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Metro Bank delivers £11.8bn of lending in first quarter
Metro Bank has reported £11.8bn of lending in the first quarter of this year, a slight fall compared to Q1 and Q4 last year.
According to Metro Bank’s latest results, lending came to £12.3bn in Q4 2023 and £12.9bn in Q1 last year.
The bank said that the decrease in lending compared to the full-year position was due to the firm strategically repositioning its balance sheet “towards higher-yielding specialist mortgages and SME/commercial lending”.
Metro Bank had previously said that, due to feedback from the Prudential Regulatory Authority (PRA), it would not receive advanced internal rating-based (AIRB) approval in 2023, and its focus was to “participate in niche parts of the mortgage market where our manual underwriting capacity is a competitive advantage”.
AIRB approval would allow the bank to use internal risk models to determine the level of capital that needs to be set aside.
The company said: “The focus remains on optimising risk-adjusted returns on regulatory capital to improve margins and profitability.”
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The report added that its deposits for the period came to £16.2bn, which is 4% higher than the Q1 and Q4 2023 figures.
The growth was attributed to this deposit campaign launched at the tail end of last year, with the company adding that the “significant levels of liquidity” raised would allow it to “focus on low-cost relationship deposits to manage down the cost of funding”.
Daniel Frumkin, CEO at Metro Bank, said: “Following the successful deposit campaign launched in Q4, we have implemented our plans to reduce cost of deposits and optimise our elevated liquidity position; this led to a modest reduction of higher-cost deposits in March.
“Lending activity levels are in line with expectations and the pivot to higher-margin commercial and residential lending progresses, with lending balances reflecting the time lag between committing facilities and subsequent drawdown.”
He continued: “During the period, we also maintained our focus on people-people banking and relationship-based services, with further growth across personal and business current accounts.
“Based on performance in the first quarter, we remain confident that financial results will continue to improve throughout 2024 as we optimise funding, deliver on cost savings, continue our asset rotation and benefit from lower-yielding fixed rate treasury and mortgage maturities.”