Metro Bank PLC on Thursday reported a narrowed annual loss as it looks to draw a line under ‘legacy issues’.
The lender said total revenue jumped 31% to £522.1 million in 2022 from £397.9 million in 2021. Pretax loss narrowed to £70.1 million from £245.1 million. Metro Bank said it achieved an underlying profit in the fourth quarter alone.
Supported by rising interest rates, net interest margin improved to 1.92% from 1.40%.
Common equity tier 1 ratio fell to 10.3% from 12.6%, though this remained well above the 4.8% minimum.
Total net loans in 2022 grew 6.6% to £13.10 billion from £12.29 billion, ‘reflecting growth in residential mortgages and consumer lending’.
‘I’m pleased with Metro Bank’s performance over the past year and the successful completion of our transformation plan. We returned to profitability, resolved our legacy issues and further strengthened the foundations for future sustainable growth. While I remain confident in the underlying business, material headwinds do exist, including the macro-economic environment and increasing competition for liabilities,’ Chief Executive Daniel Frumkin said.
The London-based retail bank added that it is resuming its store expansion plan, focusing on the north of England.
‘Stores remain at the heart of the bank’s service offering and the network will continue to expand as opportunity exists for further market penetration in significant locations where there are currently no stores present. The bank remains committed to opening stores in the north of England, the operational costs post-launch of which will be funded in part by the capability and innovation fund. These stores are expected to be opened in 2024 and 2025,’ it said.
‘Future stores have been redesigned and will be built for significantly less cost than previous stores, but will not lose the distinctive Metro Bank style. Our refreshed approach will incorporate appropriate break clauses and will have less surplus floor space and more cost-effective fixtures and fittings.’
The high-street lender is showing signs of promise after it had faced a rocky period in recent years.
UK regulators found an accounting error in its loan book at the start of 2019. In January of that year, Metro Bank announced it had underestimated the risk on its commercial loans book and needed to raise capital to compensate for the shortfall and, as a result, was forced to issue an update highlighting the increased risk.
Metro Bank was demoted from the FTSE 250 index in September 2019. It has not returned since. The company had listed in 2016.
Shares were 4.5% lower at 143.20 pence each in London on Thursday afternoon. It has a market capitalisation of £247.1 million.
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