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Metro Bank says breakeven nears as cost cuts continue

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FILE PHOTO: People walk past a Metro Bank in London
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By Sinchita Mitra

(Reuters) - British lender Metro Bank narrowed first-half pretax losses and expects to reach monthly breakeven in the first quarter of next year, it said on Thursday, citing cost cuts and its turnaround plan.

The mid-sized lender, however, said it was adopting a cautious outlook because of heightened "global insecurity".

"As of today, we are not seeing any deterioration in our credit portfolio, but we can see darkening clouds on the horizon," Chief Executive Daniel Frumkin told reporters.

"We are being prudent about our bad loans provisions."

Metro Bank, which in 2010 became the first lender to be granted a consumer banking licence in Britain in 150 years, has had a tumultuous two years after an accounting blunder in 2019 led to investigations and fines by UK regulators.

Since then Metro had launched a turnaround plan to cut costs and sought higher yields by entering the crowded unsecured lending market through its 2020 purchase of the RateSetter peer-to-peer platforms.

Metro has increased its provisions against bad loans since the second half of last year as its loan portfolio has grown, Frumkin said.

The company on Thursday reported a pretax loss of 60 million pounds ($73.06 million) for the six months to June 30, down from a loss of 139 million pounds a year earlier.

Shares in the bank were up 1% by 0819 GMT.

Metro said it expects annual loan growth to be higher than last year, adding that the bank continues to work on cost controls as well as revenue and margin growth.

Customer loans were virtually flat at 12.36 billion pounds in the first six months.

Larger rival Lloyds on Wednesday, posted better than expected first-half profit and increased dividends, boosted by rising interest rates.

(Reporting by Sinchita Mitra in Bengaluru; Editing by Shounak Dasgupta and David Goodman)

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