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(Alliance News) - Metro Bank PLC on Wednesday recorded heavy losses in the first half due to Covid-19 with income plunging and a big pretax loss.
For the six months to the end of June, the London-based bank swung to a pretax loss of GBP240.6 million from a GBP3.4 million profit a year prior.
The company put its pretax loss to the impact of Covid-19 which it says cost them approximately GBP1.9 million, accounting for 60% of its loss. This figure comprised of GBP97.0 million of Covid-19 expected credit loss expense and lower transaction fee income.
Income plunged in the half to GBP168.9 million from GBP220.5 million year on year.
Net interest income was down 30% year on year to GBP115.9 million, compared to last year's GBP166.2 million. This was primarily caused by the continued net interest margin compression, as well as the sale of a GBP521.0 million mortgage portfolio in July last year.
The bank said it anticipates that its net interest income will recover in the second half of the year as the revised base rate fully transitions on both sides of the balance sheet and legacy fixed rate deposits begin to roll off.
Metro Bank's assets rose 4% in the half to GBP22.13 billion from GBP21.38 billion a year prior.
The company's non-current assets increased during the period. The largest increase was seen in intangible assets which increased to GBP202 million, from GBP168.0 million in the last half ended December 31, as a result of its digital initiatives.
The company explained that Covid-19 primarily impacted its risk profile with expected credit loss provisions increasing to GBP145.0 million from GBP34.0 million at December 31 last year. The bank expects a credit loss expense of GBP112.0 million versus GBP4.4 million a year prior.
The company did not mention an interim dividend.
Metro Bank said that it is broadly on track with the outlook provided in February this year, excluding the impact of Covid-19.
"Covid-19 remains an unprecedented challenge and the pace of recovery in expected credit losses in particular will largely be driven by the wider macroeconomic recovery," the company said.
Metro Bank continued: "An even lower interest rate environment has emboldened our focus on reducing our cost of deposits through a continued focus on customer service. Additionally, we are accelerating our move to higher yielding assets, through our acquisition of the RateSetter platform and expansion into specialist mortgages."
Metro Bank shares were down 6.4% at 107.40 pence each on Wednesday afternoon in London.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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