Metro Bank approaches breakeven as losses narrow
The bank's CEO credited cost cuts and its turnaround plan for the narrowed first-half pretax losses.
Metro Bank has seen its losses narrow over the last quarter after dealing with underperformance for several years.
The lender’s losses closed from more than £106m in the last quarter of 2021 to just over £60m in the first quarter of this year.
Metro Bank also saw stable growth in account openings over the last six months to reach 2.6 million accounts.
“Initiatives we have put in place have helped us to improve [Net Interest Margin] NIM and lending yield, and drive record revenue growth,” Metro Bank CEO Daniel Frumkin said.
“We have also maintained our cost discipline and improved our cost to income ratio, with the focus on generating greater earnings from our capital base.”
The bank has, as a result, built a sustainable business and expects to reach monthly breakeven during Q1 2023, Frumkin said.
Over the first six months of the year, total net loans and total deposits held remained broadly flat.
When it came to lending, retail mortgages remained the largest portion of the lending book at 54 per cent, with focus shifting to specialist mortgages.
Mortgage application volumes in Q2 2022 were also 87 per cent higher than Q1 and 133 per cent higher than Q4 2021.
The bank, which in 2010 became the first lender to be granted a consumer banking licence in Britain in 150 years, had a rocky few years after an accounting blunder in 2019 led to fines and investigations from the PRA.
Since then, Metro has worked on a turnaround plan to cut costs and has sought higher yields by entering the unsecured lending market.
Frumkin said that this quarter’s results has been made possible by the focus on the bank’s turnaround strategy over the past two years.
“We also retain, at our core, fantastic colleagues delivering highly-rated customer service and we remain committed to being the UK’s best community bank,” he added.
“Collectively, we remain resolutely focused on continuing to execute our strategy and supporting our customers in the face of an increasingly complex macroeconomic environment.”