Metro Bank swings to a £240m loss

Metro Bank swings to a £240m loss as the troubled challenger bank is battered by the economic fallout from the pandemic

  • Decade-old Metro Bank said Covid-19 had cost it around £109million
  • The amount of cash deposited with the bank grew by 14 per cent to £15.6billion
  • The challenger bank’s shares fell 14 per cent on Wednesday morning

Metro Bank swung 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 decade-old business said Covid-19 had cost it around £109million as it reported a pre-tax loss of £240.6million in the first six months of the year.

The figures mark a sharp reversal from Metro’s £3.4million profit in the same period last year.

Time to slow down: Metro Bank will start slowing down its branch openings across the country

The news pushed the challenger bank’s shares down by around 14 per cent on Wednesday morning.

The amount of cash deposited with the bank grew by 14 per cent to £15.6billion 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 per cent 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.