Metro Bank upbeat on profit growth, higher lending

(Sharecast News) - Metro Bank said in an update on Thursday that it started 2026 well, with continued profit growth and higher lending in its target segments, as the lender reaffirmed all previous guidance. The FTSE 250 challenger bank said gross loans and advances to customers rose 2% from the end of 2025 to £9.14bn at 31 March, and were up 6% from £8.64bn a year earlier.

Net loans and advances increased to £9.00bn from £8.82bn at the end of December and £8.47bn at the end of the first quarter of 2025.

Metro Bank said lending in its target segments of corporate, commercial and SME lending and specialist mortgages increased 5% quarter-on-quarter to £5.50bn, and was up 52% year-on-year from £3.62bn.

The bank said the growth reflected continued execution of its asset rotation strategy.

Run-off books declined 3% from the end of 2025 to £3.64bn, and were down 27% from £5.02bn a year earlier, freeing up capital and liquidity to reinvest in target areas.

Chief executive Daniel Frumkin said the bank had built on the momentum carried into 2026.

"We have started the year well, building on the positive momentum that we carried into 2026 by delivering continued profit growth and increased lending in our key target areas against a dynamic market backdrop," he said.

Total assets were broadly flat from the end of 2025 at £16.56bn, but were down 3% year-on-year.

Customer deposits fell 1% quarter-on-quarter to £13.28bn and were 4% lower than a year earlier.

The net loan-to-deposit ratio increased to 68% from 66% at the end of 2025 and 61% a year earlier.

Metro Bank said the ratio still provided significant capacity for asset growth.

The lender said it continued to operate with the lowest cost of deposits of any UK high street bank, while excess liquidity was being actively managed down to optimise its cost of funds.

It added that underlying franchise momentum remained strong.

Credit quality remained strong, with the portfolio highly collateralised and arrears rates low, reflecting what Metro Bank described as a benign credit environment.

The allowance for impairment fell 16% from the end of 2025 to £143m, and was down 19% year-on-year, driven by the sale of non-performing unsecured personal loans within the run-off portfolio.

Metro Bank said its approved corporate, commercial and SME credit pipeline was currently more than £1.0bn, providing growth momentum into the second quarter and beyond.

"As we successfully rotate our lending and reshape the balance sheet, we have an established and high-quality pipeline, and the lowest cost of deposits of any UK high street bank," Frumkin said.

"We are confident in reaffirming all guidance previously provided."

He said the bank's relationship banking model, store network and local community focus remained positive differentiators, enabling it to win market share and increase lending.

At 0930 BST, shares in Metro Bank Holdings were up 5.92% at 146.8p.

Reporting by Josh White for Sharecast.com.

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