LONDON (ShareCast) - (Sharecast News) - Metro Bank set aside £112m for coronavirus-related credit losses as it swung to a half-year pre-tax loss.
The challenger bank became the latest lender to make provision for bad loans as they brace for the full economic impact on businesses and jobs.

Metro on Wednesday reported a £241m loss compared with a profit of £3.4m a year ago. Underlying losses before tax came in at £183.4m from a £13.6m profit, including £109m of impact from Covid-19, with £97m relating to changes in macro-economic assumptions resulting from the pandemic.

Total underlying revenue fell 29% to £153m while customer deposits hit £15.6bn, up 14%. The bank's core capital ratio, a key measure of financial strength, fell to 14.5% from 15.6% at the end of December.

Metro said it was too early to assess if the coronavirus pandemic will impact its 2024 financial targets.

The bank earlier this week agreed to buy peer-to-peer lender RateSetter in a £12m deal as it looked to move into other types of consumer lending. It expected to complete the deal in the second half.

Chief executive Dan Frumkin said that "while the pandemic has weighed heavily on our financial performance, we've made early progress delivering against the strategic priorities".

CMC Markets chief analyst Michael Hewson said the RateSetter acquisition was a "high risk strategy" given Wednesday's results and "at a time when the risk of these sorts of loans going sour is probably higher than in normal times".

"While the price tag on the deal may well have been a low one, the overall cost of the deal could be much higher, if a lot of these loans go bad in the coming years," he said.

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