Metro Bank records first profit since 2018

13th Mar 2024 07:57

(Sharecast News) - Metro Bank has reported its first annual statutory profit in five years despite a flat top line as the UK high street bank launched a cost-savings programme that cut store hours and roles across the business.

The company, which is due to let go of 1,000 workers - equivalent to 22% of the workforce - by mid-April, said it was on track to deliver £50m in annualised cost savings in the first quarter of 2024, with a further £30m expected by the end of the year.

"These efforts will ensure the bank is right-sized for the future, with a strong focus on both digital and great customer service," said chief executive Daniel Frumkin.

The bank recorded a pre-tax profit of £30.5m for 2023, compared with a loss of £70.7m the year before, as underlying revenues rose 5% to £546.5m. However, the company still saw an underlying pre-tax loss of £16.9m, compared with a loss of £50.6m the year before.

Total loans declined by 6% year-on-year to £12.3bn while deposits fell 2% to £15.6bn as an increase in the amount put into savings accounts was offset by a drop in deposits into current accounts. Deposits from SMEs also fell 26% year-on-year.

However, the net interest margin - the amount banks earn from interest on their loans compared to the amount they pay for deposits - improved to 1.98% from 1.92%.

Metro Bank ended the year with a CET1 capital ratio of 13.1%, a big improvement from the 10.3% recorded in 2022.

"Looking forward, I remain confident in our ability to be the number one community bank," Frumkin said.

"The work we have undertaken this year has laid the path to become a structurally profitable business and our focus towards the SME, Commercial and specialist mortgages sector presents an exciting opportunity in an underserved area of the market."

The stock was up 0.3% at 34.48p by 0919 GMT.