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British lender Metro Bank swings to profit in first half

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British lender Metro Bank swings to profit in first half

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(Reuters) – British lender Metro Bank Plc <MTRO.L> posted a pretax profit in the first-half, driven by growth in lending and customer deposits. The bank, which listed on the London Stock Exchange in March last year, said underlying profit before tax was 6 million pounds ($7.81 million) in the six months ended June, compared with a loss of 13 million pounds a year earlier. Metro Bank, which offers retail, business and private banking, said net loans at June-end were 7.8 billion pounds, up from 6.5 billion pounds at March-end. Total deposits jumped 49 percent to 9.8 billion pounds. One of Britain’s “challenger banks”, Metro Bank listed in London with the aim of challenging Britain’s “Big 5” lenders. The bank’s net interest margin, a measurement of lending profitability, was 1.92 percent in the second quarter, compared with 2.02 percent in the previous quarter. Net interest margin was depressed in the quarter by higher cash balances held in advance of the completion of a mortgage portfolio that the lender bought last month. Metro Bank’s core capital ratio was 13.5 percent, 140 basis points below end-2016 levels. The lender, Britain’s first new High Street bank in over 100 years, raised its 2020 loan to deposit ratio target to about 85 percent from about 80 percent and pushed its 2020 Return on Equity target of about 18 percent to 2022. Rival Virgin Money <VM.L>, the first British bank to report mid-year results, flagged a weaker housing market and pressure on margins on Tuesday, hitting its shares and adding to signs of tougher trading for UK lenders. The company’s cautious guidance overshadowed a 26 percent rise in first-half underlying pretax profit to 128.6 million pounds ($167.4 million), helped by growth in its core mortgages, savings and credit card businesses. Metro Bank also said in a separate statement on Tuesday it would raise about 280 million pounds via an accelerated bookbuild. The proceeds of the placing will be used to support Metro Bank’s growth and replace funds used for its acquisition of a mortgage portfolio from a company owned by U.S. private equity firm Cerberus Capital Management LP [CBS.UL] for 596.7 million pounds, augmenting its loan book with primarily buy-to-let mortgages.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sunil Nair)
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