Metro Bank Holdings PLC (LSE:MTRO) has reported its highest-ever annual profit, with underlying earnings before tax reaching 98 million pounds in 2025, sending shares up as much as 5% in early trading.
The challenger bank, which came close to collapse in 2023 before a rescue refinancing, has been executing a deliberate shift toward higher-margin business. Net interest income rose 22% year on year, driving a 16% increase in underlying revenue. Its net interest margin, a key measure of lending profitability, exited the year at 3.17%, in line with guidance.
The sharpest growth came in corporate and SME lending, which increased 67% to a record 2 billion pounds. The bank also cut operating costs by 7%, ahead of its own guidance of 4 to 5%, and expanded its store network with new openings in Chester, Salford and Gateshead.
A regulatory reclassification under the MREL regime, which governs how banks hold loss-absorbing capital, has freed up additional capacity for lending growth, something the bank's management flagged as a meaningful operational unlock.
Chief executive Daniel Frumkin said Metro Bank expects to more than double its return on tangible equity during the fourth quarter of 2026 and nearly triple it to above 18% by 2028.
The bank's current RoTE stands at 6.4%. Reaching 18% would place it among the stronger performers on the UK high street.
After the initial burst, the share settled at 116.2p, up 1.8%.