Metro Bank H120 statutory pre-tax loss of £240.6m compares with a profit of £3.4m in the year ago period.

In particular, the loss includes the impact of around £109m related to Covid. In addition, the results are impacted by a number of one-off items. The include the exit from a central London office and remediation costs.

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Metro Bank CEO Dan Frumkin says that 1,400 employees will continue to work from home. He adds it is testing times but remains on track to be “the UKs best community bank.”

Metro Bank H120 highlights

The bank has extended over £1bn of government-backed business loans to date. Meantime, deposits rise by 8% from end 2019 and by 14% year-over-year to £15.6bn. On the other hand, total loans inch down by 1% y-o-y to £14.9bn.

Retail mortgages remain the largest component of the lending book at 68% of gross lending (H219: 71%).

Mortgage applications started to recover in June with the lifting of lockdown restrictions, a trend that has continued into July.

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On 3 August Metro Bank announced it was snapping up P2P lender RateSetter to grow unsecured lending. Moreover, this acquisition presents an attractive opportunity for Metro Bank to improve its lending yield.

Metro Bank continues to attract new customers. But customer growth is slowing with Metro Bank ending the first with 2.1 million customers (H119: 2.0 million).

Improved cost control results in run-the-bank costs growth of just 2% y-o-y. This includes the cost of six store openings. Metro Bank ends the first half with 77 stores.

It also incorporates the cost of Covid-related costs and Metro Bank’s first advertising campaign.

Less positive metrics

Total underlying revenue is down in the first half by 29% y-o-y.

And ongoing margin pressure results in a 47-basis point drop y-o-y in the net interest margin to 1.15%. As a result, net interest income is down by 18% in the first half. Other less positive metrics include a cost-income ratio of an eye-wateringly high 147% from 110% in the six months to end 2019.

This largely reflects net interest income headwinds and planned higher investment opex. Increased ‘Change the Bank’ expenditure reflects front loaded investment spend with a lower average capitalisation rate.