Metro Bank posts smaller loss and braces for more cost cuts
Reuters
Published Mar 13, 2024 03:12AM ET
Updated Mar 13, 2024 05:21AM ET
By Eva Mathews
(Reuters) -Metro Bank posted a smaller annual loss on Wednesday and set out plans for further cost cuts as it looks to rebound from a year that saw deposit outflows require it to seek a hefty capital injection.
Launched in 2010 to challenge the dominance of Britain's big banks, Metro struck a 925-million-pound ($1.18 billion) rescue deal in October in the wake of volatile trading.
In the months that followed, the lender announced cost-cutting plans including layoffs and an end to some its biggest customer perks including seven-day opening hours.
On Wednesday the bank reported an annual underlying loss before tax of 16.9 million pounds ($22 million) after a loss of 50.6 million a year earlier.
It posted a reported profit of 30.5 million pounds, its first in four years.
Metro Bank shares ticked up 1% to 34.75 pence after CEO Daniel Frumkin announced a further 30 million pounds in cost savings by the end of this year.
Although that does not include store closures, a significant portion of it will come from reducing contracts and store costs and inevitably some of that could include a reduction in employees, Frumkin told reporters on a post-earnings media call.
"2023 was certainly an eventful year for Metro Bank. But I'm confident we are now a stronger business with stronger foundations."
Deposits as of end-2023 were up 1% from June to 15.62 billion pounds.
The lender launched a campaign late last year to make up for significant withdrawals by customers amid reports on its financial health.
However, the company expects deposits and net interest margin (NIM) — a key measure of a bank's underlying profitability to drop slightly in 2024 reflecting higher costs of deposits.
Frumkin said the bank's conservative outlook for the year also stemmed from macroeconomic uncertainties and growing competition among banks.
Metro Bank set aside 199 million pounds for expected credit losses in 2023, up from 187 million for 2022.
"We believe there is a long road ahead and execution will be key, but the refinancing package has bought management time to reshape the bank," RBC analysts said in a note.
($1 = 0.7816 pounds)
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Written By: Reuters
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