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High street chain Metro Bank has cheered signs of a “gradual return to normality” as lending remained flat in its third quarter.
The group revealed lending of £12.3 billion for the three months to the end of September, holding firm on the previous quarter.
But lending remained lower year-on-year – down 18% – having sold its residential mortgage book to NatWest for £3 billion in February as it looks to focus on specialist mortgages and unsecured lending.
The group has missed out on the mortgage boost enjoyed by rivals amid the housing market boom buoyed by the stamp duty tax break and changing demands.
Metro Bank said it was seeing improvements in its lending book and benefiting from the shift towards more profitable types of lending.
We regard this update as a little disappointing
Shailesh Raikundlia, Liberum analyst
But this progress was offset by the offloading of residential mortgages, as well as initial repayments of coronavirus bounce back loans among small business customers.
Deposits rose 5% year-on-year but fell 1% on the previous quarter to £16.4 billion as it switched away from high-cost fixed term towards growth in current account and instant access balances.
Metro Bank chief executive Daniel Frumkin said: “We are seeing signs of a gradual return to normality and have adopted a hybrid way of working for office-based colleagues.
“We remain focused on executing on our plans and returning the bank to sustainable profitable growth.”
Interim figures in July showed Metro Bank cut pre-tax losses by around £100 million, though it remained in the red by just under £139 million in the first six months of the year.
Liberum analyst Shailesh Raikundlia was unimpressed by the third quarter update.
The banking expert said: “Given the strong growth in the broader sector, and our expectation of continued loan growth in the second half for Metro Bank, we regard this update as a little disappointing.”