UK challenger bank grows deposits, lending and profits in first half of 2017.
The UK’s original challenger bank has had a strong first half of the year. Metro Bank has seen growth across the board, headlined by deposits growing to £9.8bn by the end of June, up 49 per cent on a year-on-year basis. Meanwhile the cost of getting those deposits appears to be falling, from 61bps in the first quarter of the year to 53 in the second.
The bank’s outstanding loanbook grew 67 per cent to £7.8bn in H1, increasing its loan-to-deposit ratio to 79 per cent. Metro has been deploying capital via Zopa’s marketplace lending platform since May 2015, but exactly how much has been deployed through this partnership is unclear. Metro had £201m in outstanding “consumer and other” loans as of 30 June 2017, up from £192m at the end of Q1.
Residential mortgage loans represent the largest proportion of Metro’s outstanding loanbook, at a little under £5bn at the end of H1. Metro also acquired a portfolio of UK mortgages – predominantly buy-to-let mortgages – for £592m in early June.
“This has been another great half year for Metro Bank with extremely strong organic lending supported by a c. £600m book purchase increasing our Loan to Deposit ratio to 79 per cent,” said Craig Donaldson, CEO of Metro Bank. “This, taken together with continued strong deposit growth at a reducing cost of deposits, have led to us doubling our profits quarter on quarter, from £2m to £4m, and reporting our fourth consecutive quarter of profitability.”
Metro posted £6m of profit before tax in the first half of the year, after losing £13m in the same period of last year. Profit before tax has doubled quarter-to-quarter in 2017, from £2m in Q1 to £4m in Q2. The bank also passed the one million mark in customer accounts in May, less than seven years removed from its launch. It now has 48 branches nationwide.
The bank, which is listed on the London Stock Exchange, has also launched a share placement with a view to raising £277.9m. The 8,020,000 ordinary shares (priced at £34.65p each) that have been issued by the bank represent close to 10 per cent of its issued share capital.
You can learn more about Metro Bank’s stance on marketplace lending platforms by watching the video below, in which MoneyWeek editor John Stepek interviews Metro Bank CEO Craig Donaldson.