(Alliance News) - Metro Bank PLC on Wednesday reported a narrowed loss for 2021, despite a rise in costs, as the retail lender continues on its turnaround plans.
For 2021, Metro Bank reported a pretax loss of GBP245.1 million, narrowed from the GBP311.4 million loss in 2020, helped by a drop in expected credit losses.
Metro booked a GBP22.4 million credit impairment in 2021, which is sharply lower than the GBP126.7 million set aside in 2020.
Underlying net interest income rose to GBP295.7 million from GBP250.3 million, while underlying net fee & other income increased to GBP101.5 million from GBP86.3 million. As a result, total underlying revenue rose to GBP397.9 million from GBP340.9 million.
Net interest margin improved to 1.40% from 1.22%.
Total underlying costs, however, rose to GBP546.8 million from GBP486.0 million. 'Run the Bank' costs increased to GBP435.5 million from GBP390.4 million and 'Change the Bank' costs increased to GBP111.3 million from GBP95.6 million.
"While the bank continues to operate with a high fixed cost base in the form of its store footprint, we have worked hard to contain business as usual - 'Run the Bank' - costs which grew 3% on a like for like basis in the year," Metro Bank said.
"Costs to transform the bank - 'Change the Bank' - have fallen by 15% in the second half of the year as this transformation programme has now passed its peak. The bank continues to optimise its property footprint and has adopted a hybrid way of working for office-based colleagues, utilising space above and alongside our existing store network."
Metro ended 2021 with a CET1 ratio of 12.6%, down from 15.0% at the same point a year prior.
Metro Bank signed up 300,000 new customers in 2021 and now has 2.5 million. Total net loans were GBP12.29 billion, up 2% on the year, although commercial loans - excluding government support loans - fell 13% to GBP3.22 billion, and retail mortgages were down 2% to GBP6.72 billion from GBP6.89 billion.
Chief Executive Daniel Frumkin said: "Two years into the turnaround, our strategy is delivering meaningful results as we move towards profitability. In a changing macro-economic environment, we have accelerated the shift of our balance sheet, with improved yields and lower cost of deposits. This has had a material impact on underlying revenue, which improved 42% when adjusting for the mortgage portfolio disposal.
"Encouragingly, the second half of the year delivered even stronger revenue and exit-net interest margin performances, providing ongoing momentum into 2022. There is still more to do, but our focus on delivering higher margins through unsecured and specialist mortgage lending, as well as tight cost control, is enabling transformational change. We remain committed to delivering on the strategy we set out, including supporting the communities in which we operate."
Shares in Metro Bank were 1.4% higher in London on Wednesday at 95.08 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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Metro Bank (MTRO)