Metro Bank reported growth of 31% in its total underlying revenue in its first half on Thursday, to £236.2m, which it put down to margin expansion and continued momentum in revenue growth, as lending was “optimised” for return on regulatory capital.
The London-listed challenger retail bank said its total underlying operating expenses fell 3% year-on-year for the six months ended 30 June, to £266.3m, reflecting cost actions taken to reduce its run-rate in the near term, and to limit its future cost growth.
Its cost of deposits narrowed 17 basis points to 0.14%, with the impact of rate rises offset by the bank’s continued focus on mix improvement, with 47% of deposits being in current accounts, up from 41%.
Metro Bank’s underlying loss before tax narrowed to £48m from £110m, which the board said reflected “significant growth” in revenue and its actions to reduce costs, marginally offset by increased expected credit loss provisions.
The company’s statutory loss before tax shrunk to £60.2m from £138.9m, including one-off items relating to capital-neutral intangible asset write-downs and remediation costs.
Metro Bank said remediation costs of £3m had reduced “significantly” from £25.4m in the first half of 2021, as programmes successfully concluded.
“We have delivered a strong first-half performance and I am encouraged by the continued momentum we are seeing across the bank,” said chief executive officer Daniel Frumkin.
“Initiatives we have put in place have helped us to improve net interest margin and lending yield, and drive record revenue growth.
“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.”
As a result, Frumkin said Metro Bank had built a “sustainable business”, and now expected to reach a monthly break even during the first quarter of 2023.
“All of this has been made possible by focusing on our 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.
“Collectively, we remain resolutely focused on continuing to execute our strategy and supporting our customers in the face of an increasingly complex macroeconomic environment.”
Metro Bank also announced that James Hopkinson had been appointed as its new chief financial officer and executive director, effective from 5 September, subject to regulatory approval.
Hopkinson was joining the company from ClearBank, where he had been CFO since 2019 and board member since 2020.
It said he would bring “significant experience” in global and UK retail banking, growth organisations, UK regulation and leading finance functions.
Previously, Hopkinson spent almost 20 years at Standard Chartered, where he held a variety of roles including CFO of regions and clients, CFO of global retail banking, and global head of investor relations.
He is a Chartered Accountant, and began his career at PricewaterhouseCoopers.
“James brings a wealth of experience in retail banking with a proven track record of growing businesses and managing finance teams,” Daniel Frumkin commented.
“He shares our vision for Metro Bank to become the UK’s best community bank and he will be a valuable addition to the board and executive committee.”
At 1029 BST, shares in Metro Bank were flat at 83.3p.
Reporting by Josh White at Sharecast.com.
