LONDON (ShareCast) - (Sharecast News) - Metro Bank recorded a narrower underlying loss on the back of improved revenues in its 2021 results on Wednesday, as its turnaround plan continued to deliver.
The London-listed challenger bank said underlying revenue increased 17% to £397.9m for the 12 months ended 31 December, reflecting its shift towards higher-yielding assets, a lower cost of deposits, and a recovery in customer activity.

Underlying costs totalled £546.8m, which the board put down to management actions to control costs, deliver positive operating jaws and leverage the fixed cost base, with underlying operating costs reducing 1% in the second half.

Metro Bank said its underlying loss before tax narrowed by 37% to £171.3m, with its second half underlying loss of £61.3m being down 44% on the first half, as the firm maintained its momentum towards profitability.

The company's statutory loss before tax totalled £245.1m, narrowing 17% from £311.4m in 2020, following the settlement of the Prudential Regulation Authority (PRA) investigation, provisioning for the Financial Conduct Authority (FCA) investigation, sanctions-related remediation, and non-recurring expense items.

Metro Bank's board said those underpinned the firm's path to profitability, including restructuring and legacy fixed-asset impairment.

The directors said the turnaround plan was delivering momentum and sustainable growth, with an "improving" lending mix maximising risk-adjusted returns on capital.

It reported margin expansion, net interest income growth and fee recovery as driving revenue growth, while "targeted infrastructure development" was said to be improving the company's resilience.

Management said it remained focussed on execution, with "clear steps" to breakeven.

"Two years into the turnaround, our strategy is delivering meaningful results as we move towards profitability," said chief executive officer Daniel Frumkin.

"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."

Frumkin said encouragingly, the second half delivered 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."

At 0941 GMT, shares in Metro Bank were up 2.17% at 96.79p.

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