Metro Bank Holdings Stock

Good morning, and welcome to Metro Bank's Half 1 2026 Results. As you can tell from the opening slide, you're about to see a very strong performance driven by our strategy. Our ability to win share by staying focused on relationship banking and delivering quality service will come out throughout the presentation. I'll start with a bit of an overview of the financial results, then Marc will walk you through the detail, and then I'll come back and talk about the strategy that drives the future for Metro. And then we're happy to take questions.

So let's start. Metro delivered a GBP 61 million underlying profit for the first half of the year, up 34% year-on-year and the largest in the history of Metro Bank. RoTE increased to 7.5%, up 270 basis points over a year ago. Cost-income ratio continued to drop as revenue growth outpaced cost growth. Exit NIM expanded to 325 basis points (sic) [ 3.25% ], 30 basis points up year-on-year and the largest NIM in the history of the bank.

We continue to find lots of opportunities to lend. We did GBP 1 billion in commercial and corporate lending in the first half of the year, and we have a GBP 1 billion credit-approved pipeline, the largest in the history of the bank. Historically, we've done about 120% to 130% of the approved pipeline in any half year. So we would expect in the second half of the year for lending to accelerate and for us to do about GBP 1.2 billion to GBP 1.3 billion of new commercial and corporate lending in the second half of the year.

The reason we're confident about that is we saw the largest deal flow we have ever seen. We saw GBP 6 billion of deal flow in the second half of the year. 95% of the corporate deal flow came to us directly. That deal flow is not broker-led. It comes to us because of our relationships in the market and with long-standing customers of the bank. And as I mentioned, cost-income ratio dropped as revenue over the last 2 years has grown by 29% and costs have actually decreased by 9% over the similar period.

So let's move on to RoTE. So the path to an 18% return on tangible equity becomes clearer by the day. The path to 13% in quarter 4 is broadly driven by the repricing of the treasury portfolio and then the benefit of the lending we did in the first half of the year. Those 2 things alone get you to almost 11% return on tangible equity. The delta is from the GBP 1.2 billion to GBP 1.3 billion of lending, the continued asset rotation of the balance sheet, which continues to drive NIM expansion as well as RoTE accretion.

We get a further uplift in 2027 from treasury book repricing, which means the continued rotation that will occur in 2027 will continue to build RoTE over and above just the treasury book repricing. Another way to think about it is the first bullet point in the box above the bar chart. 9.2% of the RoTE uplift from 7.5% to the 18% is broadly baked in today. It is either activities that we have done or mechanical changes that will occur over time.

So the 7.5% becomes 16.7% just through the passage of time. And we're very confident in our ability to continue to rotate assets given the largest pipeline we've ever had in the history of the bank to get us to the 18% return. All of that makes us extremely confident to reconfirm all guidance. In terms of NIM, we're already at 325 basis points and the repricing of the treasury portfolio in quarter 4 is worth another 15 basis points. So as we stand here today, the mechanical uplift from the treasury book repricing plus our current exit NIM already has us in the range.

Further rotation of the assets as we close out the GBP 1 billion pipeline of commercial and corporate lending will further increase NIM above the 340 basis points. We've talked about cost-income ratio. Marc will come back to that and the RoTE build I've given you. We are extremely confident that we have a very clear path that is now evident to get us to 18% in 2028. With that, I'll turn it over to Marc. Thank you.

Thank you, Dan, and good morning, everyone. So let me take you through the financial performance for the first half of the year. And as a reminder, our financial transformation is relatively straightforward. We rotate assets to higher-yielding asset classes. We maintain and leverage our deposit franchise, which is a funding advantage with disciplined cost management and capturing treasury tailwinds, we're able to expand earnings. So let's look at that as you see it through the lens of the financial KPIs.

Firstly, we have increased our lending yield by 11 basis points versus this time last year. That is a really strong performance given the interest rate environment has fallen by 100 basis points over this period. Our funding advantage means we can leverage and manage our cost of deposits, which has fallen over the same period. The combination of both those events has led to an improved exit NIM from 2.95%, up 30 basis points to 3.25%. This has increased revenue and with cost discipline, we have managed to lower the cost-to-income ratio by 5 points to 77% and on track to meet our guidance for the year-end.

The combination of this financial performance has led to record profits for Metro Bank of GBP 61 million, which is 34% up on this period last year. That translates to a RoTE of 7.5%, and we'll take you through the bridge and the future and the drivers on the next few pages.

So turning to the profit and loss account. I've referred to the GBP 61 million increased profit for the first period, which is 34% up year-on-year. If you break this down further, let's look at where that profit is coming from. It's a GBP 16 million profit improvement over this period and GBP 15 million of that has come from underlying revenue, which has increased by 5% from GBP 286 million to GBP 301 million. There are 2 parts to the revenue story. Firstly, our net interest income has grown by 8% over the period as the asset rotation and asset growth takes action. This has partially been offset by lower fee income as we move -- and the combination of both has led to a 5% increase in underlying revenue. If you look at where I would expect us to go from here, and we'll move on to asset rotation further, I would expect us to accelerate our interest-earning income, and I would expect fees in the second half of this year to be broadly consistent with fees in the first half. So let's take a lens of how each of our financial drivers has performed over the past 12 months.

On the bridge on the right-hand side, you can see our profit growth from GBP 45 million to GBP 61 million has been driven by the 4 fundamental drivers: asset rotation, treasury, cost reductions and deposits. All of these have combined to more than offset rates and other headwinds that have been in the bank to drive an underlying profit of GBP 61 million. So let's turn to each of the drivers and where they go from here.

Firstly, asset rotation. You can see that our total loan book has grown by 4% over the period to GBP 9.2 billion, up from GBP 8.9 billion. However, the fundamentals are much stronger than this. We have increased our core business lines by 43% or GBP 1.9 billion over this period. And we've done that efficiently by regenerating capital and liquidity from our runoff books, which have reduced by 34% over the same period. As we stand here today, our core business lines now represent 67% of our total lending book, reflecting the active trading strategy we are at reengineering our loan books. Asset quality remains strong, and we are optimizing for risk-adjusted returns.

You can see this more visibly as you look on the charts on the right-hand side. This is a demonstration of how our book is changing over time. In commercial lending, a key segment of growth for us, now stands at 44% of the total loan book. This is up from 35% a year ago.

In addition, 45% of our total mortgage book is now specialist in nature, and that was less than 1 in 4 this time last year. And why does that matter? It matters because this is about moving to higher-yielding, better RoTE returning segments. Our commercial lending lines bring us a net interest margin of 330 basis points to 350 basis points over base. And you can see in the mortgage space, our specialist yields are yielding over 200 relative to swaps, and that compares to a prime market rate of just 40 basis points to 70 basis points.

So we are recycling assets to higher performing that will drive NIM and revenue as we move forward. This is all being done by maintaining strong underwriting and disciplines. And you can see in our cost of risk is 22 basis points as we stand here today, and that is significantly below our through-the-cycle guidance of 40 basis points to 60 basis points.

Turning to the second driver, treasury asset repricing. At full year, I said there would be GBP 1 billion of maturities in 2026 and the majority of those maturities, GBP 833 million would be in the second half of the financial year. Those maturities are still there, will still mature and they are still coming off a pay rate of 85 basis points. What has changed is at full year '25, I expected those to mature on a base rate that would be around 3.25%.

Currently, we are now expecting them to mature on to a rate more closely to 3.75%, which is a 50 basis point increase. Those maturities cumulatively will add GBP 24 million of revenue uplift or 2.7% of RoTE or 15 basis points of NIM, depending on which line of the P&L stack you're looking at. In addition to the treasury maturities, our book is becoming more commercial. By its nature, it is becoming more floating rate sensitive.

To offset that, we've introduced a structural hedge program to maintain interest rate sensitivity as close to neutral as possible. In the period, we've added GBP 2.6 billion of a hedge notional compared to a year ago with an average duration of just over 3 years and a weighted yield of 3.4%.

The effect of this is to try to maintain as close to neutrality as possible given the changing mix to floating rate. And you can see that in the table below, which demonstrates that our NII sensitivity on a static book for a significant rate shock either up or down is in the low single-digit millions.

Turning to the third driver. We have an enduring strategic advantage in our funding mix. We have consistently stated that we have a significant and outsized market share of current account funding relative to the market and relative to our peers. You can see this by 43% of our balances being current account funded compared to the market peers of just 18%. This provides us with a deposit cost of 98 basis points, the lowest on the High Street.

Our high-yielding deposits are less than 5% of our mix compared with the market of 34%. As the relationship model embeds, we will see this continue to give us strength and opportunity to grow into the future.

On the right-hand side, you can see where those deposits are coming from. And more notably, as we transition and as we focus on our commercial and SME banking models, you can see that the share of those deposits has increased from 48% a year ago to now 53%. We have a strong LCR of 270% and a loan-to-deposit ratio of 69%, which provides us further capacity for growth as we move forward from here.

The final driver is cost discipline. We've consistently said we will maintain cost discipline as we pivot the bank into our target segments. Costs are down 2% year-on-year at GBP 231 million, and you can see that is lower than a year ago and lower than Half 2 2025. We are maintaining guidance that costs will be broadly flat for full year '26 versus 2025.

The combination of growing revenue and cost discipline has improved our cost-to-income ratio from 82% down to 77% and will continue to drive lower as we grow revenue from here on in.

Turning to guidance. So what does this mean? We -- I've taken you through the drivers, which are clear, visible and enduring and will build earnings momentum. But I'll leave you with 3 points to take away in terms of our guidance. We have a clear pathway to higher exit NIMs. As we currently stand, our NIM is 3.25% and plus with the 15 basis points from treasury maturities, that places us at 3.40%.

In addition, we are accelerating our lending into our target segments in the second half of this year, and that will drive that exit NIM further into the range and onwards towards 2027 targets.

The combination of growing our book and growing our NIM will lead to increased revenue and drive the cost-to-income ratio down further in line with guidance. And then finally, turning to returns. The 7.5% print in RoTE sets us up very well for the future. We have over 9 points of mechanical RoTE build from here on in and the combination of growing, accelerating our lending into our target segments gives us strong confidence we can reiterate guidance in line with growing to more than 13% in Q4, more than 15% in 2027 and more than 18% in 2028. And with that, I'm going to hand back to Dan, who's going to take you through our strategy and opportunities we see from here in.

Thanks, Marc. Let's talk about where we go from here. So again, corporate and commercial is a huge differentiator for us. We continue to win share. We continue to win business day in and day out. Again, we saw 15%, 15% of all of the SME deal flow over the last year across the U.K. 95% of that deal flow in corporate came to us directly.

You can see from the donut that we see -- we fish in a really, really big market. And of that deal flow, we rejected some of it because we don't like the risk-adjusted returns. And we're very disciplined about credit. So it gives us opportunities to be very selective. And we do support the whole U.K.

Our regional hub strategy, our ability of building out new locations drives opportunities for us to lend outside of the Greater London area. So 82% of our lending came from outside of Greater London. And on the right-hand column, we are doing good established lending. 64% of the customers we've known for 5 years.

The businesses have been in place for 10 years to 20 years and have over $43 million in turnover. And all of the lending is independently underwritten by people with 20 years to 25 years of experience on average. All of that gives us confidence that not only do we have opportunities to lend, but we're doing it very prudently.

Let's talk about the future. We've talked about getting to the '28 RoTE of 18%. We've talked to you about how the majority of that movement is mechanical, how assets will continue to rotate to continue to drive RoTE even beyond. But let's talk about '28 and beyond. So we've worked hard to build a more scalable platform by embedding AI. We use AI to empower the human to make the human more productive, to allow the human to deepen relationships and further our relationship banking strategy.

So we've created a prospecting tool that has allowed us to allow the lenders to spend less time preparing for meetings and more time meeting with customers. We've redone our account opening process, which allows us to be much slicker, quicker and more customer-focused during the account opening process. We just completed a review of all customers greater than GBP 1 million, and we did that by harnessing AI, which saved us significant man hours.

We also were the first partner with Ask Silver that has helped us avoid and helped our customers avoid over GBP 3 million of fraud. And as I said on the prior slide, we fish in very large markets, be it commercial and corporate or specialist residential mortgages. And we'll continue to expand our store network. We signed leases in Leeds, Newcastle and Nottingham, and we will continue to look for more sites across the U.K. All of that, the scalable platform we're building, the large markets we fish in gives us real strategic optionality as we build capital in the future.

We could easily increase commercial loan growth. We saw GBP 6 billion of flow and did GBP 1 billion of it. We chose not to do some of the lending because it wasn't the highest risk-adjusted return on regulatory capital we could achieve, but it was very strong risk-adjusted return on regulatory capital. And as we free up more capital resources, we can choose to go deeper into the pool we're already fishing in. We can clearly choose to disrupt the specialist markets. We have the lowest cost of funding of any High Street bank, let alone the mid-tier banks.

We can use that funding advantage to become more disruptive in those specialist markets when and if we choose to. As I said, we're entering new geographies, and we'll continue to expand the store network to give us more access to SME, commercial and retail customers.

We can also circle back and build out the digital foundations that haven't really existed at Metro since its inception. That would create new opportunities for growth in retail, SME and commercial. And obviously, as we've said, we will discuss the capital return policy at year-end 2026 results, and that will clearly be part of our story as we start to generate significant returns in '28 and beyond.

So listen, the model is working. The local relationship-led model generates low-cost deposits that we use to fund better yielding assets. And we do it efficiently, and we work to get more efficient by the day. That allows us to operate in clear blue water. We are a universe of one. We have the lowest funding cost on the High Street, and we generate yields in line with specialist lenders. And what does that mean? It means the highest profits in the history of the bank, the highest NIM in the history of the bank. It means a clear path to getting to our RoTE guidance of 18%. And all of that is hugely pleasing to me. It was a very strong start to the year, but it's not what pleases me most.

What pleases me most is the foundations we've built that allows us to have strategic optionality across corporate, commercial, specialist lending, deposits as we move forward. So we are very confident in the path to an 18% return in 2028. And with that, we're happy to take your questions. Thank you.

[Operator Instructions] Our first question today comes from Benjamin Toms from RBC.

First is around, I guess, inorganic. The bank is very close to achieving its RoTE ambitions through dynamic actions that has taken over the last couple of years. At this stage in the delivery of the plan, how are you feeling about inorganic activity? Do you feel the bank can tolerate some execution risk if there's an asset out there, which could be transformative from a scale or an ROI perspective? And presumably, Metro has no desire to go back to being an MREL bank no matter how good a deal is put on the table. And then secondly, the bank's fee run rate stepped down in the half. Can you just give us some comfort on why you think that step down has now bottomed out with fees flattish from here?

Ben, I'll take the first question, and I'll turn it over to Marc on fees. So organic versus inorganic, we are really pleased with the opportunities we have on an organic basis. I mean GBP 6 billion of flow, 15% of all SME lending. I mean we are spoiled for choice. And we're still seeing really good margins over SONIA for specialist mortgages. So I mean, our organic path is really strong. So at this point, we're really focused on that. And as I said, we have strategic optionality, be it building out a digital offering or going deeper into the markets we already participate in. So I think we're very focused on organic. Do I think we have the capacity to deliver inorganic transaction? We do. We have a really strong management team that's clearly delivered a phenomenal turnaround.

That gives us confidence that we could integrate a new business if we chose to. But at this point, we don't need to. I mean there aren't too many banks in the U.K. that are going to go from a 7.5% RoTE to an 18% RoTE in 18 months. We are really focused on delivery, and then we're focused on what we can do with that excess capital as we begin to generate it and the growth we can deliver beyond '28. So I think we have the capacity and capability to do something. I just don't know that it's our focus today. Marc, on fees?

Yes. So on fees, we're guiding that they'll be broadly similar to first half of the year. Largely, that's a function of activity that we're seeing and observing. We have seen competition in FX markets and interchange, but we're also seeing strong demand in terms of some of our own in-house services, so be that the safety deposit boxes, et cetera. So I think, look, we are -- it's becoming -- interchange and FX is an increasingly smaller part of our fee lines. And the activity we're seeing demonstrate would support kind of the guidance that I've said this morning in terms of fee activity levels. But where I would focus is really our momentum story is in the net interest income line. It's really -- it's demonstrating the activity we'll put in place, the accelerating lending into the second half of the year and the asset rotation strategy. That's the real engine for growth as we go forward.

[Operator Instructions] Our next question comes from Corinne Cunningham from Autonomous.

Can I ask a question about NII and why we're not already seeing stronger growth given that the lending is up, the NIM is up, treasury assets are already repricing. Is this a technical thing to do with denominator effect? I'm thinking particularly if you look at the exit NIM versus the average NIM, was something happening just before the balance sheet was closed in H1 to give you that pop up? Just not sure why we're not seeing more momentum in NII.

So listen, I'll start, and then I'll turn it over to Marc. So a lot of the lending we did in the first half of the year, a lot of that GBP 1 billion was actually done in May and June. June was one of the largest months for closing of transactions we've had in the history of the bank. So again, it was really back-ended, which influenced a lot of what you point out. It's a very good observation. Marc?

Yes. So timing of the lending, so you'll see that come through. The other one is, as we entered the year, we did see a rate reduction come through, which puts -- and forward curves were kind of predicting much lower rates as they were coming through. So a lot of that business we were writing in the back half of second H2 '25, plus the forward curves in the beginning of the year were lower. You can see that on the waterfall bridge. So in terms of all of the drivers outperforming to offset rates and other changes. But I would expect that now, Corinne, to change in the second half of the year. Lending will accelerate, the rotation accelerates from here. And clearly, the base rate environment is higher.

May I ask a second one just on the MREL lending -- or sorry, the MREL borrowing, should I say? And do you see any capital flexibility to do any kind of early buybacks? Or is this still a trade-off between return on new lending versus retiring the MREL debt early?

So I think, Corinne, we look at it all the time. Bankers price it for us all the time. I think if the economics work, we would consider it. At this point, it still trades at a pretty big premium, and we're not sure the economics work. In terms of capital and capital actions, I mean, again, we continue to manage capital very aggressively, as you can tell, and you would know from our history. And as we start to get more degrees of freedom in capital, both organically generated and maybe through doing something like an SRT, the reality is that we would use that capital to either accelerate lending or potentially buy back the MREL whatever provides the greatest return for shareholders.

Our next question comes from Ed Firth from KBW.

I've just got 2 questions actually. The first one is just looking at the exit NIM. The rate of progression slowed very significantly in the first half. And I guess if the second half was like the first half, you'd be really right at the bottom end of your exit NIM range for the full year. In fact, it's a little bit below. So is there something particularly going on in the first -- I mean, you mentioned earlier about rates and various other pieces, but it would be interesting to know how should we think about that in the second half of the year and into next year? Is there a sort of mix thing that perhaps different than you expected? And then secondly, if I look at deposits, deposits were down. And I'm just wondering -- are you comfortable with that? Can you see deposits continue to fall?

I mean at some point, how do you balance growing the business and funding that growth with your low-cost deposits? I mean do you actually believe you can grow deposits whilst keeping that cost advantage? Or is this more of a thing where you're going to keep those flat and you're going to have to increasingly fund any growth in the wholesale market?

Good. Listen, let's start with exit NIM, so I can walk you through it a little bit. So remember, we had a 25 basis point reduction in base rate right at the end of 2025, which has to come through all our floating rate lending, which obviously acts as a bit of a compression on NIM because, as you know, we have current account funding that's more than 2x the market average. So again, I think that created a little bit of lower. I talked about the fact that the exit NIM was influenced by the lending towards the second half of the year, which, again, will continue to bleed through in the first. But there's a couple of things that we think gives us real momentum as we get into the second half of the year.

First is the 3.25% becomes 3.40% just from the treasury book repricing. So we're already in the range of guidance for the year-end. And we think the asset rotation that will occur in the second half of the year, given the GBP 1 billion of pipeline we have, and we think we'll do GBP 1.2 billion or GBP 1.3 billion. If you model that through, that's worth another 20 basis points to 30 basis points probably in NIM. So we're pretty confident that we end up between the 3.40% and the 4%, probably more in the middle than closer to the bottom end. But again, you can do that math.

In terms of deposits, we really focus on current accounts. Current accounts, I think were -- depends on what period you look at were slightly up versus one period and slightly down versus the other, but broadly stable, which we're very pleased with. We saw a bit of decrease in fixed term deposits, which again are expensive. We saw a little bit of decrease in the interest-bearing instant access. Some of those were relationship-based pricing that were quite expensive actually, some pension money that was quite expensive. So again, we were pleased to lose it.

We run a loan-to-deposit ratio that's sub-70%. Even as we rotate assets, one of the good things about rotating assets is we're freeing up a lot of liquidity from that residential mortgage portfolio we're running off. So we can grow commercial and corporate lending significantly without needing more liquidity because for the next 18 months, it's broadly funded by the runoff of the residential mortgage book.

So we don't show the loan-to-deposit ratio in our forward plans. Sorry, I don't have your model memorized yet, I apologize. But we don't show the loan -- we don't show the loan-to-deposit ratio getting much above where it is today, maybe up into the mid-70s. But it's not significantly above because we're freeing up liquidity from the residential lending that we're running off.

We think we can grow deposits. We think we could -- one of the strategic optionality we have is whether we do something in the digital space that would accelerate deposit growth. But again, we're pretty confident we have more than enough liquidity to execute the plan and deliver on the guidance through '28 and really beyond '28 for a while.

[Operator Instructions] With that, we have no further questions in the queue at this time. So I'll hand back over to Daniel for closing comments.

I just want to thank everybody for taking the time today. We're really pleased with the first half of 2026 results, but we're more excited about what the opportunities are from this point forward. So thank you so much, and have a great day.

Hello, everyone, and thank you for joining the Metro Bank Holdings plc Full Year Results 2025. My name is Gabrielle, and I will be coordinating your call today. [Operator Instructions]

I will now hand over to your host, Daniel Frumkin, CEO of Metro Bank. Please go ahead.

Thank you, Gabrielle. Good morning. I'm Dan Frumkin, CEO of Metro Bank, and thank you so much for joining us today as we reveal our fiscal year 2025 results. Before I get into the numbers, I just wanted to take a moment to talk about how pleased I am with how well we're delivering the strategy that we outlined 2 years ago. The results you're going to see today are a testament to all of the hard work from all of the colleagues across Metro, and I can't thank them enough for their efforts. So let's get stuck in.

In terms of the agenda, I'll do a few slides as an overview. Then Marc Page, the CFO, will join us to walk through the financial performance in more detail. And then I'll come back on to talk about a few slides about how the existing strategy continues to drive the future. And then obviously, we're happy to take your questions. So let's start with what is a really strong performance. We generated a GBP 98 million underlying profit for 2025. That is the highest in the history of Metro Bank.

And not only did we generate the highest profit in the history of Metro Bank, we also generated the most revenue, the most NII and the highest NIM in the history of Metro Bank. You can see our exit NIM was 3.17%. That is in line towards the upper end of the guidance we provided. We generated a RoTE of 6.4%, again, in line with guidance, and we reduced cost by 7%. That is ahead of the guidance we provided. And by growing revenue and reducing cost, we widened our jaws that brought down the cost-income ratio, as you can see in the bottom left.

That revenue growth of 16% was really driven by a 22% increase in net interest income as we brought down the cost of deposits and continue to increase lending yield in spite of the fact that Bank of England reducing the Bank of England base rate by 100 basis points during 2025. That 22% growth in NII and the 16% growth in revenue were the highest of any U.K. bank that has reported to date. On the upper right, we saw strong commercial and corporate loan growth. We did GBP 2 billion of new loans. That's almost triple of what we did just 2 years ago. And even after all that lending, we still have an GBP 800 million pipeline as we start 2026.

And we're not done. We have tremendous capacity for growth. We have a loan-to-deposit ratio at 66%. We have a liquidity cover ratio over 300%, and we've been reclassified as a transfer firm under the MREL regime, which means we have to issue no new MREL and have the optionality around the existing MREL, which has a call date in April 2028, a really strong set of results. So let's talk about the future. So all of that's created the foundation for where we are. It's gotten us to the 6.4% RoTE.

Let's just take a minute on this chart. The darker gray boxes that you see are broadly mechanical. They are either the roll-off of our treasury portfolio, which creates a 3% uplift in RoTE in 2026 and a further 1.4% RoTE uplift in 2027 or the larger gray box above the chart for '27, '28, MREL, when we call it in April of 2028, creates a 4% uplift in RoTE in and of itself. So those mechanical uplifts are over 8% of a RoTE uplift over the next couple of years.

So what does that mean? It means that we will more than double return on tangible equity in the next 7 months. By quarter 4, 2026, we will be generating a 13% return on tangible equity. We further grow that into 2027 to 15%, and then we are now guiding greater than 18% return on tangible equity for 2028. That means we will travel, almost triple return on tangible equity from where we are today in 2028. That level of RoTE growth is exceptional and driven by the strong performance of the underlying strategy. We don't have to do anything new to deliver that. We don't have to change who we are to do that. We deliver that by being metro and delivering the strategy as we've already outlined.

Let's talk about guidance. So again, we provide 3 levels of guidance, NIMs, cost income and RoTE, yes. The NIM guidance has been widened slightly to 3.40% to 4% and 3.75% to 4.50%. We dropped the bottom end of that guidance by about 20, 25 basis points given the rate uncertainty that's occurred in the market. However, we've held the cost-income ratio as previously guided. So if revenue is affected by lower net interest margins, we will make up for it through cost activity to ensure we deliver the cost-income ratio as previously guided.

In addition, we've enhanced our guidance for quarter 4 for return on tangible equity during 2026 to a quarter 4 measure. We did that because we thought it was important to show that we are more than doubling return on tangible equity in the next 7 months and we'll generate a 13% return on tangible equity this year. That does not mean we're still not confident about delivering double-digit return on tangible equity during 2026 because we are. We are just not guiding that because we think it's more important for the market to understand how quickly Metro Bank gets to a 13% return on tangible equity.

And as I've said, we've introduced the greater than 18% return on tangible equity for 2028. And again, there's a clear path to getting there. So this slide is a slide we use quite a bit. Again, our model gives us a competitive advantage. Our localness, our relationship-led model allows us to generate low-cost deposits. We have the lowest funding cost of any high street bank. Our exit cost of deposits was 94 basis points. That gives us real power to generate strong returns. We use that liquidity to fund high-yield specialist lending and corporate and commercial lending, which gives us yields in line with the specialist lenders.

So we fund ourselves more cheaply than any high street bank, and we lend and generate lending yields in line with the specialist lenders. And we do that efficiently. We were the only bank in the U.K., the only bank in the U.K. to reduce costs during 2025, and we brought them down by 7%, which gives you the chart on the right. We operate in clear blue water. The ability to build a fundamental relationship-based model allows us to operate in clear blue water.

And with that, I'll turn it over to Marc, who will walk you through the financials. Thank you.

Thank you, Dan. Good morning. Dan has already talked about the highlights of the year. What I'd like to do is take you through the building blocks and how we think about those building blocks into the future. So on this chart, you can see that our trading momentum continues across all aspects of our business lines. Dan has already mentioned about our cost of deposits being a funding advantage. And what you can see over the past 2 years is that we have reduced our cost of deposits and our exit by more than 100 basis points to a market-leading position of 0.94%.

Combined with our asset rotation strategy, whereby we have increased lending yields in a falling rate environment has come together to increase our exit NIM to a high of 3.17%, which is the highest Metro Bank has delivered. The combination of improving NIM has increased revenue by more than GBP 81 million year-on-year to a high of GBP 585 million and by having strong cost discipline as well as maintaining low cost of risks, we have improved our underlying PBT to a high of GBP 98 million, which is GBP 112 million momentum on the previous year. The combination of that has delivered a positive RoTE of 6.4%.

And at the same time, we've strengthened our capital position. And as you can see on the right-hand side, we now have a TCR of 18.4%, which is important as we go through our transfer approach. So we have delivered all market guidance, and we've outperformed on costs. And I'm now going to take you through how those building blocks play out over time to deliver an increased RoTE of 18% or above in 2028.

So the 4 components of the building blocks. Firstly, costs. So we have delivered a year-on-year absolute cost reduction of 7% to more than offset inflation. Also pleasingly, if you look at all lines on the cost structure, so be that people, non-people or our other costs, which includes depreciation, amortization and fraud, all of our cost lines have improved. And it's that level of discipline, which gives us the confidence to be able to increase our cost guidance this year that we will maintain costs in 2026 flat relative to 2025.

It's this business model transformation and focus on costs and the partnership with Infosys, which gives us the ability to optimize our model as we go forward. The combination of increasing revenue has led to a 20 points reduction in the cost-to-income ratio and sets us up well for the future guidance in terms of improving this metric over the next couple of years.

Moving on to the second part. So our relationship strategy delivers us a strategic funding advantage. You can see that I've already talked about our exit cost of deposits reducing from 206 to 94 basis points over the past couple of years, and that's been delivered in 2 ways. Firstly, we have excess liquidity, which we have allowed to run off, and that has reduced its mix from 15% down to just 7% of expensive fixed term deposits. If you look at that, the second part of that, however, is we are growing our current account franchise. We have increased our new current accounts by more than 100,000 in 2025 across both business and personal customers.

And as a result, our current account NIBLs balances now accounts for 44% of our total deposit base. That is more than twice the average of the market peers and provides us a strong platform to be able to recycle that into lending and asset growth into the future. On the right-hand side, we also show you where those deposits have come from. And pleasingly, if you look at commercial and SME, that is growing as a proportion of our mix as we target relationship growth in those segments. We have a funding advantage with a low loan-to-deposit ratio of 66% and a high liquidity coverage ratio, which sets us up well for growth in the future.

The third component, turning to growth. We've already looked at the highlights on the right through Dan's section. We have more than tripled our origination capability within commercial and SME over the past 2 years to a high of GBP 2 billion. How that actually plays out is it's high margin at over 350 basis points above base rate, and we have a strong credit approved pipeline to help us deliver the 2026 lending plan growth.

But if you zoom out and look at this, when we talk about asset rotation, if you look at the balance sheet on the left-hand side, you can see how our balance sheet has changed over time. The first thing to notice is year-on-year, broadly our asset balance sheet is leveled, so GBP 9 billion plays GBP 9.2 billion in the previous year. But if you look at the mix of those balances, it is changing. we have run off nearly GBP 2.1 billion of noncore segments and recycled that cash into our focus areas, which is commercial and SME lending and specialist mortgages.

Our core business lines are up 56% year-on-year. So we have recycled the cash from lower-yielding returning segments into higher-yielding risk-adjusted returning segments and at the same time, maintained a strong focus on asset quality. You can see asset quality and protection in terms of collateral on the following slides. So if you look at on the left-hand side, this looks at our nonperforming ratio loans as a percentage, which are low for both retail mortgages and commercial. And the graph clearly illustrates stability through this lending period.

On the right-hand side, we give you a bit more color about the levels of protection and collateral as we lend into our target segments. So over 87% of our loans are either -- are collateral backed with either property or government guarantees. And where they're property based, so 83% of loans, the average DTV is just 62%, which provide us with a prudent level of coverage for the lending that we take.

Moving on to the fourth part. The fourth part of our transformation is a level we've previously discussed, we have treasury maturities of roughly GBP 1.5 billion maturing over the next 2 years. So that will be about GBP 1 billion in 2026 and GBP 0.5 billion in 2027. Now the maturity profile is not even through the year. So you can notice on both the chart on the left-hand side, the maturities are H2 weighted and in the table on the right-hand side, you can see in 2027, they're all H2 weighted.

Now what does that mean for us? What it means is when those balances mature, they will come off rates of circa less than 1%, and they will mature on to a rate of circa the prevailing base rate as a minimum. That is income additive, NII and NIM additive. The cumulative effect of all the 2026 maturities is a GBP 26 million PBT uplift. And by the time 2027 maturities have risen, the cumulative effect is GBP 38 million of increased revenue. Now that is a 4.4% RoTE uplift from where we stand today.

Now it won't be evenly spread across the years, as you can see from the maturity profile, but actually the benefit and leading us towards that upper -- greater than 18% RoTE is an important part of our endurance strategy. So, how have we guided today? Dan mentioned at the top of the call, interest rates have fallen by 100 basis points in 2025. If we look at the guidance we provided today, we are expecting a further 50 basis points reduction to a base rate of 3.25% by the summer of this year. That is lower than where we set the plan a year ago, and we updated you.

But we have taken actions to offset that lower interest rate environment. Those actions include we've outperformed on cost guidance. We've actually delivered a higher deposit beta than forecast to offset. We've made asset disposals, which have improved our RoTE, and we've also established structural hedging programs to reduce interest rate sensitivity. In addition, the change to our resolution strategy is additive from a performance perspective in both the short term and the longer term as those rates mature in 2028.

Now how do rates play out? Illustratively, on the right-hand side, you can see in H2, so we had a base rate reduction in December. We're planning another one -- we were expecting another one imminently. That would reduce our interest income. That interest income reduction is offset by the momentum in our underlying business that we've previously just shown you. In H2 then, where interest rates settle, you can see the momentum continues to grow and more than offset to be able to deliver the greater than 13% RoTE by Q4 -- in Q4 of this year.

In addition to provide some color, we have given you an illustrative interest rate sensitivity in the table below. What this does, it takes as of today, a 50 basis points parallel shock to interest rates. So by the time it gets to the summer of this year, they'll be at 2.75%. And that would give an interest rate sensitivity of GBP 23 million or annualized to GBP 41 million for 2027. Now there's 2 points to note about this. Firstly, it doesn't take account of any of the management actions that we would take as delivered on the left-hand side of this page.

And secondly, it's a full flat guidance, which also assumes that all of the lending we do from today, both in commercial and mortgages and all of the maturities would also have this interest rate shock applied to them. Now clearly, interest rates are uncertain. And as of live today, the curve is higher than what you see on the left-hand side. But clearly, we'll watch this very closely and take actions as needed.

So bringing it all together. So we've had an incredible year with a significant increase in profitability to GBP 98 million and a RoTE of 6.4%. The reason we talk about the 4 building blocks is because they're enduring. We have a -- we've improved our cost base. We've improved our deposit optimization. The asset rotation is working, and we're set up with a healthy pipeline to continue growth over the next few years. And our treasury maturities will happen, and it will go on to a prevailing rate, which adds royalty and earnings. At the same time, I already said we've increased our capital position and improved it, providing the capital for growth over the coming years. As the MREL debt matures in April 2028, that will lead to a RoTE uplift, if applied mechanically, 4% on full maturity.

So turning back to guidance. So why are we confident in delivering a pathway to deliver more than 18% RoTE? So firstly, the exit NIMs show continued momentum as our asset rotation strategy continues to work in practice. We hold our cost-to-income ratio in line with previous guidance, and we are enhancing the cost guidance in 2026 to maintain costs broadly flat to 2025. The combination of asset rotation, cost discipline with credit underwriting leads to an improved RoTE of more than 13% by the end of this year, increasing to more than 15% and more than 18%, respectively, by 2028. So we have a clear pathway, a clear strategy. It's working.

And with that, I'm going to hand back to Dan.

Thanks, Marc. Okay. So let's just spend a couple of minutes going through how this strategy drives the future. So this is how we win. So the relationship-based model delivers us customers who want to bank with us, who are choosing to bank with us every day. We now have 78 stores. We opened 3 new stores in Gateshead, Salford and Chester. This year, we've signed leases in Leeds and Newcastle, and we continue to look for more locations, in particular, in the East Midlands and the North of England.

Those stores create a bit of a digital halo for us. We opened more accounts digitally after we've opened a store. And again, it is that localness, the fact that we have a presence in the communities in which we operate, we lend into those communities that gives us an opportunity to differentiate ourselves from some of our competitors. We also have a full-service SME offering. So we have local business managers in every store. We have local business managers across the estate. We have local directors in the majority of our stores. And again, 69% of the new commercial lending we did was to customers we've known for greater than 5 years. We have a sophisticated suite of products, cash management, FX. So we are a full service bank.

So again, we win by having a better service proposition than the larger banks and a more full service offering than the other mid-tier and smaller challenger banks. That allows us to grow customers every day. The strategic drivers, the pillars that have underpinned the turnaround remain the same. On costs, we've talked about the 7% reduction. I won't spend much more time. On infrastructure, we are making progress on continuing to improve the operations of the organization, which allows us to be more cost disciplined.

Over 100,000 hours in Amaze Direct, our contact centers have been saved through the use of AI. Scam detect, which was a new tool launched by us before any other bank has helped 1,700 customers avoid scams. And again, we're using AI in our commercial and corporate underwriting process. It's relatively new, but it saved us over 200 mandates already. We continue to launch new products in the buy-to-let space, as you can see under revenue. We've increased our regional expansion hiring teams throughout the U.K. And one of the things we don't talk about as much, but that we should remember is earlier this year, we completed the GBP 2.5 billion residential mortgage sale. We sold GBP 584 million of unsecured personal lending, and we raised GBP 250 million of AT1 that was significantly oversubscribed.

Let's talk about corporate and commercial and SME lending for a second. Again, we had lots of proof points to choose from, but this will give you a sampling because I know it gets a lot of conversation and discussion as it should. 88% of the corporate lending we did was direct through a relationship manager, not broker-led, direct through a relationship manager. 2/3 of the lending we're doing occurs outside of Greater London. We support the U.K. economy. We support the communities in which we operate.

And the businesses we're lending to -- I get asked whether these are all start-ups. They're not. The businesses we're lending to have been in business on average between 10 and 20 years and have circa of 300 employees. And if you think about the quality of the lenders and the credit team that supports this activity, you can see towards the right, for the sectors we lend into, our corporate lenders have over 10 years of experience in those sectors. Our credit underwriting team, again, that reports independently of the lending team, has between 20 and 25 years of experience in their specialist sectors.

And again, the market is quite large. We're just taking a small piece of a very big market. And on the right of this slide, you can see that we turned down GBP 3.5 of credit for every GBP 1 we did. We saw GBP 4.5 billion of corporate credit opportunities, and we only did GBP 1 billion of lending. And the reason we turn it down is because we're very disciplined on risk-adjusted return on regulatory capital. That accounts for about half of the reason we turn it down. But about 1/3 of the reason we turn it down is because we didn't like the structure of the underlying facilities. And then 15%, we just didn't think the information was sufficient.

So from this slide, it's pretty simple to take away. We know our customers we're lending to. The customers we're lending to have been in business for a long time, and we're extremely selective and discerning about who we do business with. So this slide you've seen before. I guess let's talk about what it means to be in clear blue water because we're there already. This strategy that we're already delivering has put us into clear blue water, the lowest funding cost of any bank on the high street and yields in line with specialist lenders.

That means that clear blue water allows us to deliver the highest net income in the history of Metro Bank, the highest revenue in the history of Metro Bank, the highest net interest income in the history of Metro Bank, the highest NIM in the history of Metro Bank. And it's not just those measures. We had the highest growth in revenue of any bank that's reported in the U.K., the highest growth in NII of any bank that's reported in the U.K. That is clear blue water. That allows us to almost triple return on tangible equity over the next 2 years. We are very confident with the path forward from here to a greater than 18% return on tangible equity in 2028. And with that, I look forward to taking your questions. Thank you.

And with that, I look forward to taking your questions.

[Operator Instructions] Our first question is from Benjamin Toms from RBC Capital Markets.

You provided for the first time your interest rate sensitivity on Slide 15. I guess it's a bit odd talking about rates downside rather than upside given where the curve is today, but I guess rates can be volatile. But the disclosure notes the sensitivity excludes management actions. Broadly speaking, what proportion of the GBP 40 million headwind do you think you could offset with management actions if we were to get a shock in rates from here?

And also on the slides, you noted that you started to build a structural hedge. Is there any more color you can give us on this, whether that's natural size, swap duration or the locked-in yield? And then secondly, your RoTE guidance of greater than 18% is attractive in a sector context. Do you mind just letting us know what CET1 ratio assumption underpins that guidance? And given ongoing MREL tailwinds, presumably you're comfortable talking about RoTE increasing further once we go beyond 2028?

Sure. So I'll start, and I'm going to turn it over to Marc on the interest rate sensitivity and the structural hedge. I just want to make one comment on the interest rate sensitivity because I think we prepared it slightly differently than I think other financial institutions intentionally to try to provide more transparency.

So a lot of the interest rate sensitivity you see by the other banks is on a static balance sheet. So it literally does a parallel shift on a static balance sheet, assuming some form of a beta. We did not do that. So the interest rate sensitivity you see is on the balance sheet as it evolves over the next 2 years. So again, I think that gives you a sort of a worst-case scenario. If we did a static balance sheet, the numbers would be significantly less.

And with that, I'll turn it over to Marc.

Thanks, Ben. So look, on the actions, I think all of the actions that we would take help to deliver the guidance that we've set out. We haven't gone into the specifics in terms of which combination of actions because I think it's very rate dependent. And I think to your point earlier, as we look at today, the rate curve actually looks more positive than even the guidance we provided. So I guess we've provided the sensitivities as things get worse. The underlying assumption today is the rate curve won't be as we've guided.

But clearly, we're very nascent to what happens in different environments, and we can take actions to offset accordingly. And there will be similar actions as we've set out on the left-hand side of that page, which will be deposit betas, it will be cost management actions, and we have taken positions in terms of our hedges. You did follow up with a question in terms of natural hedge sizes. As our book is changing, as we pivot to more corporate and commercial, more of that book becomes floating. So as mortgage assets, we put through disposals, the GBP 584 million we put through in terms of unsecured lending, those were largely and predominantly fixed positions.

Over time, as we lend more commercial, our book becomes more floating, and we will, therefore, put on positions to fix relative to the growing fixed current account base that we have. So look, there is -- I think as of today, we have up to GBP 2 billion of hedges in place, and that will augment our strategy as we grow over time in line with the plans.

Good. Thanks, Marc. In terms of the greater than 18% in the CET1, at this point, Ben, we haven't really guided CET1 out that far. I'm not really comfortable doing it because it starts to get into a capital return story. Clearly, as we're generating greater than 15% return on tangible equity, the business can't organically use all the capital it's generating, which means that we are going to have to introduce a capital return strategy that we'll talk about at the end of this year, so everybody can start to have a little bit more clarity. As part of that, we'll start to provide a bit more transparency about where we think CET1 will settle.

But it's hard for us to do that today because we need to really debate the capital return strategy and then share it, which will drive the CET1. You're absolutely right that, listen, just the MREL alone, if we call it in 2028 in April, it creates a 4% annualized benefit, which means we really only get 3/4 of that in 2028, which means there's another 100 basis points in and of itself for 2029. But even beyond that, this model continues to generate outsized returns as we move beyond 2028 as we continue to transition the balance sheet, as we generate organic capital that allows us to grow, as we continue to take advantage of our funding advantage and grow deposits cheaply. Yes, we're confident that beyond 2028, we still have room to stretch our legs.

Our next question is from Edward Firth from KBW.

I had 2 -- or 3 questions actually. I mean the first one was, I noticed you've dropped the 8% to 10% CAGR guidance. And I guess I just -- yes, it would be helpful to get some sort of steer from you as to what you think the sort of growth cadence is in terms of the loan book. And I'm thinking particularly near term, I mean, is double digit for '26 something that we should be thinking about? Or should we still expect to see it reasonably low? And I guess related to that, you gave us some very good data, actually very interesting data in terms of the type of customers you're lending to in the commercial book. But I just wondered if you could give us more color about what sectors is that? Is it manufacturing? Is it property? Where is this lending? Where is it that you see you've got competitive advantage against peers? So that was the first question.

So I'm going on a bit. The second question was, in terms of deposit pricing, your deposit pricing is clearly impressive and a competitive advantage, but you're not growing it at the moment. And I'm just wondering how confident you are that you can sustain that sort of level if you're having to attract incremental new deposits. So how should we expect that deposit pricing to evolve in a growth market? And then finally, sort of related to that, we all got very excited about AI this year and what that might do in terms of deposit sweeping. It seems to be that your deposit customers would benefit hugely from that sort of product. And I'm just trying to think how worried you are or concerned you are that if that becomes the reality, that might have quite an impact in terms of the business model?

Listen, Ed, that's a suite of really good questions. So we dropped some of the specificity around the guidance mainly because we thought we've moved far enough forward that we didn't have to provide that level of granularity. We do have the meeting on Friday. I hope you're going to make it because we're happy to spend some more time going through a level of detail. But let me be really clear, and I'll do originations because it doesn't always tie to the balance sheet, which I accept, which makes it a little hard. But we did GBP 2 billion of new corporate and commercial originations last year. I would expect that number to increase by 20% to 25% again this year.

So still super normal growth in corporate and commercial originations. As I said, we're spoiled for choice and have opportunities to even do more than that. In terms of specialist residential mortgages, in terms of new origination, I think it was about 1.7. My guess is it will be around there, maybe a little less, maybe a little more. That's a market we take advantage of. We have a very small market share. We don't want to have that big a market share. And so we just -- we trade when the margins are where we need them to be.

I think over time, over a 5-year time horizon where that 8% to 10% CAGR come in, it probably ends up about there with the runoff book and everything else. I think that's probably still reasonable. But new originations on corporate and commercial, we still have plenty of opportunity. In terms of the where, really good question. So -- and we've said this before, so I'm happy to repeat it. We're very good in hotels. We're very good in hotels for the elderly care homes. We're very good in medical practices and so dental groups and physician groups. We're very good in other sectors, and we do some other one-off bits that are quite attractive. We have a very large flower grower and all that kind of good stuff.

But broadly, we are U.K. domestic lending. So we do not do a lot of manufacturing. We do not do a lot of transportation. We do not do a lot of places where you need a lot of FX, FX forwards, where you're buying goods in from all over the globe, where you're shipping goods out all over the globe, where you're broadly running a distribution center or any of that, that's not really where we excel today. That does not mean those aren't in our future plans as you get beyond sort of '27, '28. But as we sit here today, we're really good in certain sectors. We're still quite small in those sectors. So we're not overly concentrated, and those are the sectors.

In terms of deposit pricing, it's a great question because -- and it gets back to the AI thing, and I'm not going to get into everybody being very excited about AI because it does wind me up a bit, although I must admit I'm spending a chunk of my time. But what we do well is we do transactional banking well. So we look after your current account really well. And so for customers in the retail side, we make sure you can buy your Domino's on a Friday night and you can do your -- buy your tickets for arsenal and all of those kinds of good things.

And on the commercial and corporate side, we have good cash management services, good FX services. We do FX forwards, and we do some of that. So we provide a full suite of operational activities for those businesses. And current accounts in the second half of 2025, it did grow by 3%. So we are seeing current account activity. We opened 110,000 new current accounts during 2025. We are seeing good current account activity. In terms of sweeps, actually, we're fine. Like we want to encourage businesses to put cash to work if they can. For the most part, we see most of the businesses, SME and commercial and corporate keeping in their transacting, their operational accounts and people as well, about the right amount of money.

I mean everybody needs to keep a bit of a cushion, God forbid. So we're not overly concerned about sort of sweeping functionality and anything else. And again, we do think there's room to grow current accounts. We do think there's room to continue to push forward. We continue to invest in some of our digital offerings and some of the things where, honestly, we're a bit behind the competitors, which will give us another leg to our growth story. And we're pretty confident in that path forward.

Our next question is from Daniel David from Autonomous.

Congratulations on the results. I just got a couple. I realized you kind of mentioned about longer-term CET1 guidance. But I just wanted to ask, I noticed that CET1 dropped marginally this half-on-half. It looks like RWA density is driving that. Do you think CET1 will drop again in 2026 before increasing? And if so, could you provide a guide?

And the second one, I guess, is just on the MREL topic. I know that your slides include or you have been discussing the call in 2028, and there's not much discussion on a potential buyback. So is that reduced in priority? Should we kind of take that off the table as an option? Just interested in your latest thoughts regarding potential buyback of the senior paper.

Yes. I'll answer the questions in reverse order, if that's okay, because I'm going to let Marc take the CET1 question. In terms of MREL, we would buy back tomorrow if people would sell it to us at a price that it makes economic sense. The problem becomes is it's trading at such a premium that we can't make the math work to buy it back today. Now as we get closer to its call date, does the price start to normalize and start to tend back to par? Maybe.

Does it tend back to par sufficiently that the economics work in our favor? Maybe. If it does, we would absolutely execute a buyback. So we look at it pretty frequently. We have -- again, we're pretty loyal to Morgan Stanley. Morgan Stanley works with us on that math all the time. If it became economically viable, if it became in the shareholders and other stakeholders' best interest to buy back, we would do it tomorrow. Just at the moment, given where it's trading, we can't make the math work. So again, I think all our plans assume we just call it in April of '28.

And I'll let Marc talk about the CET1.

Yes. So I think, so in terms of -- from CET1, it was -- stayed constant over the course of '24 to '25. You're right in terms of density of RWA. So actually, the strategy is working. We would expect the RWA density to increase. So as we pivot more into commercial, our density will increase from here, which is deliberate and is in line with the guidance we've set.

And actually, we'll show that the strategy is working. We don't provide half-on-half one set guidance. But I think the position is clear. We're now organically generating sustainable profits, which helps fuel the growth. We've got the capital and the liquidity, and we're comfortably within our positions to fuel all of the guidance that we set out ahead.

And I would just add that we have a very strong Tier 1 position as well. The issuance of the AT1, and we actually even upsized the AT1, one because we had huge demand for it when we went to provide a bit more Tier 1 headroom as well. So you do need to keep that in mind as we continue to grow.

[Operator Instructions] Our next question is from Bridget Marchington from Barclays.

So your costs came in better in 2025 and you've obviously guided to holding it flat in 2026. So it's pointing to a slight uplift to 2026 and with the ratios in the cost income guidance except implying a slightly lower revenue. So I was just wondering if you could speak a bit more about the drivers of this? And then a second question on the NIM. So you've lowered the lower end of your exit NIM. And I was wondering if you could speak to the drivers of this and [indiscernible] operating environment and how you're navigating that potentially on the competition side of things?

Okay. Great. It was a little -- you broke up a little bit. So I'm going to do my best. I think I'm going to try to do my best. I'm going to turn a little bit over to Marc. But on the cost-income ratio and the bringing down of the NIM range ever so slightly, we think it literally -- if there's an income headwind, it's rates. The business is performing really well. We're continuing to be spoiled for choice on asset origination. We continue to be very disciplined about deposits. It's rates.

And so we just don't quite know where rates are going, which means we have to be very disciplined about cost, which is why I think for almost everybody, their model -- I think Ed might have been slightly different. But I think everybody would have had higher costs in their models as you look at 2026, and we're going to outperform that to give us a bit of cushion in case rates develop. And again, if rates -- again, who knows where rates go. But if rates develop the way we'd hoped, we'll deliver a NIM that is well within that range.

And I'd also say, I find it a little hard to not want to say that we are growing NIM, okay? So the reality is I don't know how many other financial institutions are giving you the NIM growth profile we're giving you because of the asset rotation strategy we're taking even in the face of rate headwinds, we continue to expand NIM. So yes, the lower end might have moved a bit to provide a bit of cushion in case rates drop faster than we think. But the reality is we are growing NIM.

And then in terms of the NIM, I don't know if there's anything else you'd want to add, Marc?

No, only just -- I think there's a really good general expense note on costs, which actually, if you look at it, it's the quality of the cost management actions, which is right across the board. So it's consistently all the way through that discipline in our cost profiling. And as Dan said, look, we are -- who knows where rates will go, but the actions we've taken so far to offset the 100 basis points reduction have worked, and we'll continue to deploy them in whatever rate environment comes next.

And the costs are in footnote 6 of the preliminary financials.

[Operator Instructions] We currently have no further questions. So I will hand back to Dan for closing remarks.

I just want to thank everybody for taking the time this morning. I genuinely appreciate it and appreciate your engagement, and I'll speak to you again soon. Take care.