Metro Bank has reported a more than threefold increase in its profit for the first half of the year, as its transformation strategy accelerates.
The high street bank posted an underlying pre-tax profit of £45m, a significant rise from £12.8m in the second half of 2024, as reported by City AM.
Revenue saw a 22 per cent increase to £286m, while operating costs dropped by eight per cent year-on-year to £234.7m.
The bank also recorded a record £1bn in new corporate lending for the half, double the amount originated in the same period last year.
This comes as the firm continues to shift from retail banking towards specialist lending, targeting small- and medium-sized enterprises.
The bank’s net interest margin – a crucial measure of a firm’s profitability from lending – climbed to 2.87 per cent, a sharp increase from 1.64 per cent in the first half of 2024.
This was driven by an improvement in the average interest rate the bank earns on its loans, which rose to 5.67 per cent, and lower deposit costs.
Metro’s CET1 ratio, indicating the core capital a bank holds to absorb losses and protect depositors, remained robust at 12.8 per cent.
The lender is also set to benefit significantly from changes to the MREL regime announced in Rachel Reeves’ regulatory reforms at Mansion House.
Metro stated it expects to be “reclassified as a transfer firm” and thus there are “no current plans to raise future MREL”, meaning the lender will have a more flexible balance sheet with reduced costs.
Established in the aftermath of the 2008 financial crisis, minimum requirement for own funds and eligible liabilities (MREL) regulations impose stringent bespoke requirements for banks holding assets between £15-25bn. The Bank of England is poised to raise the threshold following consultation.
Daniel Frumkin, chief executive officer at Metro Bank, said: “Metro Bank’s strong performance in the first half of the year reflects the successful execution of our strategy and decisive actions we have taken.
“We trebled profits, doubled new lending to corporate, commercial and SME customers, meaningfully reduced operating costs and optimised funding to have the lowest cost of deposits of any UK high street bank.”
In a trading update in May, Metro revealed it had registered a “significant increase” in quarter one profit compared to the second half of 2024.
The lender expressed “confidence” in full-year objectives after transitioning into more income-generating assets and streamlining deposits with reduced interest.
The company had shifted towards specialist mortgages and the lucrative sector of small business lending over the past year.
Metro disposed of its personal loan portfolio for £584m at the end of 2024 to an undisclosed purchaser in a transaction that delivered £11m in gains.
The bank attracted takeover speculation earlier this year after Sky News revealed the private equity owners of Shawbrook bank had approached Metro concerning a potential acquisition. Shares in Metro Bank have seen a significant increase of approximately 200 per cent over the past year, following its near-collapse and subsequent rescue through a £925m bailout.
This was partly financed by Colombian billionaire Jaime Gilinski Bacal, who is now the majority owner, and an additional £600m of new debt.
