0.4 million (2023: £3.4 million), based on the following assumptions: 2024 awards Risk-free interest rate 4.19% to 4.77% Expected life 1 to 7 years Volatility 176% Expected dividend yield nil Share price at grant date £0.31 Exercise price £0.00 Volatility has been estimated by taking our share price volatility since we listed in 2016. An assumption is also made in respect of how many shares will lapse due to the vesting criteria not being met. For the awards granted post 2023, as these were only made to members of the ExCo and other Material Risk Takers, the lapse assumption has been set at 0%. The fair value charges recognised in the income statement for these scheme are adjusted annually to reflect actual lapses. For all other schemes the lapse assumption is updated annually. Notes to the consolidated financial statements continued 192 Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses Accounting policy We assess on a forward-looking basis the ECL associated with the assets carried at amortised cost and FVOCI and recognise a loss allowance for such losses at each reporting date. Impairment provisions are driven by changes in the credit risk of loans and securities, with a provision for lifetime ECL recognised where the risk of default of an instrument has increased significantly. Risk of default and ECL must incorporate forward-looking and macroeconomic information. Loans and advances Impairment models have been developed for our retail and commercial loan portfolios, with three core models: revolving products; fixed term loans; and mortgages. Expected credit losses are calculated for drawn loans, and for committed lending. The same broad calculation approach is applied for each core model. ECL are calculated by multiplying three main components, being the Probability of Default (PD), Loss Given Default (LGD) and the Exposure at Default (EAD), discounted at the original effective interest rate. Key model inputs, judgements and estimates include: • consideration of when a SICR occurs • PD, LGD and EAD as well as their modelled impact • macroeconomic scenarios and weightings applied. Significant increase in credit risk IFRS 9 requires a higher level of ECL to be recognised for underperforming loans. This is considered based on a staging approach: Stage Description ECL recognised Stage 1 Financial assets that have had no significant increase in credit risk since initial recognition or that have low credit risk (high quality investment securities only) at the reporting date. 12-month ECL Total losses expected on defaults which may occur within the next 12 months. Losses are adjusted for probability-weighted macroeconomic scenarios. Stage 2 Financial assets that have had a significant increase in credit risk since initial recognition but that do not have objective evidence of impairment. Lifetime ECL Losses expected on defaults which may occur at any point in a loan’s lifetime. Losses are adjusted for probability-weighted macroeconomic scenarios. Stage 3 Financial assets that are credit impaired at the reporting date. A financial asset is credit impaired when it has met the definition of default. We define default to have occurred when a loan is greater than 90 days past due or where the borrower is considered unlikely to pay. Lifetime ECL Losses expected on defaults which may occur at any point in a loan’s lifetime. Losses are adjusted for probability-weighted macroeconomic scenarios. Interest income is calculated on the carrying amount of the loan net of credit allowance. POCI Financial assets that have been purchased and had objective evidence of being non- performing or credit impaired at the point of purchase. Lifetime ECL At initial recognition, POCI assets do not carry an impairment allowance. Lifetime ECL are incorporated into the calculation of the asset’s effective interest rate. Subsequent changes to the estimate of lifetime ECL are recognised as a loss allowance. Notes to the consolidated financial statements continued 193 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Accounting policy continued A SICR may be identified in a number of ways: • Quantitative criteria — where the numerically calculated PD on a loan has increased significantly since initial recognition. This is assessed using detailed models which assess whether the lifetime PD at observation is greater than the lifetime PD at origination by a portfolio specific threshold. Given the different nature of the products and the dissimilar level of lifetime PDs at origination, we implement different thresholds by sub-products within each portfolio (term loans, revolving loan facilities and mortgages). The threshold is set at three times the median PD of the portfolio at origination. • Qualitative criteria — instruments that are 30 days past due or more are allocated to Stage 2, regardless of the results of the quantitative analysis. In addition, instruments classified on the Early Warning List as higher risk are allocated to Stage 2, regardless of the results of the quantitative analysis. A loan will be considered to be ‘non-performing’ or ‘credit impaired’ when it meets our definition of default — that is to say, the loan is 90 days past due, or the borrower is considered unlikely to pay without realisation of collateral. Unlikeliness to pay is assessed through the presence of triggers including the loan being in repossession, the customer having been declared bankrupt, or evidence of financial distress leading to forbearance. A loan may also be considered to be non-performing when it is subject to forbearance measures, consisting of concessions in relation to either: • a modification of the previous terms and conditions of the loan which the borrower is not considered able to comply with • a total or partial refinancing of a troubled debt contract that would not have been granted had the borrower not been in financial difficulties. It may not be possible to identify a single discrete event which defines an asset as ‘non-performing’ or ‘credit impaired’. Instead, the combined effect of several events may cause financial assets to become credit impaired. Where an asset which has been classified as Stage 3 is showing improving trends and is no longer considered non-performing or credit impaired, a probation period of at least three consecutive months during which the instrument should meet the criteria for exiting default must elapse before it is transferred to Stage 2. Probability of default PD represents the likelihood of a borrower defaulting on its financial obligation either over the next 12 months (for Stage 1 accounts), or over the remaining lifetime of the loan (for Stage 2 and 3 accounts). A PD is calculated for all loans based on historical data and incorporates: • credit quality scores • life cycle trends depending on a loan’s vintage • factors indicating the quality of the vintage • characteristics of the current and future economic environment. Notes to the consolidated financial statements continued 194 Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Accounting policy continued Loss given default LGD represents our expectation of the extent of a loss on a defaulted exposure and is expressed as a percentage considering expected recoveries on defaulted accounts. LGD rates have been modelled considering a range of inputs, including: • value of collateral on secured portfolios — a key driver of the expected recovery in the event of default • expected haircut applied to the collateral value to reflect a forced sale discount • price index forecasts applied to project collateral values into the future • stress factors based on macroeconomic scenarios. Exposure at default This is the amount that we expect to be owed at the point of default. This is subject to judgement since a balance will not necessarily remain static between the balance sheet date and the point of expected default. For example: • interest should be accrued • repayments may be received • for a revolving product, further drawings may be taken between the current point in time and the point of default • estimations of these factors will be incorporated into our estimate of EAD. Retail PD, LGD and EAD are calculated and applied at an individual account level for secured lending. For unsecured lending, PD and EAD are calculated and applied at an individual account level, whilst LGD is assessed at a portfolio level and applied to accounts on an individual basis. Commercial PD and LGD for secured lending are calculated at a counterparty level, then applied at an account level. For commercial unsecured lending, LGD is assessed at a portfolio level and applied to accounts on an individual basis. Commercial EAD is calculated and applied at account level. Macroeconomic scenarios The ECL recognised in the financial statements reflects the effect on ECL of a range of possible outcomes, calculated on a probability-weighted basis, based on a number of economic scenarios and including management overlays where required. These scenarios are representative of our view of forecast economic conditions, sufficient to calculate unbiased ECL, and are designed to capture material ‘non-linearities’ (i.e. where the increase in credit losses if conditions deteriorate exceeds the decrease in credit losses if conditions improve). In the normal course of business, we use four scenarios. These represent a ‘most likely outcome’, the ‘Baseline’ scenario, and three, less likely, ‘Outer’ scenarios, referred to as an ‘Upside’, a ‘Downside’ and a ‘Severe Downside’ scenario respectively. The Baseline scenario captures the most likely economic future; the Downside and Severe Downside scenarios reflect adverse economic conditions; and the Upside scenario presents more favourable economic conditions. Notes to the consolidated financial statements continued 195 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Accounting policy continued Key scenario assumptions are set using data sourced from independent external economists. This helps ensure that the IFRS 9 scenarios are unbiased and maximise the use of independent information. The following assumptions, considered to be the key drivers of ECL, have been used for the scenarios applied as at 31 December 2024 and 31 December 2023: • UK interest rates (Bank of England base rate and five-year mortgage rate) • UK unemployment rates • UK HPI changes, year on year • UK GDP changes, year on year • UK commercial real estate index, year on year. Macroeconomic scenarios impact the ECL calculation through varying PDs and LGDs. We use UK HPI to index mortgage collateral which has a direct impact on LGDs. Other metrics are considered to have a direct impact on PDs and were selected following a search and data calibration exercise of possible drivers. A list of around fifteen potential drivers were initially considered, representing drivers which capture trends in the economy at large, and may indicate economic trends which will impact UK borrowers. The list included variables which impact economic output, interest rates, inflation, share prices, borrower income and the UK housing market. An algorithm was then used to choose the subset of drivers which had the greatest significance and predictive fit to our data. Each scenario was determined by flexing the Baseline scenario, taking into account a number of factors in the global and UK economy such as commodity prices, global interest rates, UK investment spend and exchange rates, as well as the possible impact of recessionary conditions or financial shocks. A simulation process was designed to determine the weighting to apply to each scenario based on its severity and the range of possible scenarios for which that scenario was representative. A summary of each scenario and weighting used at 31 December 2024 is as follows: • Baseline scenario: Reflects the projection of the median, or ‘50%’ scenario, meaning that in the assessment there is an equal probability that the economy might perform better or worse than the baseline forecast • Upside scenario: This above-baseline scenario is designed so there is a 10% probability the economy will perform better than in this scenario, and a 90% probability it will perform worse • Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 90% probability the economy will perform better, and a 10% probability it will perform worse • Severe Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 96% probability the economy will perform better, and a 4% probability it will perform worse. These assumptions are considered sufficient to capture any material non-linearities. The weightings applied to each scenario at 31 December 2024 were Baseline – 50%, Upside – 20%, Downside – 25% and Severe Downside scenario – 5% (31 December 2023: Baseline – 50%, Upside – 20%, Downside – 25% and Severe Downside scenario – 5%). Notes to the consolidated financial statements continued 196 Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Accounting policy continued Economic variable assumptions The year-end assumptions used for the ECL estimate as at 31 December 2024 and 31 December 2023 are as follows: 31 December 2024 31 December 2023 2025 2026 2027 2028 2024 2025 2026 2027 Interest rates (%) – five-year mortgage rate Baseline 4.5% 4.2% 3.9% 4.0% 5.1% 4.7% 4.3% 4.2% Upside 4.7% 4.3% 4.0% 4.0% 5.3% 4.7% 4.3% 4.2% Downside 3.5% 2.4% 2.4% 3.1% 3.7% 2.7% 2.6% 2.6% Severe downside 2.8% 2.1% 2.0% 2.4% 3.3% 2.2% 2.2% 2.2% UK unemployment (%) Baseline 4.4% 4.5% 4.6% 4.7% 4.6% 4.7% 4.7% 4.8% Upside 3.8% 3.6% 3.8% 4.1% 4.1% 3.8% 3.9% 4.2% Downside 6.3% 7.2% 7.3% 6.9% 6.5% 7.4% 7.4% 7.0% Severe downside 7.5% 8.3% 8.2% 8.0% 7.7% 8.5% 8.4% 8.1% UK HPI – % change year-on-year Baseline 2.2% 3.9% 2.6% 1.5% (6.2%) 3.1% 4.7% 2.6% Upside 16.6% 7.0% 0.1% (2.6%) 7.0% 6.3% 2.1% (1.5%) Downside (9.0%) (5.6%) 1.9% 4.2% (16.5%) (6.3%) 4.0% 5.4% Severe downside (15.2%) (9.6%) 2.3% 2.9% (22.2%) (10.3%) 4.4% 4.1% UK GDP – % change year-on-year Baseline 2.1% 1.2% 2.1% 1.4% 0.4% 1.0% 1.3% 1.4% Upside 5.6% 1.4% 2.0% 1.5% 3.9% 1.2% 1.3% 1.4% Downside (3.5%) 1.5% 3.3% 1.4% (5.6%) 1.3% 2.6% 1.4% Severe downside (4.6%) 0.1% 4.6% 2.3% (7.1%) (0.2%) 4.2% 2.4% UK commercial real estate index, year-on-year – % change Baseline (0.9%) 0.4% (0.3%) (1.3%) (4.2%) 0.8% 1.7% (0.4%) Upside 14.4% 2.3% (3.3%) (5.2%) 10.1% 3.3% (1.3%) (4.3%) Downside (16.0%) (5.6%) 0.8% 2.0% (18.7%) (5.3%) 3.0% 3.4% Severe downside (25.1%) (8.5%) 2.6% 1.2% (26.9%) (7.4%) 4.9% 2.6% BoE Interest Rate (%) Baseline 4.1% 2.8% 2.5% 2.5% 4.6% 2.7% 2.3% 2.3% Upside 4.3% 3.0% 2.6% 2.5% 4.8% 2.7% 2.3% 2.3% Downside 2.7% 1.1% 1.4% 1.7% 3.2% 1.0% 1.2% 1.5% Severe downside 2.1% 0.8% 0.8% 0.9% 2.6% 0.7% 0.5% 0.7% Following the initial four-year projection period, the Upside, Downside and Severe Downside scenarios converge to the Baseline scenario. The rate of convergence varies based on the macroeconomic factor, but at a minimum convergence takes place three years from the initial four-year projection period. We recognise that applying the above scenarios will not always be sufficient to determine an appropriate ECL in all economic environments. The scenarios applied comprise our best estimate of economic impacts on the ECL, and the actual outcome may be significantly different. Investment securities and other financial assets Impairment provisions have been calculated based on our best estimate of ECL on other assets classified and measured at amortised cost and fair value through other comprehensive income. These include investment securities, cash held at banks and other financial assets. These impairment provisions are not material. Notes to the consolidated financial statements continued 197 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Critical accounting judgement Measurement of the expected credit loss allowance The measurement of ECL is complex and involves the use of significant judgements. We consider that the following represent key judgements in respect of the measurement of the ECL. Significant increase in credit risk IFRS 9 requires a higher level of ECL to be recognised for under-performing loans as a lifetime ECL is recognised compared to a 12-month ECL for performing loans. This is considered based on a staging approach. Financial assets that have had no SICR since initial recognition, or that have low credit risk at the reporting date, are considered to be performing loans and are classified as ‘Stage 1’. Losses are calculated based on our expectation of defaults which may occur within the next 12 months. Assets which are considered to have experienced a SICR since initial recognition, but that do not have objective evidence of impairment, are classified as ‘Stage 2’. Losses are calculated based on defaults which may occur at any point in the asset’s lifetime. Judgement is required to determine when a SICR has occurred. An assessment of whether credit risk has increased significantly since initial recognition, resulting in transfer to Stage 2, is performed at each reporting period by considering the change in the PD expected over the remaining life of the financial instrument. The assessment explicitly or implicitly compares the PD occurring at the reporting date compared to that at initial recognition, taking into account reasonable and supportable information, including information about past events, current conditions and future economic conditions. Use of Post Model Adjustments and Overlays We have applied expert judgement to the measurement of the ECL in the form of Post Model Adjustments (PMAs) and Management Overlays (MOs). Post Model Adjustments PMAs refer to increases/decreases in ECL to address known model limitations, either in model methodology or model inputs. These rely on analysis of model inputs and parameters to determine the change required to improve model accuracy. These may be applied at an aggregated level, however they will usually be applied at account level. Model Overlays MOs reflect management judgement. These rely more heavily on expert judgement and will usually be applied at an aggregated level. For example, where recent changes in market and economic conditions have not yet been captured in the macroeconomic factor inputs to models (e.g., industry – specific stress event). The appropriateness of PMAs and MOs is subject to rigorous review and challenge, including review by the Audit Committee (see page 66). ECL assessment We have applied PMAs in the assessment of ECL. PMAs supplement the models to account for where there are limitations in model methodology or data inputs and/or to mitigate downsides risks which are not fully captured through the economic scenarios. The appropriateness of PMAs has been subject to rigorous review and challenge, including review by our Model Governance Committee, Impairment Committee and Audit Committee. The level of PMAs has reduced in 2024 with the total percentage of ECL stock standing at 10% as at 31 December 2024 (31 December 2023: 12%). There are no MOs being used as at 31 December 2024. PMAs have been reassessed during the financial year to ensure an appropriate level of ECL to account for the high level of macroeconomic uncertainty, following the cost of living pressures, higher interest rates, and potential property price falls. Notes to the consolidated financial statements continued 198 Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Critical accounting judgement continued PMAs make up £18.7 million of the ECL stock as at 31 December 2024 (31 December 2023: £23.4 million) and comprise: • Macroeconomic correlation uncertainty — This PMA was raised in Q4 2024 to reflect the uncertainty risk and the potential adverse effects of significant government support that was in place during and following the Covid period and the subsequent growth in SME debt which may not be fully reflected in model outputs (31 December 2024: £11.5 million; 31 December 2023: nil). • Significant increase in credit risk (SICR) adjustment overlay — The SICR model for the RateSetter portfolio is resulting in an overstatement of Stage 2 assets and a negative PMA is in place to account for this. These overlays will be removed once the IFRS9 PD Annual Model Review is validated and implemented into production. The value of the PMA has reduced significantly during 2024 as a result of the rundown of the portfolio (31 December 2024: £2.2 million; 31 December 2023: £7.4 million). • CRE adjustment — Reflects potential downside risk in property price indices beyond the latest scenarios for the commercial property portfolios (31 December 2024: £0.7 million; 31 December 2023: £3.4 million). • Climate change impact — This adjustment was originally raised in 2021 has been revised for FY 2024 and reflects the impact of climate change on property values for the mortgage and commercial portfolios (31 December 2024: £2.8 million; 31 December 2023: £3.2 million). The slight reduction in the overlay since December 2023 is due to the updated balance movements for all portfolios across the year. • Mortgage model enhancements — A PMA reflects the new IFRS9 Mortgage PD and Staging models. This overlay will be removed once the IFRS9 PD Annual Model Reviews are validated and implemented into production (31 December 2024: £2.9 million; 31 December 2023: £4.7 million). • Commercial model enhancements — An overlay is held in anticipation of remaining model adjustments for the commercial portfolio (31 December 2024: £4.6 million; 31 December 2023: £3.5 million). The increase in the overlay over the period is to reflect the impact from the Business Overdrafts portfolio growth which utilises the IFRS9 commercial models as a proxy for ECL assessment. • Government guaranteed loans LGD adjustment — a £1.6m negative PMA was raised for December 2024 month end (31 December 2023: Nil) in anticipation of changes to the LGD model. Notes to the consolidated financial statements continued 199 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Expected credit loss expense 2024 £’million 2023 £’million Retail mortgages1 (4) (1) Consumer lending1 – 33 Commercial lending1 (4) (20) Investment securities – 1 Write-offs and other movements 15 20 Total expected credit loss expense 7 33 1. Represents the movement in ECL allowance during the year and therefore excludes write-offs which are shown separately. Investment securities All investment securities held at FVOCI are deemed to be in Stage 1. Any credit loss allowance is, however, included as part of the revaluation amount in the FVOCI reserve. At 31 December 2024, the loss allowance included within the FVOCI reserve is £0.1 million (31 December 2023: £0.1 million). All investment securities held at amortised cost are deemed to be in Stage 1. The total ECL expense recognised for these assets at 31 December 2024 is £0.6 million (31 December 2023: £0.9 million). Collateral Collateral is usually held in the form of real estate, guarantees, debentures and other loans that we can call upon in the event of the borrower defaulting. At 31 December 2024, 80% (31 December 2023: 80%) of our loans consisted of retail mortgages and commercial term loans secured on collateral, with average debt-to-value of 59% (31 December 2023: 58%) and 56% (31 December 2023: 55%) respectively. A further 4% (31 December 2023: 4%) of our lending portfolio consists of BBLS, which although they do not have any collateral are 100% guaranteed by the Government. Further details on the collateral of our loans can be found in the Risk report. Write-off policy We write off financial assets (either partially or fully) when there is no realistic expectation of receiving further payment from the customer. Indicators that there is no reasonable expectation of recovery include debt sale to a third party and ceasing enforcement activity. We may write off financial assets that are still subject to enforcement activity. Modification of financial assets We sometimes renegotiate the terms of loans provided to customers with a view to maximising recovery. The modifications have not led to any material modification gains or losses being recognised. Notes to the consolidated financial statements continued 200 Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued The following tables explain the changes in both the gross carrying amount and loss allowances of our loans and advances during the year. Gross carrying amount Loss allowance Net carrying amount £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total 1 January 2024 10,596 1,511 389 – 12,496 (63) (43) (93) – (199) 10,533 1,468 296 – 12,297 Transfers to/(from) Stage 11 385 (368) (17) – – (11) 10 1 – – 374 (358) (16) – – Transfers to/(from) Stage 2 (409) 416 (7) – – 2 (2) – – – (407) 414 (7) – – Transfers to/(from) Stage 3 (192) (100) 292 – – 4 7 (11) – – (188) (93) 281 – – Net remeasurement due to transfers2 – – – – – 9 (14) (40) – (45) 9 (14) (40) – (45) New lending3 1,716 147 1 – 1,864 (11) (3) (1) – (15) 1,705 144 – – 1,849 Repayments, additional drawdowns and interest accrued (618) (121) (33) (1) (773) – – – – – (618) (121) (33) (1) (773) Derecognitions4 (3,755) (507) (121) – (4,383) 11 11 20 – 42 (3,744) (496) (101) – (4,341) Changes to model assumptions5 – – – – – 20 5 – 1 26 20 5 – 1 26 31 December 2024 7,723 978 504 (1) 9,204 (39) (29) (124) 1 (191) 7,684 949 380 – 9,013 Off-balance sheet items Commitments and guarantees6 718 – 718 Gross carrying amount Loss allowance Net carrying amount £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total 1 January 2023 10,849 2,088 352 – 13,289 (66) (51) (70) – (187) 10,783 2,037 282 – 13,102 Transfers to/(from) Stage 11 872 (857) (15) – – (15) 15 – – – 857 (842) (15) – – Transfers to/(from) Stage 2 (581) 589 (8) – – 4 (6) 2 – – (577) 583 (6) – – Transfers to/(from) Stage 3 (170) (71) 241 – – 3 4 (7) – – (167) (67) 234 – – Net remeasurement due to transfers2 – – – – – 12 (13) (38) – (39) 12 (13) (38) – (39) New lending3 2,060 239 16 – 2,315 (18) (6) (6) – (30) 2,042 233 10 – 2,285 Repayments, additional drawdowns and interest accrued (685) (172) (40) – (897) – – – – – (685) (172) (40) – (897) Derecognitions4 (1,749) (305) (157) – (2,211) 13 10 26 – 49 (1,736) (295) (131) – (2,162) Changes to model assumptions5 – – – – – 4 4 – – 8 4 4 – – 8 31 December 2023 10,596 1,511 389 – 12,496 (63) (43) (93) – (199) 10,533 1,468 296 – 12,297 Off-balance sheet items Commitments and guarantees6 718 – 718 1. Represents stage transfers prior to any ECL remeasurements. 2. Represents the remeasurement between the 12-month and lifetime ECL due to stage transfer. In addition it includes any ECL change resulting from model assumptions and forward-looking information on these loans. 3. Represents the increase in balances resulting from loans and advances that have been newly originated, purchased or renewed as well as any ECL that has been recognised in relation to these loans during the year. 4. Represents the decrease in balances resulting from loans and advances that have been fully repaid, sold or written off. 5. Represents the change in ECL to those loans that remain within the same stage through the year. 6. Represents undrawn lending facilities. Further details can be found in note 31. Notes to the consolidated financial statements continued 201 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Retail mortgages Gross carrying amount Loss allowance Net carrying amount £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total 1 January 2024 6,887 784 146 – 7,817 (7) (6) (6) – (19) 6,880 778 140 – 7,798 Transfers to/(from) Stage 1 146 (138) (8) – – (1) 1 – – – 145 (137) (8) – – Transfers to/(from) Stage 2 (171) 173 (2) – – – – – – – (171) 173 (2) – – Transfers to/(from) Stage 3 (53) (46) 99 – – – 1 (1) – – (53) (45) 98 – – Net remeasurement due to transfers – – – – – 1 (1) (2) – (2) 1 (1) (2) – (2) New lending 728 126 – – 854 (1) (2) – – (3) 727 124 – – 851 Repayments, additional drawdowns and interest accrued (113) (12) 1 – (124) – – – – – (113) (12) 1 – (124) Derecognitions (3,066) (303) (33) – (3,402) 3 2 2 – 7 (3,063) (301) (31) – (3,395) Changes to model assumptions – – – – – 1 1 – – 2 1 1 – – 2 31 December 2024 4,358 584 203 – 5,145 (4) (4) (7) – (15) 4,354 580 196 – 5,130 Gross carrying amount Loss allowance Net carrying amount £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total 1 January 2023 6,195 1,343 111 – 7,649 (6) (11) (3) – (20) 6,189 1,332 108 – 7,629 Transfers to/(from) Stage 1 745 (737) (8) – – (6) 6 – – – 739 (731) (8) – – Transfers to/(from) Stage 2 (193) 199 (6) – – – – – – – (193) 199 (6) – – Transfers to/(from) Stage 3 (38) (29) 67 – – – – – – – (38) (29) 67 – – Net remeasurement due to transfers – – – – – 5 (2) (2) – 1 5 (2) (2) – 1 New lending 1,195 147 1 – 1,343 (1) (1) – – (2) 1,194 146 1 – 1,341 Repayments, additional drawdowns and interest accrued (177) (18) – – (195) – – – – – (177) (18) – – (195) Derecognitions (840) (121) (19) – (980) 1 1 – – 2 (839) (120) (19) – (978) Changes to model assumptions – – – – – – 1 (1) – – – 1 (1) – – 31 December 2023 6,887 784 146 – 7,817 (7) (6) (6) – (19) 6,880 778 140 – 7,798 Notes to the consolidated financial statements continued 202 Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Consumer lending Gross carrying amount Loss allowance Net carrying amount £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total 1 January 2024 906 314 77 – 1,297 (26) (16) (66) – (108) 880 298 11 – 1,189 Transfers to/(from) Stage 1 80 (79) (1) – – (3) 3 – – – 77 (76) (1) – – Transfers to/(from) Stage 2 (74) 74 – – – 1 (1) – – – (73) 73 – – – Transfers to/(from) Stage 3 (27) (14) 41 – – 1 4 (5) – – (26) (10) 36 – – Net remeasurement due to transfers – – – – – 2 (4) (25) – (27) 2 (4) (25) – (27) New lending 4 – – – 4 – – – – – 4 – – – 4 Repayments, additional drawdowns and interest accrued (226) (83) (10) (1) (320) – – – – – (226) (83) (10) (1) (320) Derecognitions (167) (59) (10) – (236) 4 2 9 – 15 (163) (57) (1) – (221) Changes to model assumptions – – – – – 9 3 (1) 1 12 9 3 (1) 1 12 31 December 2024 496 153 97 (1) 745 (12) (9) (88) 1 (108) 484 144 9 – 637 Gross carrying amount Loss allowance Net carrying amount £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total 1 January 2023 1,180 250 50 – 1,480 (21) (12) (42) – (75) 1,159 238 8 – 1,405 Transfers to/(from) Stage 1 34 (34) – – – (2) 2 – – – 32 (32) – – – Transfers to/(from) Stage 2 (182) 182 – – – 2 (2) – – – (180) 180 – – – Transfers to/(from) Stage 3 (35) (9) 44 – – 1 2 (3) – – (34) (7) 41 – – Net remeasurement due to transfers – – – – – 2 (6) (28) – (32) 2 (6) (28) – (32) New lending 311 78 7 – 396 (9) (4) (6) – (19) 302 74 1 – 377 Repayments, additional drawdowns and interest accrued (217) (111) (10) – (338) – – – – – (217) (111) (10) – (338) Derecognitions (185) (42) (14) – (241) 3 2 12 – 17 (182) (40) (2) – (224) Changes to model assumptions – – – – – (2) 2 1 – 1 (2) 2 1 – 1 31 December 2023 906 314 77 – 1,297 (26) (16) (66) – (108) 880 298 11 – 1,189 Notes to the consolidated financial statements continued 203 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Commercial lending Gross carrying amount Loss allowance Net carrying amount £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total 1 January 2024 2,803 413 166 – 3,382 (30) (21) (21) – (72) 2,773 392 145 – 3,310 Transfers to/(from) Stage 1 159 (151) (8) – – (7) 6 1 – – 152 (145) (7) – – Transfers to/(from) Stage 2 (164) 169 (5) – – 1 (1) – – – (163) 168 (5) – – Transfers to/(from) Stage 3 (112) (40) 152 – – 3 2 (5) – – (109) (38) 147 – – Net remeasurement due to transfers – – – – – 6 (9) (13) – (16) 6 (9) (13) – (16) New lending 984 21 1 – 1,006 (10) (1) (1) – (12) 974 20 – – 994 Repayments, additional drawdowns and interest accrued (279) (26) (24) – (329) – – – – – (279) (26) (24) – (329) Derecognitions (522) (145) (78) – (745) 4 7 9 – 20 (518) (138) (69) – (725) Changes to model assumptions – – – – – 10 1 1 – 12 10 1 1 – 12 31 December 2024 2,869 241 204 – 3,314 (23) (16) (29) – (68) 2,846 225 175 – 3,246 Gross carrying amount Loss allowance Net carrying amount £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total 1 January 2023 3,474 495 191 – 4,160 (39) (28) (25) – (92) 3,435 467 166 – 4,068 Transfers to/(from) Stage 1 93 (86) (7) – – (7) 7 – – – 86 (79) (7) – – Transfers to/(from) Stage 2 (206) 208 (2) – – 2 (4) 2 – – (204) 204 – – – Transfers to/(from) Stage 3 (97) (33) 130 – – 2 2 (4) – – (95) (31) 126 – – Net remeasurement due to transfers – – – – – 5 (5) (8) – (8) 5 (5) (8) – (8) New lending 554 14 8 – 576 (8) (1) – – (9) 546 13 8 – 567 Repayments, additional drawdowns and interest accrued (291) (43) (30) – (364) – – – – – (291) (43) (30) – (364) Derecognitions (724) (142) (124) – (990) 9 7 14 – 30 (715) (135) (110) – (960) Changes to model assumptions – – – – – 6 1 – – 7 6 1 – – 7 31 December 2023 2,803 413 166 – 3,382 (30) (21) (21) – (72) 2,773 392 145 – 3,310 Notes to the consolidated financial statements continued 204 Metro Bank Holdings PLC Annual Report and Accounts 2024 30. Expected credit losses continued Credit risk exposures Total lending 31 December 2024 31 December 2023 £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 Total Up to date 7,694 849 145 (1) 8,687 10,553 1,342 123 12,018 1 to 29 days past due 29 39 14 – 82 43 54 15 112 30 to 89 days past due – 90 86 – 176 – 115 43 158 90+ days past due – – 259 – 259 – – 208 208 Gross carrying amount 7,723 978 504 (1) 9,204 10,596 1,511 389 12,496 Retail mortgages 31 December 2024 31 December 2023 £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 Total Up to date 4,356 504 57 – 4,917 6,885 695 37 7,617 1 to 29 days past due 2 21 11 – 34 2 28 10 40 30 to 89 days past due – 59 21 – 80 – 61 16 77 90+ days past due – – 114 – 114 – – 83 83 Gross carrying amount 4,358 584 203 – 5,145 6,887 784 146 7,817 Consumer lending 31 December 2024 31 December 2023 £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 Total Up to date 496 141 2 (1) 638 900 297 3 1,200 1 to 29 days past due – 2 1 – 3 6 2 – 8 30 to 89 days past due – 10 5 – 15 – 15 7 22 90+ days past due – – 89 – 89 – – 67 67 Gross carrying amount 496 153 97 (1) 745 906 314 77 1,297 Commercial lending 31 December 2024 31 December 2023 £’million Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 Total Up to date 2,842 204 86 – 3,132 2,768 350 83 3,201 1 to 29 days past due 27 16 2 – 45 35 24 5 64 30 to 89 days past due – 21 60 – 81 – 39 20 59 90+ days past due – – 56 – 56 – – 58 58 Gross carrying amount 2,869 241 204 – 3,314 2,803 413 166 3,382 Notes to the consolidated financial statements continued 205 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 31. Financial commitments Accounting policy To meet the financial needs of our customers, we enter into various irrevocable commitments. These generally consist of financial guarantees, letters of credit and other undrawn commitments to lend. Even though these obligations are not recognised on the balance sheet, they do contain credit risk and an ECL is calculated and recognised for them (see note 30). When these commitments are drawn down or called upon, and meet the recognition criteria as detailed in note 12, these are recognised within our loans and advances to customers. At 31 December 2024, we had undrawn facilities granted to retail and commercial customers of £881 million (31 December 2023: £718 million). As part of our retail and commercial operations, this includes commitments of £241 million (31 December 2023: £327 million) for credit card and overdraft facilities. These commitments represent agreements to lend in the future, subject to certain conditions. Such commitments are cancellable, subject to notice requirements, and given their nature are not expected to be drawn down to the full level of exposure. 32. Contingent Liabilities As part of the normal course of business we are subject to legal, taxation and regulatory matters. The matters outlined below represent material contingent liabilities and as such at the reporting date no provision has been made for any of these cases within the financial statements. This is because, based on the facts currently known, it is not practicable to predict the outcome, if any, of these matters or reliably estimate any financial impact. Their inclusion does not constitute any admission of wrongdoing or legal liability. Magic Money Machine litigation In 2022 Arkeyo LLC, a software company based in the United States, filed a civil suit with a stated value of over £24 million against us in the English High Court alleging, among other matters, that we infringed their copyright and misappropriated their trade secrets relating to money counting machines (i.e. our Magic Money Machines). We believe Arkeyo LLC’s claims are without merit and are vigorously defending the claim. Notes to the consolidated financial statements continued 206 Metro Bank Holdings PLC Annual Report and Accounts 2024 33. Offsetting of financial assets and liabilities Accounting policy Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. 31 December 2024 31 December 2023 Effects of offsetting on the balance sheet Effects of offsetting on the balance sheet Assets Gross amount £’million Gross amounts offset in the balance sheet £’million Net amounts presented in the balance sheet £’million Gross amount £’million Gross amounts offset in the balance sheet £’million Net amounts presented in the balance sheet £’million Loans and advances to customers 9,013 – 9,013 12,297 – 12,297 Investment securities1 4,490 – 4,490 4,879 – 4,879 Derivative financial assets 23 (7) 16 67 (31) 36 Deferred tax assets 271 (31) 240 17 (17) – Other assets2 82 – 82 108 – 108 Liabilities Derivative financial liabilities 8 (7) 1 31 (31) – Repurchase agreements1 391 – 391 1,191 – 1,191 Deposits from central banks1 400 – 400 3,050 – 3,050 Deferred tax liabilities 31 (31) – 30 (17) 13 1. We have pledged £1,034 million (2023: £6,110 million) against repos, deposits from central banks and other assets as encumbered collateral which can be called upon in the event of default. 2. Includes £53 million (2023: £50 million) pledged as cash collateral. None of the cash collateral has been offset in the balance sheet. Notes to the consolidated financial statements continued 207 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 34. Fair value of financial instruments Accounting policy Determination of fair value ‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which we have access at that date. The fair value of a liability reflects its non-performance risk. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below: • Level 1 financial instruments – Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that we have access to at the measurement date. We consider markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available on the balance sheet date. • Level 2 financial instruments – Those where the inputs that are used for valuation are significant, and are derived from directly or indirectly observable market data available over the entire period of the instrument’s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices, such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs which are significant to the entire measurement, we will classify the instruments as Level 3. • Level 3 financial instruments – Those that include one or more unobservable inputs that are significant to the measurement as whole. 31 December 2024 31 December 2023 Carrying value £’million Quoted market price Level 1 £’million Using observable inputs Level 2 £’million With significant unobservable inputs Level 3 £’million Total fair value £’million Carrying value £’million Quoted market price Level 1 £’million Using observable inputs Level 2 £’million With significant unobservable inputs Level 3 £’million Total fair value £’million Assets Loans and advances to customers 9,013 – – 8,981 8,981 12,297 – – 12,156 12,156 Investment securities held at fair value through other comprehensive income 377 377 – – 377 476 476 – – 476 Investment securities held at amortised cost 4,113 2,857 1,122 – 3,979 4,403 3,143 1,072 – 4,215 Derivative financial assets 16 – 16 – 16 36 – 36 – 36 Liabilities Deposits from customers 14,458 – – 14,458 14,458 15,623 – – 15,622 15,622 Deposits from central bank 400 – – 400 400 3,050 – – 3,050 3,050 Debt securities 675 – 711 – 711 694 – 585 – 585 Derivative financial liabilities 1 – 1 – 1 – – – – – Repurchase agreements 391 – – 391 391 1,191 – – 1,191 1,191 Notes to the consolidated financial statements continued 208 Metro Bank Holdings PLC Annual Report and Accounts 2024 34. Fair value of financial instruments continued Cash and balances with other banks, trade and other receivables, trade and other payables and other assets and liabilities which meet the definition of financial instruments are not included in the tables. Their carrying amount is a reasonable approximation of fair value. Information on how fair values are calculated are explained below: Loans and advances to customers Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date, adjusted for future credit losses and prepayments, if considered material. Investment securities The fair value of investment securities is based on either observed market prices for those securities that have an active trading market (fair value Level 1 assets), or using observable inputs (in the case of fair value Level 2 assets). Financial assets held at fair value through profit and loss The financial assets at fair value through profit and loss relate to the loans and advances previously assumed by the RateSetter provision fund. They are measured at the fair value of the amounts that we expect to recover on these loans. Deposits from customers Fair values are estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities. The fair value of a deposit repayable on demand is approximated by its carrying value. Debt securities Fair values are determined using the quoted market price at the balance sheet date. Deposits from central banks/repurchase agreements Fair values are estimated using discounted cash flows, applying current rates. Fair values approximate carrying amounts as their balances are either short-dated or are on a variable rate which aligns to the current market rate. Derivative financial assets and liabilities The fair values of derivatives are obtained from discounted cash flow models as appropriate. 35. Related parties Related persons Key management personnel Our key management personnel, and persons connected with them, are considered to be related parties. Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group. The Directors and members of the ExCo are considered to be the key management personnel for disclosure purposes. Controlling shareholder Following the completion of our capital raise in November 2023, Jaime Gilinski Bacal, via Spaldy Investments Limited, a company of which he is the sole director and shareholder, became the controlling shareholder of Metro Bank Holdings PLC (see note 7 to the Company financial statements for further details). Given his control over the Group, Jaime Gilinski Bacal, Spaldy Investments Limited and persons connected to them are also considered to be related parties as at 31 December 2024. We have a relationship agreement with our controlling shareholder which may be viewed on our website (www.metrobankonline.co.uk/globalassets/documents/customer_documents/personal/relationship- agreement-metro-bank-holdings-plc-spaldy-investments-ltd-jaime-gilinski-bacal.pdf). More information on the independence of our controlling shareholder can be found on page 119. Key management compensation Total compensation cost for key management personnel for the year by category of benefit was as follows: 2024 £’million 2023 £’million Short-term benefits 5.5 5.4 Post-employment benefits 0.1 0.1 Share-based payment costs 1.1 0.9 Termination benefits 0.4 0.9 Total compensation for key management personnel 7.1 7.3 Short-term employee benefits include salary, medical insurance, bonuses and cash allowances paid to key management personnel. The share-based payment cost represents the IFRS 2 charge for the year which includes awards granted in prior years that have not yet vested. During the year as part of the organisational restructure announced, exit agreements were agreed with certain key management personnel who subsequently left the business in January 2024. Banking transactions with key management personnel We provide banking services to Directors and other key management personnel and persons connected to them. Notes to the consolidated financial statements continued 209 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Notes to the consolidated financial statements continued 35. Related parties continued Deposit transactions during the year and the balances outstanding as at 31 December 2024 and 31 December 2023 were as follows: 2024 £’million 2023 £’million Deposits held at 1 January 1.0 1.5 Deposits relating to persons and companies newly considered related parties 0.1 – Deposits relating to persons and companies no longer considered related parties (0.3) (0.5) Net amounts deposited/(withdrawn) – – Deposits held as at 31 December 0.8 1.0 Loan transactions during the year and the balances outstanding as at 31 December 2024 and 31 December 2023 were as follows: 2024 £’million 2023 £’million Loans outstanding at 1 January 2.0 2.1 Loans relating to persons and companies newly considered related parties 0.4 – Loans issued during the year 0.2 – Net repayments during the year – – Loans outstanding as at 31 December 2.6 2.1 Interest received on loans (£’000) 62 35 There were two (31 December 2023: two) loans outstanding at 31 December 2024 totalling £2.6 million (31 December 2023: £2.1 million). Both are residential mortgages secured on property; all loans were provided on our standard commercial terms. In addition to the loans detailed above, we have issued credit cards and granted overdraft facilities on current accounts to Directors and key management personnel. Credit card balances outstanding as at 31 December 2024 and 31 December 2023 were as follows: 2024 £’000 2023 £’000 Credit cards outstanding as at 31 December – 3 As with all of our lending we recognise an ECL on loans and credit card balances outstanding with key management personnel. As at 31 December 2024, the only ECL recognised on the balances above was our standard modelled ECL with no individual impairments recognised (31 December 2023: £nil). We have not written off any balances to key management personnel in either 2023 or 2024. 36. Earnings per share Basic earnings per share is calculated by dividing the profit/(loss) attributable to our ordinary equity holders by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share has been calculated by dividing the profit/(loss) attributable to our ordinary equity holders by the weighted average number of ordinary shares in issue during the year plus the weighted average number of ordinary shares that would be issued on the conversion to shares of options granted to colleagues. In the year ended 31 December 2024, 2.5 million share options were excluded from the weighted average number of shares due to these being antidilutative. 2024 2023 Profit attributable to ordinary equity holders (£’million) 42.5 29.5 Weighted average number of ordinary shares in issue (thousands) – Basic 672,784 214,297 Adjustment for share awards 2,466 6,459 Diluted 675.250 220,756 Earnings per share (pence) Basic 6.3 13.8 Diluted 6.3 13.4 There have been no transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of the completion of these financial statements which would require the restatement of loss per share. In Q4 2023, shareholders approved a £925 million capital package that included £150 million of new equity made up of 500,000 shares. The new shares increased the weighted average number of ordinary shares in issue from 214,297 thousand in 2023 to 672,784 thousand in 2024. 210 Metro Bank Holdings PLC Annual Report and Accounts 2024 Notes to the consolidated financial statements continued 37. Non-cash items The table below sets out the non-cash items included in profit/(loss) before tax. These have been adjusted for in the cash flow statements on page 164. 2024 £’million 2023 £’million Interest receivable (935) (856) Interest paid 558 444 Depreciation and amortisation 77 78 Impairment and write-offs of property, plant, equipment and intangible assets 44 5 Expected credit loss expense 7 33 Share option charge 2 3 Grant income recognised in the income statement (3) (2) Amounts provided for (net of amounts released) (8) 16 Haircut on Tier 2 debt – (100) (Loss)/gain on sale of assets (101) 3 Total adjustments for non-cash items (359) (376) 38. Post balance sheet events On 26th February 2025, the Bank confirmed entering into an agreement to sell a portfolio of approximately £584 million of unsecured personal loans. The sale of the portfolio is in line with the Bank’s strategy to reposition its balance sheet and enhance risk-adjusted returns on capital. The transaction is capital accretive and creates additional lending capacity to enable the Bank to continue its asset rotation towards higher yielding corporate, commercial and SME lending and specialist mortgages. The sale was completed on 31st March 2025. On 26th March 2025, the Bank issued £250 million 13.875 per cent fixed rate reset perpetual subordinated contingent convertible capital securities (Additional Tier 1 securities). These securities constitute direct, unsecured, unguaranteed and subordinated obligations of the Bank and rank pari passu without preference among themselves. The issuance is in line with Metro Bank’s capital management framework and strategy and is aimed at optimising the capital structure and providing further flexibility for growth. On 31st March 2025, £50,000 of redeemable preference shares associated with the original incorporation of MB Group PLC, subsequently Metro Bank Holdings PLC, were redeemed. This transaction occurred between the period end and publication date of the Annual Report and Accounts and is therefore an immaterial yet noteworthy event. 211 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Years ended 31 December Notes 2024 £’million 2023 £’million Cash and balances with other banks – 2 Financial assets held at fair value through profit and loss 2 711 585 Investment in subsidiaries 3 1,112 682 Prepayments and accrued income 15 7 Deferred tax asset 1 – Total assets 1,839 1,276 Debt securities 4 671 670 Other liabilities 43 33 Total liabilities 714 703 Share premium 5 144 144 Retained earnings 957 406 Other reserves 24 23 Total equity 1,125 573 Total equity and liabilities 1,839 1,276 1. The Company profit for the year was £550.4 million (2023: loss of £536.5 million). The accompanying notes on pages 215 to 218 form an integral part of these financial statements. The financial statements and accompanying notes were approved by the Board of Directors on 22 April 2025 and signed on its behalf by: Robert Sharpe Daniel Frumkin Chair Chief Executive Officer Company balance sheet As at 31 December 2024 212 Metro Bank Holdings PLC Annual Report and Accounts 2024 Company statement of changes in equity For the year ended 31 December 2024 Company Called-up share capital £’million Share premium £’million Retained earnings £’million FVOCI reserve £’million Share option reserve £’million Merger reserve £’million Total equity £’million Balance as at 1 January 2024 – 144 406 – 23 – 573 Profit for the year – – 550 – – – 550 Total comprehensive income – – 550 – – – 550 Equity-settled share-based payment charges – – – – 2 – 2 Transfer of share option reserve – – 1 – (1) – – Balance as at 31 December 2024 – 144 957 – 24 – 1,125 Balance as at 1 January 2023 – – – – – – – Loss for the year – – (537) – – – (537) Other comprehensive income (net of tax) relating to investment securities designated at fair value through other comprehensive income – – – – – – – Total comprehensive profit – – (537) – – – (537) Net share option movements 1 1 Transfer of share option reserve – – (22) – 22 – – Issuance of Metro Bank Holdings PLC share capital – – – – – 965 965 Bonus issuance 965 – – – – (965) – Capital reduction of Metro Bank Holdings PLC share capital (965) – 965 – – – – Shares issued – 150 – – – – 150 Cost of shares issued – (6) – – – – (6) Balance as at 31 December 2023 – 144 406 – 23 – 573 Notes 26 26 27 28 28 28 The accompanying notes on pages 215 to 218 form an integral part of these financial statements. 213 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Years ended 31 December 2024 £’million 2023 £’million Reconciliation of loss before tax to net cash flows from operating activities: Profit/(loss) before tax 549 (537) Adjustments for non-cash items Interest receivable (84) (24) Interest paid 85 25 Fair value movements (126) 88 Interest received 70 17 Interest paid (70) (16) Impairment (loss)/gain on subsidiary (428) 428 Changes in other operating assets (10) (7) Changes in other operating liabilities 12 33 Net cash (outflows)/inflows from operating activities (2) 7 Cash flows from investing activities Issuance of equity to subsidiary – (144) Issuance of debt to subsidiaries – (175) Net cash outflows from investing activities – (319) Cash flows from financing activities Share issuance – 150 Cost of share issuance – (6) Debt issuance – 175 Cost of debt issuance – (5) Net cash inflows from financing activities – 314 Net (decrease)/increase in cash and cash equivalents (2) 2 Cash and cash equivalents at start of year 2 – Cash and cash equivalents at end of year – 2 The accompanying notes on pages 215 to 218 form an integral part of these financial statements. Company cash flow statement For the year ended 31 December 2024 214 Metro Bank Holdings PLC Annual Report and Accounts 2024 Notes to the company financial statements 1. Basis of preparation and significant accounting policies 1.1 General information The separate financial statements of the Company are presented as required by the Companies Act 2006. The basis of preparation and principal accounting policies adopted are the same as those set out in within the Group’s consolidated financial statements, aside from the accounting policy in relation to share-based payments. For the Company, the cost of the awards are recognised on a straight-line basis to investment in subsidiaries (with a corresponding increase in the share-based payment reserve within equity) over the vesting period in which the employees become unconditionally entitled to the awards. Incorporation of Metro Bank Holdings PLC The Company was incorporated on 29 September 2022 as MB Group TopCo PLC with £50,000 of redeemable preference shares and £2 of ordinary shares, which were issued to Robert Sharpe (Chair) and Daniel Frumkin (Chief Executive Officer). On 12 December 2022, the Company changed its name to Metro Bank Holdings PLC. The Company remained a dormant company with no trading activities until the 19 May 2023, when it was inserted as the new ultimate holding company and listed entity of the Group. As at 31 December 2024, the redeemable shares had not yet been redeemed. The Company’s main activity consists of holding the Group’s external regulatory debt and share capital which is then downstreamed to Metro Bank PLC to meet the Bank of England’s resolution requirements. The Company adopted the predecessor value method with an investment in subsidiary of Metro Bank PLC being the book value of the balance sheet in Metro Bank PLC at the date of insertion. As part of this, the share option reserve was transferred from Metro Bank PLC to the Company at its carrying amount on the same day. 1.2 Critical accounting estimates The preparation of financial statements in conformity with IFRS requires us to make both material judgements as well as estimates which, although based on our best assessment, by definition will seldom equal the actual results. Management believes that the underlying assumptions applied at 31 December 2024 are appropriate and that these financial statements therefore present our financial position and results fairly. The areas involving a higher degree of complexity, judgement or where estimates have a significant risk of resulting in a material adjustment to the carrying amounts within the next financial year are: Area Estimates Judgements Further details Impairment of investments in subsidiaries Key assumptions used for VIU calculations n/a Note 3 2. Financial assets held at fair value through profit and loss The financial assets held at fair value through profit and loss consist solely of intercompany loans used for downstreaming regulatory debt issued by the Company to Metro Bank PLC. In line with resolution requirements, these internal agreements incorporate the Bank of England’s Statement of Policy giving the Bank of England power to write down the par value of the loans or convert the loans into equity. As such, the intercompany loans fail the ‘solely payments of principal and interest’ test under IFRS 9 and have a mandatory classification of fair value through profit and loss. Key terms of the loans are identical to the debt securities issued (see note 20 to the consolidated financial statements). The measurement of these assets is consistent with the measurement approach used to determine the fair value of the debt securities as set out in note 34 to the Group’s consolidated financial statements. 215 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Notes to the company financial statements continued 3. Investment in subsidiaries Accounting policy The Company’s only directly held subsidiary is that of Metro Bank PLC, which was recognised on 19 May 2023. The value of the subsidiary was recognised using the predecessor value method as set out in note 1. At the end of each reporting period, the investment in the subsidiary is tested for impairment when there is an indication that the investment may be impaired. An impairment is recognised when the carrying amount exceeds the recoverable amount for that investment. The recoverable amount is the higher of the investment’s fair value less costs of disposal and its VIU, in accordance with the requirements of IAS 36. The VIU is calculated by discounting management’s cash flow projections for the investment. The cash flows represent the free cash flows based on the subsidiary’s binding capital requirements. Critical accounting estimate Impairment of investment in subsidiary The review identified that the VIU exceeded the carrying amount. Consequently, the impairment in the investment in Metro Bank PLC, the Company’s only directly held subsidiary, of £428 million, recognised in FY 2023 was reversed. This increased the carrying value of the investment to £1,112 million including the net share option movements. Key assumptions used for VIU calculations The rate used to discount the cash flows is based on the cost of capital related to the investment, which is derived using a capital asset pricing model and market implied cost of equity. A pre-tax discount rate of 22.4% has been used in the VIU. In determining the discount rate, management has used judgement and applied the Group’s cost of equity, as this represents a proxy for the subsidiary’s cost of equity given it represents substantially all of the Group. A 2% increase in the discount rate would lead to a reduction in the VIU by £182m and an impairment of £133m. A 2% decrease in the discount rate would lead to an increase in the VIU by £243m. The profitability and growth rates applied are consistent with those used in the Group’s impairment assessment as set out in note 15 to the Group’s consolidated financial statements. A 10% decrease in the forecast free cash flows each year would lead to reduction in the VIU by £180m and an impairment of £131m. A 10% increase in the forecast free cash flows each year would lead to increase in the VIU by £214m. As the investment is eliminated upon consolidation within the Group’s financial statements, it has no impact on the Group’s capital position or regulatory ratios. 216 Metro Bank Holdings PLC Annual Report and Accounts 2024 Notes to the company financial statements continued 3. Investment in subsidiaries continued The Company had the following subsidiaries at 31 December 2024: Name Country of incorporation and place of business Nature of business Proportion of ordinary shares directly held by the Parent (%) Proportion of ordinary shares directly held by the Group (%) Metro Bank PLC1 UK Retail and commercial banking services 100% – SME Invoice Finance Limited1 UK Invoice financing – 100% SME Asset Finance Limited1 UK Asset financing – 100% 1. All of the Company’s subsidiaries have their registered address at One Southampton Row, London, WC1B 5HA. The proportion of the voting rights in the subsidiary undertakings held directly by the Company do not differ from the proportion of ordinary shares held. In May 2023, Metro Bank Holdings PLC was inserted as the new ultimate holding company and listed entity of the Group. In June 2023, Metro Bank PLC issued £964.6 million shares to Metro Bank Holdings PLC. Prior to this date Metro Bank PLC was both a banking entity and the ultimate parent company of the Group, but has subsequently become a 100% subsidiary of Metro Bank Holdings PLC. In November 2023, the Company issued 500.0 million ordinary shares for consideration of £150 million, with associated costs of £6 million having been offset against the amount raised. In line with the resolution requirements, Metro Bank PLC issued 500.0 million new shares for consideration of £144 million to the Company to allow the proceeds of the capital raised to be downstreamed. An impairment of £428 million was recognised at year end. Company 2024 £’million Company 2023 £’million 1 January 682 – Net book value of Metro Bank PLC on 19 May 2023 – 965 Deemed capital contribution 2 1 Capital injections into subsidiaries – 144 Reversal/(Impairment) of subsidiaries 428 (428) 31 December 1,112 682 The investment in subsidiary gain has been recognised in Total comprehensive income. Transactions between the Company and Group subsidiaries In addition to the intercompany loans used for downstreaming regulatory debt set out in note 2, Metro Bank PLC provides the Company with a small amount of operational funding. The amounts outstanding as at 31 December 2024, primarily relate to the costs of the capital raise in November 2023 which were paid by Metro Bank PLC on the Company’s behalf. As at 31 December 2024, Metro Bank PLC had £14 million of accrued interest payable to the Company on the internal debt instruments used for downstreaming the regulatory debt. The timing of interest payments on these internal instruments is aligned to the interest payment dates on the external debt securities (see note 4). 2024 £’million 2023 £’million Amounts owed by Metro Bank PLC 14 7 Amounts owed to Metro Bank PLC 29 24 The transactions above are eliminated upon consolidation within the Group’s financial statements. 217 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Notes to the company financial statements continued 4. Debt securities Details of the Company’s debt securities in issue can be found in note 20 to the Group’s consolidated financial statements. Hedge accounting is not applicable to the debt securities in issue at the Company level. 5. Called-up share capital As set out in note 1 the Company was incorporated on 29 September 2022 with £50,000 of redeemable preference shares and £2 of ordinary shares. As at 31 December 2024, the redeemable preference shares had not yet been redeemed. As at 31 December 2024, the Company had 673.0 million ordinary shares of 0.0001p authorised and in issue. Further details on the Company’s called-up share capital can be found in note 26 to the Group’s consolidated financial statements. 6. Directors and employees The Company has no employees. Metro Bank PLC provides the Company with employee services and bears the costs, associated with the Directors of the Company. These costs are not recharged to the Company. 7. Controlling party As at 31 December 2024, the controlling party of Metro Bank Holdings PLC was Jaime Gilinski Bacal, through Spaldy Investments Limited, a company registered in the British Virgin Islands and of which he is the sole director and shareholder. The registered office of Spaldy Investments Limited is at the offices of Aleman, Cordero, Galindo & Lee Trust (BVI) Limited, 3rd Floor, Yamraj Building, Market Square, P.O. Box 3175, Road Town, Tortola, British Virgin Islands. 218 Metro Bank Holdings PLC Annual Report and Accounts 2024 In this section 220 Country-by-country report 221 Independent auditors’ report to the Directors of Metro Bank Holdings PLC (on country-by-country information) 223 Other disclosures 224 Alternative performance measures 229 Abbreviations 230 Shareholder information Additional information 219 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Country-by-Country report The reporting obligations set out in the Capital Requirements Directive IV (CRD IV) have been implemented in the UK by the Capital Requirements (Country-by-Country Reporting) Regulations. The purpose of the regulations is to provide clarity on the source of the Group’s income and the locations of its operations. The Group is a credit institution for the purposes of CRD IV and is therefore within the scope of Country-by-Country Reporting. Our activities are disclosed within note 1 to the financial statements. For the purposes of Country-by-Country Reporting, the appropriate disclosures required are summarised below: UK Number of employees (average full-time equivalent) 3,455 Turnover (£’million) 405 Loss before tax (£’million) (212) Tax credit (£’million) 255 Corporation tax paid (£’million) – No public subsidies were received during the year. Basis of preparation Country Metro Bank Holdings PLC and its subsidiaries only operate within the UK and are all UK registered entities. Full-time equivalent employees FTE employees are allocated to the country in which they are primarily based for the performance of their employment duties. The figures disclosed represent the average number of FTE employee, all of which were employed in the UK. Turnover and loss before tax Turnover and loss before tax are compiled from the Metro Bank Holdings PLC consolidated financial statements for the year ended 31 December 2024, which are prepared in accordance with IFRS. Turnover represents the sum of the Group’s net interest income, net fee and commission income, net gains on sale of assets and other income. Tax credit and corporation tax paid Corporation tax paid represents the net cash taxes paid to the tax authority, HMRC, during 2024. Corporation tax paid is reported on a cash basis and will normally differ from the tax expense recorded for accounting purposes due to: • timing differences in the accrual of the tax charge • brought forward losses from previous years that were used to extinguish a portion of the Company’s taxable profits • other differences between when income and expenses are accounted for under IFRS and when they become taxable. 220 Metro Bank Holdings PLC Annual Report and Accounts 2024 Independent auditors’ report to the directors of Metro Bank Holdings PLC Report on the audit of the country-by-country information Opinion In our opinion, Metro Bank Holdings plc’s country-by-country information for the year ended 31 December 2024 has been properly prepared, in all material respects, in accordance with the requirements of the Capital Requirements (Country-by-Country Reporting) Regulations 2013. We have audited the country-by-country information for the year ended 31 December 2024 in the Country-by-Country Report. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), including ISA (UK) 800 and ISA (UK) 805, and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the country-by-country information section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the country-by-country information in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Emphasis of matter – Basis of preparation In forming our opinion on the country-by-country information, which is not modified, we draw attention to note 1 of the country-by-country information which describes the basis of preparation. The country-by- country information is prepared for the directors for the purpose of complying with the requirements of the Capital Requirements (Country-by-Country Reporting) Regulations 2013. The country-by-country information has therefore been prepared in accordance with a special purpose framework and, as a result, the country-by-country information may not be suitable for another purpose. Conclusions relating to going concern Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included: • Understanding the Directors’ going concern assessment process, including the preparation and approval of the budget. We obtained management’s Board approved forecast covering the going concern period of assessment of 15 months from the date of these financial statements. We evaluated the forecasting method adopted by the Directors in assessing going concern; • Evaluation of management’s financial and regulatory capital forecasts. We checked the mathematical accuracy of the model and evaluated the key assumptions using our understanding of the Group and external evidence where appropriate. We used our Prudential Regulatory experts to review the Bank’s risk weighted assets and forecast capital requirement assumptions. We also performed a comparison of the 2024 budget and the actual results to assess the accuracy of the budgeting process; • Evaluation of the appropriateness of management’s severe but plausible scenarios using our understanding of the group and the external environment. We considered the mitigating actions that management identified, including the reduction of costs and slowing down the origination of new loans and advances, and assessed whether these were in the control of management and possible in the going concern period of assessment; • Reviewing management’s stress testing of liquidity and evaluation of the impact on liquidity of past stress events. We substantiated the liquid resources held, and liquidity facilities available to the group, for example, with the Bank of England; • Reviewing correspondence between the Bank and its regulators and we met with the PRA during the audit and understood the PRA’s perspectives on the Bank’s risks and its capital and liquidity position; and • Assessing the adequacy of disclosures in the Going Concern statement in note 1 of the Consolidated and Company Financial Statements and within the within the Viability statement and going concern section on pages 46 and 47 and found these appropriately reflect the key areas of uncertainty identified. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from the date on which the country-by- country information is authorised for issue. In auditing the country-by-country information, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the country-by-country information is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company’s ability to continue as a going concern. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report . 221 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Independent auditors’ report to the directors of Metro Bank Holdings PLC continued Responsibilities for the country-by-country information and the audit Responsibilities of the directors for the country-by-country information The directors are responsible for the preparation of the country-by-country information in accordance with the requirements of the Capital Requirements (Country-by-Country Reporting) Regulations 2013 as explained in the basis of preparation in note 1 of the Country-by-Country Report and the accounting policies in the Consolidated and Company financial statements, and for determining that the basis of preparation and accounting policies are acceptable in the circumstances. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of country-by-country information that is free from material misstatement, whether due to fraud or error. In preparing the country-by-country information, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the country-by-country information It is our responsibility to report on whether the country-by-country information has been properly prepared in accordance with the relevant requirements of the Capital Requirements (Country-by-Country Reporting) Regulations 2013. Our objectives are to obtain reasonable assurance about whether the country-by-country information as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this country-by-country information. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the group and industry, we identified that the principal risks of non- compliance with laws and regulations related to breaches of the rules of the Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA) and we considered the extent to which non-compliance might have a material effect on the country-by-country information. We also considered those laws and regulations that have a direct impact on the country-by-country information such as UK tax legislation and the Capital Requirements (Country-by-Country Reporting) Regulations 2013. We evaluated management’s incentives and opportunities for fraudulent manipulation of the country-by-country information (including the risk of override of controls), and determined that the principal risks were related to posting manual journal entries to manipulate financial performance and management bias in accounting estimates. Audit procedures performed included: • Enquiries of the Audit Committee, management, internal audit and the group’s legal counsel, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud; • Evaluation of the design and implementation of controls designed to prevent and detect irregularities relevant to financial reporting; • Reviewing key correspondence and holding discussions with regulators, such as the FCA and the PRA, in relation to the group’s compliance with banking regulations; • Incorporating unpredictability into the nature, timing and/or extent of our testing; • Challenging assumptions and judgements made by management in respect of the determination of allowance for expected credit losses on loans and advances to customers, the carrying value of non-financial assets, the carrying value of the investment in subsidiary and the recognition of a deferred tax asset in relation to past trading losses; • Identifying and testing journal entries including those posted by infrequent or unexpected users, posted to certain account combinations and those posted late in the financial reporting process; and • Identifying and testing significant and unusual transactions and material non-recurring items such as impairments and write-offs. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the country-by-country information. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. A further description of our responsibilities for the audit of the country-by-country information is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report. Use of this report This report, including the opinion, has been prepared for and only for the Group’s directors in accordance with the Capital Requirements (Country-by-Country Reporting) Regulations 2013 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come, save where expressly agreed by our prior consent in writing. The engagement partner responsible for this audit is Jonathan Holloway. PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 22 April 2025 222 Metro Bank Holdings PLC Annual Report and Accounts 2024 Other disclosures (unaudited) Reconciliation of statutory balance sheet to risk-weighted asset 31 December 2024 31 December 2023 Financial statements £’million Average risk density % Risk- weighted assets £’million Financial statements £’million Average risk density % Risk- weighted assets £’million Cash and balances with the Bank of England 2,811 1% 18 3,903 1% 44 Loans and advances to customers 9,013 50% 4,529 12,286 46% 5,597 Investment securities held at FVOCI 377 2% 8 476 2% 11 Investment securities held at amortised cost 4,113 4% 171 4,403 4% 187 Financial assets held at fair value through profit and loss – – – – – – Derivative financial assets 16 – – 36 – – Property, plant and equipment 711 100% 711 723 100% 723 Intangible assets 126 0% – 193 – – Prepayments and accrued income 93 45% 42 118 43% 51 Deferred tax assets1 240 n/a 7 3 267% 8 Other assets 82 104% 85 108 96% 104 Total assets 17,582 32% 5,571 22,248 30% 6,725 Off-balance sheet assets 132 79 Credit risk (excluding counterparty credit risk) 5,703 6,804 Counterparty credit risk 19 26 Market risk – – Operational risk 720 703 Total risk-weighted assets 6,442 7,533 1. In the consolidated balance sheet per the financial statements, deferred tax is shown as a net figure with the deferred tax liability, however, from a regulatory perspective the deferred tax asset and liability are treated separately. 223 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Alternative performance measures (unaudited) In the reporting of financial information, we use certain measures that are not required under IFRS, the Generally Accepted Accounting Principles under which we report. These measures are consistent with those used by management to assess performance. These alternative performance measures have been defined below: Metric KPI Scorecard measure LTIP Definition Cost of deposits Yes No No Interest expense on customer deposits divided by the average deposits from customers for the year. 2024 £’million 2023 £’million Interest on customer deposits (note 2) 303.6 147.8 Average deposits from customer 15,530 15,237 Cost of deposits 1.95% 0.97% Cost of risk Yes Yes No Expected credit loss expense divided by average gross loans. 2024 £’million 2023 £’million Expected credit loss expense (note 30) 7.1 33.2 Average gross lending 11,223 12,778 Cost of risk 0.06% 0.26% Coverage ratio1 No No No Expected credit losses as a percentage of gross loans. 2024 £’million 2023 £’million Expected credit losses (note 12) 191 199 Gross loans and advances to customers (note 12) 9,204 12,496 Coverage ratio 2.07% 1.59% Retail mortgages 2024 £’million 2023 £’million Expected credit losses – retail mortgages (note 12) 15 19 Gross retail mortgage lending (note 12) 5,145 7,817 Coverage ratio 0.29% 0.24% Consumer 2024 £’million 2023 £’million Expected credit losses – consumer (note 12) 108 108 Gross consumer lending (note 12) 745 1,297 Coverage ratio 14.43% 8.33% Commercial 2024 £’million 2023 £’million Expected credit losses – commercial (note 12) 68 72 Gross commercial lending (note 12) 3,314 3,382 Coverage ratio 2.05% 2.13% 1. Coverage ratio calculated using underlying figures. 224 Metro Bank Holdings PLC Annual Report and Accounts 2024 Metric KPI Scorecard measure LTIP Definition Loan-to-deposit ratio Yes No No Net loans and advances to customers expressed as a percentage of total deposits as at the year end. It is a commonly used ratio within the banking industry to assess liquidity. 2024 £’million 2023 £’million Net loans and advances to customers (note 12) 9,013 12,297 Deposits from customers (note 18) 14,458 15,623 Loan-to-deposit ratio 62% 79% Net interest margin No No No Net interest income as a percentage of average interest-earning assets. 2024 £’million 2023 £’million Net interest income (note 2) 377.9 411.9 Average interest-earning assets 19,800 20,786 Net interest margin 1.91% 1.98% Non-performing loan ratio No No No Gross balance of loans in stage 3 (non-performing loans) as a percentage of gross loans as at year end. Total book 2024 £’million 2023 £’million Stage 3 loans (note 30) 504 389 Loans and advances to customers (note 12) 9,200 12,496 Non-performing loan ratio 5.48% 3.11% Retail mortgages 2024 £’million 2023 £’million Stage 3 loans – retail mortgages (note 30) 203 146 Gross retail mortgage lending (note 12) 5.145 7.817 Non-performing loan ratio – retail mortgages 3.95% 1.87% Consumer 2024 £’million 2023 £’million Stage 3 loans – consumer (note 30) 97 77 Gross consumer lending (note 12) 745 1,297 Non-performing loan ratio – consumer 13.02% 5.94% Commercial 2024 £’million 2023 £’million Stage 3 loans – commercial (note 30) 204 166 Gross commercial lending (note 12) 3,314 3,382 Non-performing loan ratio – commercial 6.16% 4.91% Alternative performance measures (unaudited) continued 225 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Metric KPI Scorecard measure LTIP Definition Return on tangible equity Yes No Yes Statutory profit after tax as a percentage of average tangible equity (average total equity less intangible assets). 2024 £’million 2023 £’million Statutory profit after tax (Consolidated statement of comprehensive income) (211) 29.5 Average tangible equity 901 795 Return on tangible equity (23%) 4% Statutory cost:income ratio Yes Yes No Statutory total operating expenses as a percentage of statutory total income. 2024 £’million 2023 £’million Total operating expenses (Consolidated statement of comprehensive income) 610.3 585.2 Total income (Consolidated statement of comprehensive income) 405.3 648.9 Statutory cost:income ratio 151% 90% Total shareholder return Yes No Yes Total capital gains and dividends returned to investors over a one-year period. 2024 2023 Share price at the start of the period 37p 126p Share price at the end of the period 94p 37p Total shareholder return 155% (71%) 1. No dividends were paid in either period Underlying cost:income ratio No No No Underlying total operating expenses as a percentage of underlying total income. 2024 £’million 2023 £’million Total underlying operating expenses (page 228) 510.4 530.2 Total underlying income (page 228) 503.5 546.5 Underlying cost:income ratio 101% 97% Underlying loss Yes Yes No Underlying loss represents an adjusted measure, excluding the effect of certain items that are considered to distort year-on-year comparisons, in order to provide readers with a better and more relevant understanding of the underlying trends in the business. Details of the calculation of underlying loss can be found on page 228. We also disclose a number of capital and liquidity metrics which are required by the PRA and FCA. The basis of calculation of those metrics is defined within the relevant legislation. Alternative performance measures (unaudited) continued 226 Metro Bank Holdings PLC Annual Report and Accounts 2024 Non-underlying item Description Reason for exclusion Impairment and write-offs of property, plant, equipment and intangible assets The costs associated with non-current assets that are either no longer being used by or are no longer generating future economic benefit for the business. The impairments and write-offs relating to property, plant, equipment and intangible assets are removed as they distort comparison between years. This is on the basis that the write-offs and impairments relate to specific events and triggers which are not consistent between years. Net C&I costs These costs and income relate to the delivering the commitments associated with the Capability and Innovation Fund. Further details on this grant can be found in note 23. The commitments under the Capability and Innovation Fund continue through to 2025. The costs associated with fulfilling the commitments and associated income are felt to distort year-on-year comparison. Given the offsetting nature of the income and expenditure, there is no net impact on our profitability from this adjustment. Remediation costs Remediation costs consists of money spent including the conclusion of the FCA enquiry into legacy issues relating to transaction monitoring systems and controls as well as work undertaken in relation to financial crime. The remediation costs are felt to be time limited and will disappear once the investigations have concluded, as such these are removed to allow greater comparability between periods. Transformation costs Transformation costs primarily consist of the costs associated with redundancy programmes during the year as part of our approach to right-sizing teams as well as the costs of work undertaken to establish our cost reduction programme. The transformation costs are seen as a nonrecurring cost stream aimed at addressing the challenges the business faces. These are therefore removed in order to prevent year-on-year distortion. Mortgage portfolio sale (2024 only) On 30 September 2024, we sold a portfolio of approximately £2.5 billion of prime residential mortgages to NatWest Group plc. We recognised a loss on the sale of £101.6 million. During 2024, we took proactive steps to strengthen the balance sheet and enable positive asset rotation. The sale of this portfolio was one of those proactive steps. The sale of loan portfolios is generally not considered in line with our business model. Given the infrequency of sales and the quantum of the gain it has been removed in order to prevent year-on-year distortion. Cost of capital raise In November 2023, shareholders approved a £925 million capital package which consisted of £150 million of new equity, £175 million of new MREL-eligible debt and £600 million of debt refinancing. Costs associated with the refinancing were expensed to the income statement, including the impact of discontinuing the previous hedge relationships. Alongside this a £100 million gain was recognised on the haircut agreed by Tier 2 bondholders. The nature of the capital package meant it was both significant and one-off. The expense recognised in 2024 was near zero and as such item is expected to be removed in 2025. Alternative performance measures (unaudited) continued 227 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 A reconciliation from statutory profit/(loss) before tax to underlying loss before tax is set out below. Year ended 31 December 2024 Statutory basis £’million Impairment and write-off of property, plant, equipment and intangible assets £’million Net C&I costs £’million Transformation costs £’million Remediation costs £’million Mortgage portfolio sale £’million Cost associated with capital raise1 £’million Underlying basis £’million Net interest income 377.9 – – – – – – 377.9 Net fee and commission income 93.2 – – – – – – 93.2 Net gains on sale of assets (101.4) – – – – 101.4 – – Other income 35.6 – (3.4) – – 0.2 – 32.4 Total income 405.3 – (3.4) – – 101.6 – 503.5 General operating expenses (489.0) – 3.4 31.1 21.3 – 0.1 (433.1) Depreciation and amortisation (77.3) – – – – – – (77.3) Impairment and write-offs of property, plant, equipment and intangible assets (44.0) 44.0 – – – – – – Total operating expenses (610.3) 44.0 3.4 31.1 21.3 – 0.1 (510.4) Expected credit loss expense (7.1) – – – – – – (7.1) Loss before tax (212.1) 44.0 – 31.1 21.3 101.6 0.1 (14.0) Year ended 31 December 2023 Statutory basis £’million Impairment and write-off of property, plant, equipment and intangible assets £’million Net C&I costs £’million Transformation costs £’million Remediation costs £’million Holding company insertion costs £’million Capital raise and refinancing £’million Underlying basis £’million Net interest income 411.9 – – – – – – 411.9 Net fee and commission income 90.4 – – – – – – 90.4 Net gains on sale of assets 2.7 – – – – – – 2.7 Other income 143.9 – (2.4) – – – (100.0) 41.5 Total income 648.9 – (2.4) – – – (100.0) 546.5 General operating expenses (502.9) – 2.4 20.2 – 1.8 26.0 (452.5) Depreciation and amortisation (77.7) – – – – – – (77.7) Impairment and write-offs of property, plant, equipment and intangible assets (4.6) 4.6 – – – – – – Total operating expenses (585.2) 4.6 2.4 20.2 – 1.8 26.0 (530.2) Expected credit loss expense (33.2) – – – – – – (33.2) Profit/(loss) before tax 30.5 4.6 – 20.2 – 1.8 (74.0) (16.9) 1. Relates to the capital raise in Q4 2023. Alternative performance measures (unaudited) continued 228 Metro Bank Holdings PLC Annual Report and Accounts 2024 Abbreviations AGM Annual General Meeting ALCO Asset and Liability Committee ATM Automated teller machine BAME Black, Asian and Minority Ethnic BBLS Bounce Back Loan Scheme BEIS Department of Business, Energy and Industrial Strategy bps Basis points C&I Capability and Innovation Fund CEO Chief Executive Officer CET1 Common Equity Tier 1 Capital CFO Chief Financial Officer CMA Competition and Markets Authority CoF Cost of Funds CRD Capital Requirements Directive CRO Chief Risk Officer D&I Diversity and inclusion DNED Designated Non-Executive Director for Colleague Engagement DTR Disclosure Guidance and Transparency Rules DTV Debt-to-value DVRP Deferred Variable Reward Plan EAD Exposure at default ECL Expected credit losses EPC Energy Performance Certificate ERC Executive Risk Committee ESG Environmental, social, and governance ExCo Executive Committee FCA Financial Conduct Authority FRC Financial Reporting Council FSQS Financial Services Qualification System FTE Full time equivalent FVOCI Fair value through other comprehensive income GDP Gross domestic product GHG Greenhouse gases HMO House in multiple occupation HMRC His Majesty’s Revenue and Customs HPI House price index IAS International Accounting Standards Board ICAAP Internal Capital Adequacy Assessment Process IFRS International Financial Reporting Standards ILAAP Internal Liquidity Adequacy Assessment Process IRB Internal ratings-based KPI Key performance indicator LGBTQ+ Lesbian, gay, bisexual, transgender, queer plus LGD Loss given default LIBOR London Inter-Bank Offered Rate LTI Loan-to-income LTIP Long-Term Incentive Plan LTV Loan-to-value MOs Model Overlays MPs Members of Parliament MREL Minimum requirement for own funds and eligible liabilities MSc Master of Science NED Non-Executive Director NICs National insurance contributions NIM Net Interest Margin NPL Non-performing loan OFAC Office of Foreign Assets Control PAYE Pay as you earn PCAF Partnership for Carbon Accounting Financials PD Probability of default PMA Post model adjustments POCI Purchased or originated credit impaired PRA Prudential Regulation Authority PwC PricewaterhouseCoopers LLP REGO Renewable Energy Guarantee of Origin RLS Recovery Loan Scheme ROC Risk Oversight Committee RoTE Return on Tangible Equity RWAs Risk-weighted assets SBTi Science-Based Targets Initiative SICR Significant increase in credit risk SME Small or medium-sized enterprise SONIA. Sterling Overnight Index Average. SVAP Shareholder Value Alignment Plan TCFD Task Force on Climate-related Financial Disclosures TFSME Term Funding Scheme with additional incentives for SMEs UK United Kingdom VAT Value added tax VIU Value in use 229 Additional information Financial statements Strategic report Risk report Governance Metro Bank Holdings PLC Annual Report and Accounts 2024 Shareholder information Annual General Meeting Our 2025 AGM will be held on 20 May 2025. Full details for the arrangements for the AGM and details of the resolutions to be proposed, together with explanatory notes, will be set out in the Notice of AGM to be published on our website. Shareholder profile Shareholder profile by size of holding as at 31 December 2024 Range Total number of holdings Percentage of holders Total number of shares held at 31 December 2024 Percentage of total 0 – 100 222 25.58% 8,638 0.00% 101 – 500 135 15.55% 35,536 0.01% 501 – 5,000 235 27.07% 439,509 0.07% 5,001 – 100,000 157 18.09% 4,477,925 0.67% 100,001 – 500,000 59 6.80% 14,890,682 2.21% 500,000+ 60 6.91% 653,127,333 97.05% Total 868 100.00% 672,979,623 100.00% Shareholder profile by category as at 31 December 2024 Category Number of holders Percentage of holders within type Shares held at 31 December 2024 Percentage of issued share capital Private shareholders 569 65.55% 1,208,491 0.18% Banks 2 0.23% 44,929 0.01% Nominees and other institutional investors 297 34.22% 671,726,203 99.81% Total 868 100% 672,979,623 100.00% Forward-looking statements This Annual Report and Accounts contains statements that are, or may be deemed to be, forward-looking statements. Forward-looking statements typically use terms such as ‘believes’, ‘projects’, ‘anticipates’, ‘expects’, ‘intends’, ‘plans’, ‘may’, ‘will’, ‘would’, ‘could’ or ‘should’ or similar terminology. Any forward-looking statements in this Annual Report and Accounts are based on our current expectations and, by their nature, forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, that could cause our actual results and performance to differ materially from any expected future results or performance expressed or implied by any forward-looking statements. As a result, you are cautioned not to place undue reliance on such forward-looking statements. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, expressed or implied, is made regarding future performance. No assurances can be given that the forward-looking statements in this Annual Report and Accounts will be realised. We undertake no obligation to release the results of any revisions to any forward-looking statements in this Annual Report and Accounts that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement and we disclaim any such obligation. Registrars We have appointed Equiniti Limited to maintain our register of members. Shareholders should contact Equiniti using the details below in relation to all general enquiries concerning their shareholding: Equiniti Limited1,2 Aspect House Spencer Road Lancing West Sussex BN99 6DA Telephone: 0371 384 2311 International callers: +44 (0) 371 384 2311 1. Equiniti Limited and Equiniti Financial Services Limited are part of the Equiniti group of companies. Company share registration, employee scheme and pension administration services are provided through Equiniti Limited, which is registered in England and Wales with No. 6226088. Investment and general insurance services are provided through Equiniti Financial Services Limited, which is registered in England and Wales with No. 6208699 and is authorised and regulated by the UK Financial Conduct Authority. 2 Lines are open from 8.30am to 5.30pm (UK time) Monday to Friday, excluding public holidays in England and Wales. Registered and other offices Our registered office and head office is: One Southampton Row London WC1B 5HA Telephone: 0345 08 08 500/0345 08 08 508 Website: metrobankonline.co.uk Unsolicited mail We are required by law to make our share register available on request to unconnected organisations. As a consequence, shareholders may receive unsolicited mail, including mail from unauthorised investment firms. If you wish to limit the amount of unsolicited mail received, please contact the Mailing Preference Service, an independent organisation whose services are free for consumers. Further details can be obtained from: Mailing Preference Service MPS Freepost LON 20771 London W1E 0ZT Website: mpsonline.org.uk 230 Designed and produced by Printed by Park Communications – A Carbon Neutral printing company The material used in this Report is from sustainable sources and the paper is recyclable and biodegradable. The papermill and printer are both registered with the Forestry Stewardship Council (FSC) ® and additionally have the Environmental Management System ISO 14001. It has been printed using 100% offshore wind electricity sourced from UK wind. Metro Bank Holdings PLC metrobankonline.co.uk