Covid hit pushes Metro Bank into loss
Metro Bank marked its 10th anniversary by swinging to a heavy loss in the first half of the financial year as it took a multimillion-pound hit from the effects of the coronavirus pandemic.
The business said Covid-19 had cost it around £109 million and reported a pre-tax loss of £240.6 million in the first six months of the year.
It is a swing from Metro’s £3.4 million profit in the same period last year.
The news pushed the high street challenger’s shares down by around 14% as markets opened in London on Wednesday morning.
The amount of cash deposited with the bank grew by 14% to £15.6 billion when compared with the same period in 2019.
Chief executive Daniel Frumkin said: “These have been testing times but I’m very proud of the way Metro Bank has demonstrated the benefits of its community banking model, with our colleagues stepping up to support our customers and the local communities we serve.”
Metro becomes the latest in a string of high street banks to post a loss after taking a major hit from the pandemic which has ripped through the high street.
The bank was at the start of a four-year turnaround plan when coronavirus struck, after a major accounting error cost the company its chief executive and chairman.
Metro was forced to raise £375 million to stay in business after it discovered a major accounting error in its books.
It has shelved plans to pour millions of pounds into new branches, but, on a call with reporters on Wednesday, Mr Frumkin stuck by the company’s existing network.
“Our stores are 75% as busy as they were pre-Covid, so we see nothing to indicate that the store estate doesn’t make perfect sense over the medium term for the organisation,” he said.
He also said that the existing 77 stores need to get bigger, as the business only opens two new branches in the next 24 months.
Unlike many of its older rivals, Metro’s branches were all opened within the last 10 years, which means their locations are more suited to today’s footfall than some other high street lenders.
“We saw an increase in digital activity – less than double-digits though,” Mr Frumkin added.
Many of the company’s staff will continue to work from home for at least three days a week, and Metro will wait until after the winter to make any decisions on when and if it will bring everyone back to the office.
Last week Metro Bank celebrated the 10th anniversary of its first branch opening.