Metro Bank is leading the march of the so-called challenger banks, there to provide alternatives to the ‘big four’ UK banks. But while customers delighted in quirky touches like complimentary dog biscuits in their branches, not a great deal was known about the bank’s performance. This week, the bank posted its first set of results, six weeks after its initial public offering (IPO). Depending on how you slice it, the news was good or bad.
Yet to turn a profitIn his article for
Business Insider UK, Ben Moshinsky takes a fairly negative view, focusing on the bank’s statutory losses (including IPO costs) of £11.1m.
£37.7m
Metro Bank's revenue“Metro Bank, set up in 2010 by American entrepreneur Vernon Hill, is yet to turn a profit,” he says.
That said, Moshinsky also outlines some of the bank’s clear successes. “Revenue increased 11% quarter-on-quarter to £37.7m and deposits increased 15% to £5.9bn.”
Moshinsky notes too that, despite the bank’s comparatively small size, its capital buffer of 25% of assets is stronger than the average big bank's, which is around 13%.
Craig Donaldson, Metro Bank’s CEO, is quoted with an upbeat message about the bank’s performance: “I am particularly pleased with the momentum and quality of our lending; net lending increased by 125% year-on-year to £4.1bn, driven by strong growth in both residential mortgages and commercial lending.”
Business Insider UK article
Make customers fansThe Telegraph duo Kate Palmer and Tim Wallace note that Metro Bank’s underlying loss after tax was £7.9m for the first quarter of 2016 – an improvement on the £10.2m loss reported in the last quarter of 2015.
74%
The proportion by which the bank's business lending has grown in the past yearPalmer and Wallace describe the achievement as “another small step closer to profitability”, and cite surging lending and deposit volumes as reasons underlying it.
The pair highlight some impressive figures: “Mortgage lending has almost tripled in the past year, rising by 174% from £941m to £2.6bn. Business lending is up 74% over the same period to £1.4bn.”
They also note the bank’s strong rise in revenues, up 60% to £38m in the first quarter of 2016.
They go on to quote Founder Vernon Hill, who remains the bank’s Chairman and is supremely confident in the business and its branches, which he refers to as 'stores'. “Every day we welcome new customers into our stores and make them fans with our exceptional customer service.”
The Telegraph comment
Major banking forceJonathan Hopkins is equally cheery about the bank’s progress in his article for
This is Money. Turning his attention to the bank’s notable customer growth, he says it has “notched up a strong start to the year as it attracted a record 62,000 new customers in the quarter”.
62,000
The number of new customers the bank attracted in Q1 2016Hopkins also highlights the impressive growth in customer savings deposits, which rose by £790m in the first quarter, and reports that, as a result of the encouraging figures, shares shot up by 26 points to 2,033p on Wednesday.
He goes on to express the view of analysts at investment bank Jefferies International. They described Metro Bank's branch performance as “incredibly impressive” and predict the bank may well turn a profit in 2017.
Chairman Hill is again quoted: “We continue to build Metro Bank into a major banking force in the UK.”
This is Money report
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