Losses widen at Metro Bank amid Covid-19 costs

Metro Bank more than doubled its loss last year as it took a major hit from loans it expects to go bad largely because of Covid-19.

Pre-tax loss hit £311.4 million in 2020, up from £130.8 million a year before, the bank revealed on Wednesday.

The company said it expected the cost of lost credit to hit £100 million because of the Covid-19 pandemic. This was coupled with costs of more than £40 million associated with speeding up its exit from its central London headquarters.

Metro took the decision to hasten the move out of the offices as remote working makes it unlikely staff will return to permanent desk working in the future.

Many other banks have said the shift to remote working, which has been made necessary by Covid-19, could stick around in some form when the pandemic ends. Lloyds separately on Wednesday said it would reduce its office space by around a fifth.

Metro Bank chief executive Daniel Frumkin: “The pandemic has clearly impacted performance, leading to significant expected credit losses, but our transformation strategy is firmly on track and we have accelerated initiatives to shift our asset mix, bringing higher yield and improving net interest margin, as evidenced in the second half.”

The business’s loan book shrank by 18% over 2020 to £12.1 billion, Metro said, driven by the second half of the year.

It came even as Metro granted 36,000 Government-backed loans to businesses, at a total of £1.5 billion.

The company also revealed it had taken a £5.4 million hit to pre-tax profit from the integration of peer-to-peer lender RateSetter, which it bought last year.

Earlier this month, Metro also completed the sale of a mortgage portfolio to NatWest for £3 billion.

Mr Frumkin said: “The purchase of the RateSetter platform has allowed us to enter the unsecured lending market.

“In addition, we have made progress against each of our strategic pillars, including the sale of part of our residential mortgage portfolio to further optimise our balance sheet, the launch of higher yielding products including specialist mortgages, and we have grown customer accounts to 2.2 million.”