By Yadarisa Shabong
-Metro Bank said on Wednesday its annual loss narrowed and it has put aside 5.3 million pounds ($7.2 million) to resolve an investigation by Britain’s financial regulator into the high street lender’s 2019 accounting blunder.
The London-based bank, however, said it was cautious on its outlook due to the cost of living squeeze in Britain driven by higher energy prices, tax hikes and inflation.
It withheld medium-term guidance but its shares rose nearly 3% after the results which showed net interest margin, a key measure of profitability, rose to 1.4% from 1.22% last year. It looks to further benefit from rising interest rates.
Metro Bank, which in 2010 became the first lender to be granted a high-street banking licence in Britain in 150 years, has had a tumultuous two years after an accounting scandal in 2019 weighed on its shares and prompted probes by UK regulators.
CEO Daniel Frumkin told a media call that a resolution of the Financial Conduct Authority’s investigation into the accounting issues was “closer” than previously thought, allowing the group to make the provision.
The lender also said on Wednesday it was shutting down three branches – Earl’s Court, Milton Keynes Midsummer and Windsor.
The Bank of England in December also fined Metro for the accounting problem after it said the group presented an inaccurate picture of its regulatory capital in regulatory returns between May 2016 and Jan 2019.
Since the accounting scandal, the lender has launched a turnaround plan focussing on cost controls, revenue and margin growth, among others.
Metro reported an underlying pretax loss of 171.3 million pounds ($232.9 million) for the year ended Dec. 31, compared with a loss of 271.8 million pounds the prior year.
Frumkin declined to give a forecast for when the group may return to profitability.
Analysts at RBC Capital estimates Metro to break even at some point between 2023 and 2024.
Loans rose 2% to 12.29 billion pounds for the year and deposits also inched up 2% to 16.45 billion pounds.
($1 = 0.7356 pounds)