MortgagesOct 25 2017

Metro Bank 'on track' for first full year of profitability

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Metro Bank 'on track' for first full year of profitability

Metro Bank increased its profits in the three months to 30 September, boosted by an 11 per cent leap in lending

Metro made a profit £7.2m in the quarter, compared with £4m in the same period last year. The company said it has made a profit on a year-to-date basis and expects to make its first annual profit this year.

Lending was up £858m, 11 per cent quarter-on-quarter to £8.6bn while the challenger bank's loan-to-deposit ratio increased to 80 per cent.

The company added a record 79,000 new current account customers in the period, but said its cost of deposits, that is the interest it pays, fell.

Craig Donaldson, chief executive of Metro Bank said this helped the company deliver its fifth quarter of underlying profitability, and an underlying profit up 77 per cent from the last quarter.  

He said: “We continued to support the SME sector, the backbone of British business, and are on track to meet our January pledge to lend £1bn of net lending to businesses during 2017.

“We also opened the doors of our 50th store, and by the end of the year our store network will extend further north, east and west, and we will have strengthened our Greater London presence. “

The company said it intends to open its first branches in Birmingham and Bristol this year.

Metro Bank's net interest margin increased to 1.94 per cent for the quarter, which was driven by the increase in the loan-to-deposit ratio.

It made £5.5bn of gross loans and advances for residential mortgages, up 11 per cent on the previous quarter and up 72 per cent on the previous year.

Peter Lenardos, analyst at RBC Capital said the shares, currently £36.20, could reach £40 within a year, if the economic outlook remains stable.

david.thorpe@ft.com