UK Metro Bank reports lower loss as economy picks up
- Metro Bank cuts its half-year loss
- Anticipates an increase in net loans in H2
- Stocks rise 3% in morning trading
- CEO says “pingdemic” is slowing things down
July 28 (Reuters) – UK lender Metro Bank (MTRO.L) reported a lower half-year loss on Wednesday, as it struggles to turn its finances around after the pandemic plunged it deeper into the red.
The challenger bank is betting that a surge in consumer lending will help it get back on a better footing, after a turbulent period that started with a major error in the loan book in 2019. Read more
Metro nearly halved its pre-tax losses to £ 139m ($ 192.90m) for the six months ending June, from a loss of £ 241m the year before after a large loan allowance irrecoverable in the event of a pandemic.
The bank was launched over a decade ago to challenge historic British lenders, but has struggled to generate profits from a growing deposit base.
Metro’s total loans at the end of June stood at £ 12.3 billion, down 17% from a year earlier, after lockdowns hampered spending and following the sale of part of its mortgage portfolio at NatWest last year.
However, Metro’s consumer lending tripled, and the bank added that it expected lending to pick up in the second half of the year after the economy fully reopens.
Its net interest margin – a key measure of a bank’s profitability – improved 13 basis points to 1.28%.
“The road to profitability remains long and uncertain. We continue to believe that the eventual end of Metro Bank’s story will be inorganic, but, in the meantime, management continues to pivot towards a more sustainable “self-sufficient” business model, ”said Ian, analyst at Investec. Gordon said.
Metro shares, which have lost a third of their value so far in 2021, are up 3% at 9:25 a.m. GMT.
“We have seen a recovery in economic activity since it began to reopen,” Metro Bank boss Dan Frumkin told reporters.
But Frumkin said the country’s “pingdemia” of people warned to self-isolate made it harder for the bank to operate.
Recent data has shown a marked slowdown in economic growth this month, as hundreds of thousands of Britons had to stay at home when they were ‘screwed’ by the COVID-19 app. Read more
The bank added 200,000 customers in the first half of the year, partly reflecting its purchase from peer-to-peer lender RateSetter.
Biggest rival Barclays on Wednesday announced a quadrupling of its first-half profits on Wednesday, while Virgin Money (VMUK.L) raised its margin forecast on Tuesday. Read more
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($ 1 = 0.7206 pounds)
Reporting by Muvija M in Bengaluru; edited by John O’Donnell, Iain Withers and Kim Coghill
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