Metro Bank returned to profit in the second half of 2024 as it reported a loss after tax of £33.1m in H1, which rebounded to a profit of £75.6m by H2.
For the full year, Metro Bank delivered a statutory profit after tax of £42.5m, up from £29.5m in 2023.
However, it recognised a statutory loss before tax of £212.1m for the full year, largely driven by a one-off loss on the sale of the £2.5bn mortgage portfolio to NatWest, various charges relating to the transformation of the business and remediation costs.
Its net interest margin came to 1.91% by the end of 2024, down from 1.98% in 2023.
It said its interest income benefitted from the higher base rate, with a 9% annual rise to £935.4m. Its lending income still makes up the largest share of its interest income, but this decreased following the sale of its mortgage portfolio.
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Retail mortgage lending down, commercial loans up
Metro Bank’s gross retail mortgage lending fell 32% from £7.8bn to £5.1bn year-on-year, while, compared to the first six months of 2024, this was down from £7.5bn.
It attributed this to the sale of its £2.5bn prime residential mortgage loan book.
Retail mortgages were still the largest component of its lending book, making up 56% of accounts compared to 63% in 2023.
The portfolio’s average debt to value (DTV) was 59%, compared to 58% at the end of 2023.
Metro Bank said it was still continuing to pivot towards specialist mortgages and recently invested to re-platform the mortgage business and improve its product offering. It said its operating model was tailored to complex underwriting to suit the needs of more customers.
Its gross commercial lending rose by 9% year-on-year to £2.6bn, owing to growth in new corporate, commercial and SME lending but offset by lower commercial real estate and portfolio buy-to-let (BTL) portfolios.
Metro Bank said its shift to corporate, commercial and SME lending was being “delivered at pace”, indicated by a 71% annual rise in gross new corporate and commercial lending to £1.2bn at the end of 2024.
From the first to the second half of the year, new corporate and commercial loans rose by 40%, and so far this year, the pipeline has been 50% higher than 2024.
The DTV rose from 55% to 56% annually and it had a coverage ratio of 1.98%, down from 2.13% previously.
By the end of the year, commercial lending made up 36% of its book, up from 28% the year before.
A ‘transformational’ year for Metro Bank
Daniel Frumkin, chief executive at Metro Bank, said: “It has been a transformational year for Metro Bank as we made substantial progress against our strategy, ending the period ahead of guidance, profitable, and with strong momentum going forward.
“We have successfully continued our pivot towards higher-margin business in the form of corporate, commercial and SME lending and specialist mortgages, while also taking significant steps to reduce our costs and optimising our funding model. We have simplified and strengthened our balance sheet, and as a result, end the year with a robust capital position.
“We are delivering on our strategy. Looking forward, we are confident that Metro Bank has a strong and compelling plan, differentiated model and clear path forward to further growth.”
