31st Jul 2024 12:02
(Alliance News) - Metro Bank Holdings PLC on Wednesday said it hopes to return to profitability in the fourth quarter aided by cost savings and the recently announced mortgage portfolio sale.
The high street lender reported a pretax loss of GBP33.5 million for the six months to June, swinging from a pretax profit of GBP15.1 million a year prior. Revenue fell 10% to GBP234.0 million from GBP260.9 million. Underlying losses per share were 3.9 pence, compared with 12.2p.
Metro said cost discipline, asset rotation and the mortgage portfolio sale means it hopes to return to profitability before the end of the year.
Total underlying operating expenses reduced by 6.3% to GBP255 million from GBP272 million, with GBP80 million of annualised run-rate savings on track to be delivered by December 2024.
The lender increased return on tangible equity guidance to mid-to-upper single digit in 2025, double-digit in 2026 and mid-to-upper teens thereafter. Its RoTE outlook was previously "low-single digit in 2025, increasing to high-single digit in 2026 and low-mid teens thereafter".
Metro sees continued net interest margin expansion driven by asset rotation, and expects NIMs in 2024, 2025 and 2026 to be approaching 2.50%, 3.25% and 4.00% respectively.
Chief Executive Daniel Frumkin said: "Metro Bank has made significant underlying progress during the first half of 2024."
"Our upgraded guidance today reflects progress against our strategy, including the recent residential mortgage portfolio sale. We expect these actions to positively impact on our balance sheet in the fourth quarter of the current financial year, delivering a return to profitability."
Last Friday, Metro sold a GBP2.5 billion mortgage portfolio of prime UK residential mortgages to NatWest Group PLC.
The transaction is earnings, NIM and capital ratio accretive, and creates additional lending capacity to enable Metro Bank to continue its asset rotation towards higher yielding commercial, corporate, SME lending and specialist mortgages, the company said in a statement at the time.
Metro Bank also revealed that it has started construction on a new site in Chester and signed a lease in Gateshead, with plans to grow further in the North and East Midlands.
Shares in Metro Bank soared 27% to 51.00 pence in London on Wednesday.
By Jeremy Cutler, Alliance News reporter
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