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Metro Bank starts to stem losses

Metro Bank starts to stem losses

Metro Bank’s total assets grew by 83 per cent year-on-year to £8,351m from £4,571m at the end of June and up 13 per cent over the quarter from £7,388m at the end of March.

The bank’s half year statement also revealed revenue up 63 per cent compared to the end of June last year, with the underlying quarterly loss after tax down to £4.1m, compared to £10.2m in the fourth quarter of 2015 and £7.9m in the first quarter of 2016.

Asset and revenue growth was driven by a 110 per cent year-on-year increase in lending, with both residential mortgages and commercial lending pushing the loan-to-deposit ratio to 70 per cent.

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Total loans as of 30 June were £4,629m, up from £4,129m at 31 March and £2,206m at 30 June 2015; an increase of 110 per cent year-on-year and 12 per cent increase in the quarter.

Chief executive Craig Donaldson said he was pleased with both the momentum and quality of lending.

“Metro Bank is in a strong position to deal with any post European referendum uncertainty. Since the vote we have seen no change in customer behaviour or impact on business flows.”

Peter Lenardos, an analyst from RBC Europe, concluded that despite Brexit and a likely cut to the Bank of England’s base rate the bank should continue to outperform.

However, he said Metro Bank was predicted to not achieve all of its targets, and thus a meaningful level of profitability, until 2020.

RPC stated price target impediments included UK economic growth, the level of volatility of interest rates, the health of the UK real estate market, competition and reliance on intermediaries.

The analyst pointed out Metro Bank derived 84 per cent of its mortgage portfolio and 61 and 75 per cent respectively, of its invoice and asset finance portfolios, from intermediaries in 2015.

peter.walker@ft.com