Lending by Metro Bank Holdings PLC (LSE:MTRO) in the first quarter fell compared to the final quarter of last year and a year ago, though savings deposits were higher.
A turnaround by the challenger bank remains ongoing, after last autumn's funding crisis.
Chief executive Daniel Frumkin said: “Following the successful deposit campaign launched in Q4, we have implemented our plans to reduce the cost of deposits and optimise our elevated liquidity position; this led to a modest reduction of higher cost deposits in March."
He said the lower lending activity levels were in line with expectations, while a "pivot" to higher margin commercial and residential lending is making progress.
"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."
Total lending for Q1 came in at £11.8 billion, down 4% on the Q4 last year and 9% on a year ago.
Total deposits rose 4% in the quarter and the year to £16.2 billion.
Metro raised £925 million in emergency funding in October, linked to a restructuring plan that included cost-cutting and an end to its seven-day-a-week opening hours.