Metro customers bank another £1.4 billion in Covid year

Customers in Metro Bank have stashed more than £1 billion into their accounts in the last year, as the bank lent to thousands of small businesses through the Covid-19 crisis.

Metro said that deposits had increased 10%, or £1.4 billion, from the September last year, hitting £15.6 billion last month.

It comes as the bank lent over £1.3 billion under the Government-backed loan schemes.

Most of the 33,000 loans were Bounce Back Loans, which provide up to £50,000 against low interest for businesses struggling during the pandemic.

However, the bank also flagged that it has strayed below the buffer it has above the Bank of England’s so-called MREL requirements.

The rules require banks to have enough resources on hand so they can absorb major losses. Metro said that its total capital plus MREL ratio is 20.2%, above the minimum 18% required.

It is below the Metro’s usual 2.5% above the requirement, but is in line with previous forecasts at the bank.

“Management flagged this as an expectation at first half 2020 results and so should not come as a surprise,” said Joseph Dickerson, an analyst at Jefferies.

Metro said that the number of customers who are deferring their mortgage payments dropped from 16% in the first half to 3.5% at the end of the third quarter.

Chief executive Daniel Frumkin said: “In a challenging environment, Metro Bank has delivered a good performance with loan growth reflecting our support for Government-backed lending schemes.

“The continued dedication of our colleagues and their focus on excellent customer service underpins our position as the UK’s best community bank.”