Good morning, everyone and thank you for joining us today. I'm sorry that we're not able to do this in person. And for our U.S. shareholder base, I apologize for the early start. Inevitably, without meeting in person and having to prerecord the presentations, it will seem a bit flatter than normal. We, obviously, need to start saying the first half of the year has been extremely challenging given the pandemic. And while it's unusual, I wanted to start with a video this morning to let you all see some of the great work our colleagues are doing in the community. [Video Presentation] That video simply makes me proud. Our colleagues have been more Metro and really stepped up to make us a great community bank during these unprecedented times. We said we would prioritize our customers, communities and colleagues. And that video encapsulates a small sample of our efforts. I said in February when I took the job and I believed that Metro would be successful over the medium term, because of our colleagues. Nothing has changed. And I genuinely believe our colleges are our secret sauce and is the part of Metro that will make us successful. Now let's crack along with the agenda. You'll see we've provided a bit more detail here on what we've done to support our customers, our communities and our colleagues. I'm not going to spend a lot of time on the slide, but I do want to just highlight a few bits. We processed over 9,000 payment deferrals. In a normal year we process 15. We processed over 25,000 BBLS loans and we've extended over £1 billion of government-backed lending. We've kept every single store open. We're the only High Street retail bank to be able to say that. We've answered calls, processed payments, we've done everything we had to do to run the bank. For our colleagues, we provided additional support in extending sickness leaves, granting additional days to Amaze and creating a £2 million banking fund, amongst many other initiatives. I don't think this slide will be revolutionary for anybody but I thought it was worth recapping before we get into the financials. Every bank, anywhere in the world being affected by COVID is affected directly in four areas of their operation. Operational resilience

our ability to respond to the largest humanitarian and economic crisis to face London in my lifetime. We've done extremely well in the face of the pandemic. Our colleagues have truly stepped up. Fee income. Obviously, our fee income is generated by macroeconomic activity. It's what being event gives. And clearly lower economic activity; be it reduced cash usage, less travel, creating less FX income, has really been impacted through the crisis. Credit provisioning. While we haven't seen an increase in actual defaults or actually even in an increase in non-accruals our credit provisions are mainly driven off the economic forecasts that Moody's Analytics have built. Those forecasts show a meaningful drop in house prices and a significant rise in unemployment. hose factors led us to use judgmental overlays to make sure our provision expense was prudent for the period. And clearly, margin compression given the historically low rate environment creates challenges for the bank. I don't think any of this should be a surprise to anybody. I want to be really clear our strategy stays the same. There is nothing that's occurred in the pandemic that changes the path forward for Metro. It's still a J-curve turnaround. But it may be a bit deeper J, but it is still the path forward that we believe in, we will execute against and we will deliver. The drivers to make this happen as outlined in February are costs, infrastructure, revenue, balance sheet management and internal and external communications. Again, those are the right drivers for a community bank and they're the right drivers for Metro. The good bit and the bit that you may find surprising is we've made really good progress since February in delivering across those vectors. But I'll come back to that later. Right now let's get into the financials. David, over to you.

Thank you, Dan, and good morning everybody. First up our KPIs for the first half. Clearly, overall financial performance has been severely impacted by COVID, although we have seen strong customer account growth and good momentum on deposits. Our underlying loss before tax of £183 million principally reflects the impact of the pandemic. We estimate the direct impact of COVID to be £109 million in the first half. That's £97 million of incremental ECL expense and we've also seen pressure on fee and other income as a result of the lockdown. The statutory loss of £241 million was further impacted by a number of items, most notably furthered remediation expenses and a one-off charge associated with exiting our Old Bailey office in London. You can see on the slide that capital and liquidity remain robust and above requirements. And overall and I appreciate that these are a challenging set of financials, the core franchises continued to progress and we have delivered in line with our expectations whilst also absorbing the operational challenges presented by COVID. Turning to revenue. NIM reduced 25 basis points to 115 bps, principally because of the timing lag on asset and liability pricing as base rates fell 65 basis points in March, combined with the decrease in the loan-to-deposit ratio to 95%. We would expect NIM to increase in the second half as cost of deposits continue to reduce. The exit rate on card was 60 basis points versus 82 basis points for the half overall. On fees, the impact of lockdown measures were keenly felt. We saw lower income from FX and reduced transaction volumes overall. It's difficult to guide for the second half on fees. Suffice to say, we are seeing volumes steadily increase. Although consistent with the broader market, they remain materially below pre-COVID levels. On costs, we've been very disciplined on Run the Bank costs with growth contained at 2%. This is after opening six new stores delivering our first above-the-line brand campaign and absorbing the incremental costs of COVID such as PPE in stores, colleague kit for working from home and the thank you fund for our frontline colleagues without whom we wouldn't have been able to maintain our strong customer focus and keep all our stores open. We've also taken action to maintain continued cost discipline going forward. And for H2 cost trajectory, we would expect a low to mid-single-digit growth again over the half one outturn. On Change the Bank, we're right on track where we said we'd be albeit the capitalization rate is higher than you might expect. We expect this to be a timing difference. The total investment spend parameters that we guided in February remain appropriate though we may choose to flex the rate of Change the Bank spend in H2. There's an accelerator and a break. The rate of spend in H2 will depend on operational capacity and the business' readiness to deliver and accept change. Now turning to credit risk and starting with our methodology and our assumptions. Our macroeconomic scenarios have been provided by Moody's Analytics and we've used three scenarios with the weightings 40% base case, 30% upside and 30% downside. The COVID-19 ECL expense is principally a combination of modeled overlays and expert judgments which is used where the underlying risk is masked through payment deferrals and our models quite understandably have not been able to fully capture the impact. In applying these scenarios, which are at the most severe end of the range, particularly for HPI and unemployment combined with the resulting overlays and judgments, we believe we have appropriately captured the impact of the pandemic. However, as you all know there remains considerable uncertainty as we move forward. ECL expense is broken down as £15 million underlying. The underlying book is performing as expected, albeit a limited number of single-name concentrations have elevated the commercial charge. There's also £97 million of COVID-related ECL expense, £15 million of single-name exposures, and £82 million of macro overlay and judgments. Assuming the economic outturn follows our scenarios or is better, then we would expect the H2 ECL expense to remain materially lower than H1. As defaults begin to emerge and we've seen very little to-date, then we would expect to release the overlay to offset defaults as they come through. Key risks going forward are clearly a further lockdown leading to a worsening of the economic outlook and any unexpected single-name defaults on the commercial book. In terms of asset quality, we have seen no material change in lending mix, underwriting standards, or underlying credit quality and we have maintained our disciplined and prudent attitude to lending throughout the period. On the slide, we've broken out more detail than usual as we think it's appropriate given the backdrop. You can see cost of risk split underlying and COVID-related as well as ECL coverage ratios and stage migration of which there is little to-date. Residential mortgages remain the largest components of the lending book at 68% of gross lending. The book continues to be highly collateralized with an average debt to value of 59%. We initially granted repayment deferrals to around 25% of our mortgage portfolio with 99% of those customers being up to date prior to deferral. As at the end of June, active deferrals represented 16% of the portfolio. And since that time they have fallen further by over 45%. As you know payment deferrals do not automatically trigger a significant increase in credit risk and therefore, we've not seen any material stage migration at this point. We will be forming PRA guidance on our decision tree analysis regarding stage migration post deferral. Commercial lending increased in the period predominantly reflecting the government-backed lending we have provided representing around 20,000 customers and approaching £800 million of lending at the half year. Debt-to-value ratios remain broadly low across the portfolio. And in terms of COVID and its potential impact, we have reviewed every single name with loans of £2 million and above. We know all these customers individually and we have enhanced diligence in place to ensure the appropriate monitoring and support is provided to customers. Here's the P&L for the half. I cut most of the items on this page though it's worth dwelling on exceptional items. A total of £31 million of charges relating to the exit of one of our Central London offices at Old Bailey is included within the impairment and the transformation costs lines. There's also £18 million of remediation costs which is largely associated with the ongoing work on the bank's previously disclosed sanctions procedures. We recognize that the work on sanctions is a significant figure. We are being very thorough in this work and are engaging a number of expert third-parties. We also believe the program is consistent with other programs of a similar nature that have happened elsewhere in the market. For H2, we would expect these remediation costs to be broadly consistent with H1. Turning now to the balance sheet which remains relatively simple and very liquid. Our liquidity coverage ratio at 226% remains strong and we remain comfortable at this level for now given the uncertain macroeconomic [technical difficulty] the additional funding available to us as a result of TFSME. It provides additional flexibility to our funding plans including the repayment of TFS. Turning now to deposits, we're really pleased with the growth in retail and small business deposits which were up 13% in the first half and 32% year-on-year. These deposits now make up 73% of the book which is a marked improvement in stability given the events of last year. Two factors at play here. One is the growth in retail deposits reflects lower transaction volumes during lockdown with customer spending less a perfectly understandable dynamic. We've also experienced some SME customers retaining BBLS drawings in their current rather than deploying the cash immediately which again is an understandable customer behavior. It's also worth flagging the favorable mix shift we're seeing in deposit types; 34% in current accounts, up from 30% at the full year with a corresponding reduction in fixed-term deposits. This is a positive driver for COD. Given the various dynamics and the uncertain backdrop, it's difficult to provide guidance on the trajectory of deposit growth, but we're pleased to have already achieved our objective for the year at the half year. Indicatively, we would expect continued mix shift towards retail and SME and we will be comfortable with total deposit balances being broadly flat in the second half. Cost of deposits were 82 basis points in the period. This is reflective of initial higher mix of high-cost fixed-rate accounts, which are now rolling off. You'll recall that we took in a lot of FTDs across May to July last year. As these are now rolling off it will provide further momentum on COD into H2. The base rate cuts in March moved the exit rate significantly lower to 60 bps and we would expect the second half to outturn below this level. And to reiterate this should be a positive driver for NIM in the second half. Finally from me on capital. Our capital position remains above requirements. Total capital ratio was 17.3% and our total capital ratio plus MREL was 21.3%. The capital position has benefited from the CRR Quick Fixes firstly from the IFRS 9 transitional agreement, which has largely offset the ECL expense impacts. Secondly, the changes to the SME supporting factor added 60 basis points in the half. As we look to H2, RateSetter will have a limited impact on our capital position as we are not taking the back book. And just a couple of comments on MREL if I may. The Bank of England's MREL framework review is due by the end of 2020, so timing on any MREL raise will be subject to the outcome of that review. Pending the outcome, we may consider raising MREL in H1 2021. In the intervening period, we will assess the most appropriate route to market recognizing our experience in October 2019. Additionally, during that intervening period it is reasonable to assume that our MREL resources may fall below the sum of the MREL requirement plus buffers, which is 20.5%. So before I pass on to Dan a few concluding remarks from me. Despite everything this half, we are operationally on track and we continue to have momentum across the franchise. We have shown good cost discipline. Our approach and response to COVID has been appropriate. Capital and liquidity remain well above requirements, whilst recognizing and acknowledging MREL continues to be the binding constraint on the bank. All that said, we do not underestimate the current and the future challenges. And in response, we have adapted and accelerated our plans as evidenced by RateSetter, and we remain entirely focused on executing our strategy as set out in February. And with that, I'll pass back to Dan. Thank you.

Thanks David. As you've seen from the financials, it's been a difficult six months. There's little doubt the organization has been significantly impacted by COVID, but we shouldn't lose sight that the core operation be it deposit growth, controlling costs has delivered in line with the expectations we would have had when we laid out the strategy in February. Our colleagues and the business has responded well. From an operational perspective, we saw an increase in absences which have now dropped back down, completely to be expected given the pandemic. We did manage to keep all our stores open during the pandemic. However, we did have to modify opening hours. And while we're now back to being open seven days a week, a true differentiator for Metro, our opening hours are not quite back to normal. We have decided to accelerate the rationalization of our main Central property portfolio. Our Central London real estate portfolio was quite expensive and needed to be rationalized for us to deliver against the plan. We mentioned it in February. We were very clear that Old Bailey building was very expensive and didn't seem to make sense from a strategic point of view. We've now decided to exit the building and no colleagues will be returning to Old Bailey. This is possible by the success we've had as have many companies in being productive working remotely. Our remote workforce has been at least as productive and maybe more so than when in the office. And when we asked our colleagues, most didn't want to go back to work five days a week. We did a survey, and only 4% of our colleagues currently working at home said, they would like to go back into the office five days a week. So between a combination of remote working and using all that extra space we have in stores, be it below, above, around the stores that were part of the leases that were negotiated, we can successfully exit Old Bailey and stay as productive. I do worry about talent development and holding the unique Metro culture with a peripatetic workforce, but our return to the office plans really do address those concerns and we'll find that as we bring people together in London we'll make sure that a big chunk of that is for cultural-building events. We've launched BBLS and CBILS. We've provided forbearance. We've done all the other measures the government has rolled out to try and support the economy. As a community bank, we thought it appropriate, although it was operationally difficult lots of colleagues work seven days a week extended hours to make it all happen. In addition, the operational impact from BBLS in 13 months' time when borrowers need to make the first payment should not be underestimated. Fee income is directly tied to economic activity and we've been impacted like every other bank. In the next slide I'll provide a little bit more detail on economic activity as we've seen a bit of an uptick. Credit provisions are driven by Moody's economic forecast. We believe the assumptions we've used are appropriate given the current economic contraction. To be clear this is the most severe and rapid economic contraction I have ever seen and our provisions are prudent in light of that. We're also preparing for the road ahead. This is the start of the journey not the end, so we're actively building out our customer support infrastructure to help customers during this difficult period. As people roll off of furlough and are made redundant as individuals find it challenging to find a new role, we need to be ready to help them in a Metro manner. We will be a patient creditor and will work in the communities we operate. Metro can only be as good as the macro environment we operate in and only as good as the communities in which we're involved. Margins are compressed and are likely to stay that way for some time given the historically low base rate. While David highlighted the transitory nature of some of the NIM decline in half one, and we expect that to return in half two, it still doesn't get us to acceptable margins going forward. So Metro needs to take actions to reposition its asset mix to drive higher margin. The acquisition of RateSetter and the further investment in specialist mortgages will help accelerate the asset mix shift. It's hard to believe that the strategic plan was launched just five months ago. But the good bit is it's still the right strategic plan for Metro going forward. So we said, we'd provide you some data on economic activity. The interesting bit of this slide is it really shows a precipitous drop at the start of the lockdown and since easing has begun a real build back up in activity. To be honest I've never seen a drop in activity anything near what was caused by the lockdown. And while it doesn't quite look like a V, it probably looks a little bit more like a check mark or a check or a Nike Swoosh there's little doubt the trend in activity levels is positive since lockdown was eased. And I do want to highlight and it should be mentioned that we continued to open new accounts for new fans throughout the pandemic. So this slide hasn't really changed since February. We've guided some bets in terms of our response to COVID, but the strategy stays absolutely the same. And it is absolutely the right path forward for Metro. There's little doubt that our service led model with extended hours dog-friendly, lollipops, creating fans not customers, allowing customers to choose channel, investing in digital and telephone, as well as our store estate gives us the foundation, on which to build. The opportunity to meet more customer needs be it unsecured personal lending, overdrafts, credit cards, small business lending, business credit cards, insurance are all still available to us even with the pandemic. We have an amazing group of colleagues who always stand ready to help our fans. And as we introduce more products, I have complete faith they will be able to meet more and more customer needs. I was clear in February that Metro had room for improvement in meeting those customer needs. And when compared to a normal community bank, we still struggle to do the basics well. RateSetter and its unsecured lending platform is a step to addressing some of these deficiencies. As stated in February, this isn't a cost-out plan. There's no way to turn Metro around by simply shrinking to success. We absolutely need to grow. Our fixed cost base are too high, too much capital was invested into the stores and it puts us in a position where the path forward is about growth. And as I said in February, the good bit is there's lots of things that we're not very good at. And as we get better at them, unsecured lending, small business lending, et cetera, we meet more customer needs, we generate more revenue and we begin to leverage up the fixed cost base. And as Metro grows into its skin and gets to scale, we can generate increasing returns for shareholders. Now given the historically low interest rates, there's clearly more interest rate urgency to change the shape of the asset book. There's little doubt that the plan was always predicated on entering the specialist mortgage market in building an unsecured lending portfolio in offering better credit card products in building out overdrafts. All of that was clearly part of the plan, but we need to do it quicker and we need to move with more urgency than the original plan laid out. So these help recap where we are four months into the strategy. And we've done a fair amount on cost in a very short period of time. Choosing to exit Old Bailey 12 to 18 months before it was in the original plan, exploring all lease options with our landlords across every store to see if our current liquidity might be of interest to them in exchange for revised lease terms. We will continue to push and be disciplined about store openings. We're only going to open one store in the next 12 months and two stores in the next 24 months. So I promised in February, we were putting our foot on the ball in terms of slower store expansion. And we are. This gives us a chance to enhance the model and get the growth necessary to leverage up the fixed cost base. In terms of our infrastructure, we've done a lot. Between delivering across all of the government initiatives, we've also invested in new products and the plumbing of the business, things like financial crimes, financial controls, regulatory projects and cyber have seen significant investment in the first half of the year. We also signed a contract with Wipro to outsource certain IT functions, which provide us some flexibility and anchors us to a lower cost structure that should provide benefits as we move forward. The revenue story was definitely superseded by helping the government enact all of the various initiatives. BBLS, CBILS, processing forbearances et cetera absolutely distracted us from some of the core revenue-generating initiatives. However, even with that, we've managed to launch business account opening online for friends and family with a full launch expected shortly. Again, this digital service -- while Metro stores get talked about a lot, our core digital offerings don't get the mention they deserve. The business account opening service is as good as any of the current providers in the market. We're quite excited to get it launched. We also managed to begin and complete discussions with RateSetter, while laying out a new strategic imperative in specialist mortgages. And again, the one place that clearly was slowed by COVID was balance sheet optimization. We continue to stay fully committed to driving risk-adjusted returns on regulatory capital. We talk about it all the time. We view every decision we make through that lens. However, COVID has limited our optionality around some of the actions we may take over the medium term. Now let's talk about the RateSetter acquisition. We've been clearly signaling our ambition to grow unsecured lending. Purchasing RateSetter for £2.5 million upfront with £0.5 million deferred for a year and £9 million payable in three years depending upon volume and other triggers is a pretty low-cost acquisition for Metro to make, especially when compared against the cost to build a similar platform. At some level, it's a very straightforward buy-versus-build decision. Another strength of the RateSetter acquisition, given the uncertain macro environment is we're not acquiring the existing lending relationships. Those relationships are funded by the existing investors in RateSetter. Those investors have benefited from interest they've received on those loans over time and we see no reason to disrupt those relationships. And those investors will see out those investments, which will run down over time. So the acquisition doesn't create incremental credit risk for Metro Bank. There is no back book. It is one of the structural pieces of the transaction we worked hard to achieve. The logic of the acquisition is I think relatively self-evident. And I'm clearly biased, but I think it's relatively self-evident. So RateSetter was struggling to find funding. The reality is that we have plenty of funding. We continue to generate low-cost sticky deposits, so we have the ability to really leverage up RateSetter's operating model, getting even greater scale in the unsecured lending market. It also provides us a really rapid and cost-effective route to market and the ability to embed the processes within our stores to allow us to meet more customer needs. So listen, we're really excited about the acquisition and we're also really excited about the great group of colleagues that will be joining the Metro family. It's a great business. Their asset-origination model, scorecards et cetera will be additive to Metro. Rhydian, the CEO and founder of RateSetter sees the logic of the combination with Metro as do we. And for clarity we're keeping the RateSetter brand. We'll continue to use it especially on platforms where the Metro Bank brand isn't used. And as I said we'll definitely roll out the functionality into our stores. So this slide David's covered for the most part so I don't want to spend a lot of time on it, but there's just a couple of bits I do want to highlight. The first is that, if you looked at the February guidance we're not far off from delivering across almost all of those metrics. Considering, we're in the middle of the worst economic cycle, I've ever lived through in the middle of a pandemic, the fact that we can stand here today and tell you the second half guidance is not far off of what we said in February, gives you an indication of how well the underlying business is doing. Another thing I think I need to highlight is expected credit losses. So you saw the provision expense in the first half of the year. It was really driven by IFRS nine and the Moody's models that were prudent in particular around HPI drops and increases in unemployment, but it would be a mistake to simply annualize the first half charge for the second half. Assuming our economic forecasts hold up and the economy doesn't worsen meaningfully, we don't expect the second half provision expense to match the first half. And I would just like to reiterate what David already said around MREL. We will be below total capital plus MREL thresholds of 20.5% during the second half of the year. We know that. Our Board knows that. And we provided a forecast for the regulator that provides clarity. Given the MREL framework review that's being done by the regulator, we're more than comfortable operating this way through year-end. And if we need to we'll raise £200 million to £300 million of MREL in the first half of next year. So now on to the 2024 outlook on this slide. And I hate to be following the pack, but I don't think we really have a choice. Every other bank and almost every other company has withdrawn guidance. And we simply cannot provide guidance over the medium term. We have no idea where the pandemic's going. We have no idea, if we can successfully reopen the economy and then hold it open without having to go through a second lockdown. You can look what happened -- is happening in the U.S. or Taiwan or other markets around the world and you simply can't predict where it's all headed. So given that uncertainty, it's just too early to establish if our medium-term financial targets are going to be impacted. So in summary, we've been unwavering in our support for our customers our communities and our colleagues. To be honest that's what being a community bank is. Inevitably the financial results have been challenging over the short term given the effects of COVID. It is amazing to me how quickly COVID has had such a severe impact on the global economy. Metro continues to be a deposit-gathering machine. It is the piece of Metro that we told you in February was a critical component for Metro growing into its skin for achieving the strategy. And with retail and SME deposits up 32% year-on-year and overall deposit growth of 8% in the first half and 14% year-on-year, being quite strong we remain very confident that the deposit-generating engine of Metro is intact. And that is the key plank along with meeting more customer needs to deliver the strategy. And very pleasingly we've seen a huge shift to more current accounts and a reduction in fixed-term deposits. That trend will help margin in the second half of the year and beyond. The strategic plan as outlined is absolutely the right path for Metro. I still believe in it. Our colleagues still believe in it. And I'm confident in its delivery. We clearly need to accelerate our asset mix shift. It was always part of the plan. But given the low rate environment we have no choice. It's one of the reasons why the RateSetter acquisition made so much sense. Cost discipline remains focused. We spend more time talking about cost as a leadership team than we have since, I've joined the bank. We're not opening as many stores. We're exiting London office space. We're outsourcing IT services where appropriate to ensure, we contain costs. Lastly and potentially most importantly we've refreshed the Board and management in the last few months. We have attracted talented hires for the executive management team and have attracted a Chairman of real quality in Robert Sharpe. So with that David and I are happy to turn it over to the -- to questions and I want to thank you very much for your time this morning. Thank you. Sandra, over to you.

Thank you. [Operator Instructions] And our first question comes from the line of Benjamin Toms from RBC. Please go ahead. Your line is now open.

Good morning. Thank you David, for taking my question, firstly, in the presentation you noted the potential for the bank to fall below its MREL requirement, before new issuance next year. Could you just provide some color on any discussions you've had with the regulator on this? And secondly on the CET1 capital ratio, please could you give us some guidance on the half two outlook, including the benefit from potential software intangibles which I think would be quite material for you guys? Thank you very much.

Yeah. So Benjamin, good questions and I -- it's not surprising they're top of mind. So I'll talk a little bit about our interactions with the regulator. And then I'll turn it over to David to talk about, the forward-looking CET1 capital build. So we have been providing the regulator financial updates, since we started doing the strategic work, in September October. We continue to do that. We've provided them forecasts for the next five years, with a focus on the first 24 months that make it clear where we think the financial performance of the organization will be, during the down part of the J curve where it starts to flatten out, and where it starts to come back. And as part of that, we've been really clear about what the capital profile looks like. So I'm not going to recap, any of the conversations we specifically had with the regulator, but there is real clarity in the conversations we've had. And I think there is an understanding of the financial profile of where Metro goes from here. And I just -- I want to be clear that, there is an MREL review going on. And I know some of the analyst community who have written about. And I hope become more vociferous about. And become very vocal at the moment because while the review is going on, I think for those who believe the MREL regime should not apply to a bank at the scale of Metro, we need to be really clear. Because to be honest, if we were in France, or Germany, or Canada, or Hong Kong, or the U.S. or even Latvia Metro, Bank could be six times larger than it is today, maybe five times larger than it is today, before it would be caught by a loss-absorbing capital regime. So we are hopeful that, the review concludes. But we've built our plans under the assumption that we'll need to raise MREL. And MREL will continue to exist. But it would not be prudent for the organization, to raise MREL until the review concludes. So if we need to we'll raise it early next year. And we'll crack on with that when the review finishes on. And with that, I'll turn it over to David on the CET1.

Hey Ben good morning. And on CET1, at the half year CET1 ratio of 14.5% significant headroom, against our minimum which is 9.6%. What I would say around half two progression is that, you shouldn't expect any material RWA inflation in the second half. And regarding the software benefit, it's not in our gift. It very much depends on the EBA and PRA. But if it does come in it will add depending on the option chosen and we're still looking at that. And we'll review it when the final thing lands if it does, it will add between 35bps and 70 bps of CET1, in the second half.

Thank so much.

Thank you. Our next question comes from the line of Joseph Dickerson from Jefferies. Please go ahead. Your line is now open.

Hi. Good morning. Thank you. Just staying on the topic of the regulatory requirements around capital is there any update on AIRB treatment, because that kind of goes hand in hand here with the [Indiscernible] on the business? And if I look just back of the envelope a more normal model weighted resi risk weight is at least 400 bps of CET1 for you. So is there any updated thought process on the timing of AIRB, certainly as regards to the resi mortgages?

Joe, a really good question, and we do stay silent on in the presentation with the exception we do highlight that in terms of the infrastructure spend we spent a chunk of money on the AIRB program. So I think there's, a few bits we should just make clear, because I know in particular this has been a topic in some notes that have been published. We continue to work on the AIRB. We continue to do all of the parallel running you would expect us to do. We continue to work through all of the models that would need to be in place and all the slotting work that would need to be in place, before we would make a submission. So I know, we pulled it off the table at the year-end and I think I may have confused a few people. We didn't stop work for a second yes? We've also just had an external third-party come in because I thought it was prudent to get an independent review to see how we stacked up against others who've been through the process. And that review concluded in early July and was broadly favorable. And we have work to do but we're not we're in line with where you would expect us to be for somebody who is contemplating making an application. Now all that said Joe I'm not going to comment about timing I'm not going to comment about where we are in the submission process and all that because that's really within the regulators' gift. And I can't tell you, whether we'll get it or not get it because it's completely up to the bank. So all I can tell you is, the work is ongoing and we're completely committed to doing the work to a high standard. And what comes after that is outside of my control.

Understood. Thanks.

[Operator Instructions] Our next question comes from the line of John Cronin from Goodbody. Please go ahead. Your line is now open.

Good morning, all. Thanks for the call. Just if I can come back to provisioning first. Look I'm trying to understand, I guess how much of the – I mean, it's very clear in terms of the split in favor of overlay versus evidence-based impairment charges in H1. But I'm trying to ascertain how much of that is structural in the sense that your coverage ratios at end FY 2019 were quite light particularly on residential mortgages, but also relative to peers or be it certain apples-and-oranges comparison but nice as well on the commercial book arguably at that point. So, at one level, I guess, I can see that the scenarios that you paint particularly in an unemployment and HPI context, which look materially worse than peer banks beyond FY 2020. But what I'm trying to I guess understand is, a the sensitivity around some of those assumptions. So any kind of information you could give us in relation to how your mortgage provisions and commercial provisions particularly with move and response to bringing your assumption closer in line with peers, but also how we should think about coverage levels going forward. That's my first question. Then my second one is on the RateSetter acquisition and your comments this morning around moving with more urgency. You – I guess, look you still have – you have some tailwinds coming from a capital perspective as you've called out in response to previous questions. Could you do some more keenly priced deals maybe in other lending channels for example SME to create a platform for further expansion in a post-IRB context? And then thirdly, a point of detail just on the RateSetter deal again. Could you give us some color or walk us through maybe how you get to the 30 basis points of CET1 capital ratio depletion owing to that transaction please? They're all my questions. Thank you.

Thanks John. I really appreciate it. Thoughtful as always. So listen, I'll do bits of it and then I'm going to turn you over to David, who will do the chunk of it. So I'm going to reorder your questions slightly as we go through it. So on provisioning, I mean, John you've lived through a few cycles like I have. The reality is that, I think for Metro Bank given its history, and given the way, I was raised at other organizations, I think early in the cycle is a time to be prudent, yeah? So I think provisioning overall early in the cycle is not a time to be trying to figure out a way to underlay or justify lower numbers. It's time to be conservative in your assumptions and be prudent. There's – it's just – I think it's the right way to attack a crisis. So I think that's what you've seen come through in our numbers. And I know that we have other competitors who didn't take such a view. Some of the larger banks were more aligned with us, but I accept some of the banks that are closer in size to us did not. But that's fine. We think being prudent is the right thing to do. In terms of RateSetter and moving with more urgency, and trying to attack markets listen we're always happy to have conversations. If there are opportunities that make sense that would accelerate our entry into SME lending or specialist mortgages or anything along those lines we're happy to have those conversations. Again, obviously, John I'm not going to tell you whether anything is imminent or anything like that because that's just – but we're always happy to have these conversations. But just as importantly, you will see that our BBLS lending platform we did with ezbob, which is a fintech, and we created a partnership with them to launch BBLS lending and that -- they were always our chosen partner for our small business lending platform. So regardless of whether we make an acquisition in that space or not, we have invested a lot of money and capital, some of which was thankfully matched by BCR and contributed by them, to build out both a very slick business account opening online, which will be attractive to SMEs. And we were -- we are a few months away, because it had to be delayed to do BBLS, from launching a relatively slick automated small business lending platform, which again, both of those, both -- being able to open a business current account online and the SME lending, will be pretty close to best-in-class when they're launched. We're completely committed to the SME market. We think our seven day-a-week banking extended hours all of that appeals to that marketplace. We still win a larger share of switchers in the London market than our current market share, so we believe it's a place where we can continue to dominate. So, yes, we're still -- we're open to having those conversations. Again, I think, everybody understands the urgency and you've been very clear in your notes about the need to shift the asset mix of the balance sheet to generate more yield. I agree with you and we're on that path. And either organically or inorganically, we will make it happen. And with that, I'll turn it over to David to talk about the structural bits and what we're thinking about coverage going forward on provisions and then the 30 basis points in CET deterioration caused by RateSetter. I'll let David take both those. David?

Hey, John. How are you doing? I think you hit the nail on the head on ECL, comparing across banks, is large -- to a larger extent apples and pears. We have used scenarios that are at the more severe end of the range, particularly on unemployment and HPI and that does drive sensitivity, particularly for mortgages. When you look at the stats on our mortgage book, with regard to deferrals, we're broadly in line with everybody else. But the level of provision we've taken in the first half, assuming the economics play through the way we're expecting them to or we're forecasting to, we would expect a material lower charge in the second half. And we'll monitor that very closely. On the commercial book, we're also providing significant support to our customers. And we believe that's the right response and should increase their chances of surviving the pandemic. It's the right thing to do. We've been very diligent in distinguishing individual level, the difference between temporary COVID support and long-term financial difficulty. And as I say we -- as I said in the script, we know many of these customers by name. And we're monitoring and supporting our customers throughout. So there remains considerable uncertainty, but we believe in the stories we've used that, as I say, but as you rightly point out, they're at the more severe end of the range. And therefore we should be in good stead for the second half, depending whatever COVID throws us. Regarding the 30 bps, we're not buying the back book. And the 30 bps is just the acquisition accounting because we are buying the business, with all the associated assets and liabilities that come with the business excluding the lending book which is -- which resides and will continue to reside with the investors in RateSetter.

Very good. Thank you.

Thank you. Our next question comes from the line of Chris Cant from Autonomous. Please go ahead. Your line is now open.

Good morning. Thanks for taking my questions. I would just like to ask more on your store network. Firstly, you mentioned during your remarks that you're looking at trying to renegotiate some leases. I just wondered if you could comment a little bit more on what you think is achievable there. I assume that as a bank you can't actually go through anything like a CBA process. The second question, on the full year 2019 call, you said you'd assessed the store network assets and you felt the stores were broadly up a value, was the phrase used. Presumably, the fair value of those store assets has fallen quite a bit, given COVID, can I presume if you weren't already, you're now quite reliant on value and use modeling to avoid needing to take a write-down from carrying value? So is my supposition correct on that? And if so, could you talk a bit about the value and use modeling assumptions that you are making? Dan you commented on the full year call that you were hoping for rates to rise, as the bank would be significantly, significantly more profitable. So presumably given that rates have gone sharply against you, relative to the expectations you had when you thought the stores were broadly up a value, that's now significantly, significantly worse. And I would have thought that that rate outlook would make the value and use assessment for the stores materially worse. So what would need to happen before you take a write-down on those store assets? Thank you.

So Chris, thanks. I'm going to give some of that in terms of the value and use to David. But let's talk about the lease conversations we're having. So I want to be really clear that we've made all rent payments when due. We think part of being a community bank and a financial organization is that we honor our commitments, so we've made all lease payments when due. So we're not withholding lease payments to try to gain leverage against our landlords. However, we think there and we may be wrong, but we think there may be opportunities where our liquidity may be attractive to certain landlords in exchange for modified lease terms. So we are in a position where we could prepay significant portions of the leases. We could potentially buy out leases and purchase properties. We could exchange for properties that are -- that for our stores we really like. We could potentially sign small extensions. It would be really attractive to them to lock in a tenant in exchange for modified terms. So I think Chris, we're trying everything we can to work through creative solutions that may or may not bear fruit on a property-by-property basis across the whole store estate. I think it is our responsibility to try to see if there's anything we could do across every store. I mean, I think, I mean we have a responsibility to our shareholders to try to see what we can do. So we're way doing that. The one thing about lower rates and the analysis at year-end which I thought I highlighted, but maybe got missed and maybe I didn't highlight. It is the store analysis that was done, again was done for a purpose about whether you open or close a store. So a slightly different sort of marginal cost marginal contribution kind of an analysis. But that's not the point. The point is we did it off the existing product set that exist -- that existed within the store estate. So as we deliver better products into the stores so that they can meet more customer needs, the underlying value of each store improves because they will be giving some unsecured personal lending more overdrafts, more credit cards. They will become one of the channels to access our fans, to meet more needs and generate more revenue. So I think you need to keep that in mind actually that actually the analysis that was done was really just based off the products that exist today. And we're actively working quickly to expand that product set to meet more customer needs which makes the stores more valuable. And then I know there is a growing drumbeat about the value of stores and I saw some comments from some other CEOs yesterday about they've seen drops in activity in their store levels and they're not sure what they're going to do with their store estate. I think there was a article in the Mail yesterday online. There was the bit of commentary in the FT today. I mean the reality is I hear all that. I don't necessarily believe it. So there's a slide in the deck where we talked about an uptick in activity levels. Our stores are now 70% to 75% as busy as they were pre-COVID. We do not yet know whether there's a some form of permanent impairment in activity levels in store. We have no reason to believe there might be. I don't know why people think, actually you can make the counterargument that actually COVID and being locked inside for as long as people have been locked inside has created a deep need for some level of personal interaction. And therefore, the tactile experience of going to a bookstore or going to a bank will have more value as we go forward. So I don't buy it. I get why the narrative is there. I fully understand that if I had a store estate of 600 to 700, I would be talking about how the stores are less valuable so that I could justify closing a large chunk of them. We have 77 stores all of which are less than 10 years old. So they're in locations that we've chosen after the demographic shifts that occurred. So we're comfortable with our store estate. We think -- we're comfortable with the decisions we've made around the store estate. And as we build out a broader product set and meet more customer needs the stores only become more valuable. And as a channel for customers, we fully expect that stores have a huge role to play in the economy as we go forward. But David, I'll let you talk about the value and use and some of those bets, if you choose yes?

Yes. Hi, Chris, how are you doing? The other thing I would just close out in Dan's bit around the analysis we did in February was that it was very much point in time and it was shown in the past that all our stores are maturing every day and they continue. And the analysis showed that the younger stores on a point-in-time basis looks really the worst-performing but that's just because they're young right? And you're right, Chris that impairment is based on value and use rather than market value. A temporary reduction in market value does not necessarily drive an impairment charge. IAS 36 requires that the value and use is compared with the carrying amounts of CGU on our stores as we've demonstrated many times in the past are integral to the wider brand and operation of the business. And as we grow the product set and to meet more customer needs coming through our stores then the operation of the business and the value of the business grows. So, we -- and that's kind of where we're at. Our impairment tests are regularly reviewed through appropriate governance. And we're really comfortable with the carrying value that we've got.

And so on the rates versus product piece, essentially the argument is that, because you've done things like buy RateSetter, which will accelerate plans you already have at the full year 2019 stage, so you're going to have a bit more consumer credit growth earlier on than you were planning that offsets the impact of minus 65 bps, which we can see in the first half results. I mean it's done pretty brutal things to your top line. And just coming back to what you said at the full year 2019 stage, rate rises would have been significant, significant upside to your view. So, surely there's significant, significant downside to your view now that rates are lower, or are you now in your value and use assuming base rate rises, which is the only way I can think about squaring the circle here? I understand the branches are important channel. I understand they're important for the brand. But when I look at your freehold property, based on previously disclosed store sizes, you've capitalized freehold property assets at about £2,700 per square foot, which is an incredibly high number versus where rates would have implied values are today. So, I'm really struggling a bit with this idea that, because you've done something like buy RateSetter that offsets lower rates. I would have thought that the lower rates piece was pretty bad for what is a liability-led model. And I would have thought that that would make your value and use calculations materially worse.

So, listen there is -- sorry, I'll just -- I'll comment and then David I'll let you speak up a bit. So, listen Chris, we can -- and maybe we can pick it up tomorrow when we have the break out session and drill into it a bit. But for the avoidance of doubt the forecast we've built and that we've showed the Board show flat rates from this point forward. We don't have rate increases built into the forecast. And we think that would be inappropriate, looking at how we need to reposition the business going forward. But yes, the ability of the stores to be able to do more stuff with customers enhances the value in the stores. Just like if it was a retailer and it sold more sweaters it would be more valuable. So at the end of the day, we're comfortable that there's real value in that store footprint. But, I don't know, David if there's anything you want to add.

No. The only thing I would add is that we've been very clear today that the low rate environment accelerates the need to shift the assets out of the balance sheet more rapidly. And RateSetter does that. So, the plan we outlined in February, and I imagine that we'd get to 5% consumer by the end of the plan, with RateSetter that's going to happen a lot sooner. And once we get there, a lot sooner then we can determine how much you want to drive consumer lending.

Okay. Thank you.

Thanks, Chris.

Thank you. Our next question comes from the line of Nicholas Herman from Citigroup. Please go ahead. Your line is now open.

Yes, good morning. Thank you for taking my questions.

Good morning.

Morning. Three questions if I may. And I apologize if I'm kind of going back on the stuff that you've already touched on. I was a bit late in joining the call due to another results call. But -- so the three questions are

one on LDR, one on Change the Bank cost, and one on RateSetter. So on LDR, if I understood you correctly that you're expecting loan-to-deposit ratio to tick up in the near to medium-term. But for 2024, you still expect to operate at a similar LDR versus the original plan? Secondly, in terms of investment spend. So back in February, I think you indicated front-loading of investment costs will be the overall Change the Bank spend of £250 million to GBP 300 million. So, I guess are you -- well, I guess -- so now you're indicating more flexibility in that Change the Bank spend. So I guess firstly, what will determine in your approach that flexibility in the second half 2020 and 2021 versus the more front-loading approach I think that you previously indicated? And are you deferring programs? Which programs are you deferring? And what effect do you see from that? And then, finally, in terms of RateSetter and consumer lending, so you've indicated in the presentation that the consumer loan yield on RateSetter alone is 8%. Now, that seems to be to me a fair bit higher than Metro Bank's consumer -- current consumer lending book. So your business plan with RateSetter does that factor in new consumer loans at that 8% or more at Metro Bank's consumer -- existing consumer loan rates? Thank you.

Good questions. I'll take the RateSetter one and then I'll let David do the LDR and the Change the Bank investment spend in the guidance we provided. And as part of that I'm sure David will weave in the C&I bit. So current rates if you walk into one of our stores to get an unsecured personal loan I think the current rate in store is 7.99%. So it's not meaningfully different. And when we looked at the risk profile of RateSetter's customer base it wasn't miles off of our small consumer base. But remember we have £180 million of consumer lending or something the square root above all. So the reality is that we're not anticipating a meaningful shift in RateSetter's risk appetite and/or risk-based pricing model that they currently use. So I think the 8%, we put in the deck is a reasonable yield to use. Now the question is going to become is the trade-off between volume and price and we may choose to go to a higher-quality lower-priced unsecured lending product. But again, all those decisions we made once we own the business. It's a bit too early for us to tell. Again we just announced that we're working to close and we're working through all the financial modeling now. But we think 8% is not far off to use. And then David do you want to talk about loan-to-deposit ratio and then the Change the Bank investment?

Sure. Sorry, I was on mute. Apologies. Hi, Nicholas. So on loan-to-deposit ratio, you're right it may go up in the short-term and may run at a slightly elevated level through the life of the plan. The mix shift, we've seen to more stable funding over the last 12 months. And the introduction of TFSME gives us much more flexibility on funding as we move forward. And the Change the Bank, the only thing that will change the rate of expenditure is the business operational capacity and readiness to accept change. So far this year, we have not deferred any programs. And frankly, we don't intend to but I just -- I'm just conscious that we need to be conscious of capacity and capability in the business given the incredible effort that all our colleagues have made so far this year in not only meeting all our expectations in terms of putting the change program, but absorbing the incremental change presented by COVID. So we'll assess that as a management team and as a Board over the next few weeks.

Got it. Thank you very much.

Thank you. And as there are no further questions registered at the moment, I will hand the word back to you Daniel for the closing comments. Please go ahead.

I just want to thank everybody for taking the time this morning. I know the financials were dense. I know they -- that the effects of COVID were more severe than some people have modeled. But I don't want to lose sight of the fact that the core business performed in line with what we would have expected pre COVID that we saw strong deposit growth which we said repeatedly is an underpinning of the turnaround strategy. So there is a lot in the financial statements to like. It just turns out that COVID has created a scenario that makes the overall financial performance look pretty difficult in the first half. So I appreciate everybody taking the time this morning and we look forward to catching up when we present year end numbers at which point, we'll continue to deliver against the strategy as outlined. Then we'll have further updates on where we're taking RateSetter and how we're continuing to shift the asset mix. So again thank you very much for your time this morning. And everybody stay safe. Thank you.