Metro Bank PLC (LSE:MTRO) said on Thursday it returned to profit in the fourth quarter of 2022 despite posting a loss for the full year.
The UK bank said underlying revenue increased by 31% to £522.1mln in the 12 months to 31 December 2022, reflecting the shift in deposit and asset mix, the impact of the higher Bank of England base rate and a recovery in customer activity.
But despite the jump in revenue, the company remained in the red with a statutory pre-tax loss of £70.7mln although this narrowed from £245.1mln reported in 2021.
Underlying costs reduced 3% to £532.8mln despite inflationary pressures, reflecting management actions to control cost and leverage the fixed-cost base for profitable growth.
Metro said the cost of risk increased to 32 basis points (bps) for the year from 18bps in 2021. It said credit quality of new lending remains strong and the movement “reflects the bank’s prudent approach to provisioning in response to the uncertain macro-economic environment and the growth in the consumer unsecured portfolio”.
Net interest margin improved to 1.92% in 2022 from 1.40% the previous year, but the bank suggested further rises would be limited by fewer anticipated base rate moves. The CET1 ratio fell to 10.3% vs 12.6%.
Looking ahead, Metro Bank said it is targeting mid-single digit return on total equity by 2024. It said 2023 would be a “transitional year” with the bank focused on maintaining cost discipline whilst continuing to invest in infrastructure and build sustainably.
The bank plans to resume store expansion in the north of England, supported by funding from the Capability and Innovation Fund.