Metro Bank scales back Northern store opening plans

Metro Bank has significantly scaled back its expansion plans for the North of England.

It said it will now open only 15 stores, rather than the 30 stores it had planned for the region, by 2025.

The bank’s business model for its stores is to locate them in areas of high footfall, such as shopping centres.

Following a strategic review it said it will now cut its store openings, and will make new stores more cost efficient and flexible in size, fit-out and leasing terms.

The bank said it will also streamline its back-office operations by relocating to cost-effective locations, modernise contact-centre technology, aim to digitise/automate services and reduce organisational layers across the bank.

Metro Bank opened its first Northern store last December, in Manchester’s Market Street.

Its second Northern store, in the Liverpool One retail centre, was also due to open last December, but is now likely to open next month, following a delay due to technical issues.

The announcement came as part of annual figures published today that revealed a tough year for the challenger bank.

In the 12 months to December 31, 2019, Metro Bank announced a statutory loss before tax of £130.8m, compared with a £40.6m profit the previous year, reflecting a £68m write-down of intangible assets, which it said had no impact on regulatory capital.

It incurred an underlying loss before tax of £11.7m, against a £50m profit in 2018, reflecting balance sheet strengthening actions, IFRS 16 impact and debt interest expense.

Underlying total revenues of £400.1m compared with £404.1m in 2018.

However, the bank achieved a 21% growth in retail and SME core deposits to £10.2bn, while net fee and other income was up 43%, driven by customer growth and the launch of fee-earning services. The bank surpassed two million customer accounts, up from 1.6 million the previous year.

Total assets fell one per cent to £21.4bn, and deposits dropped by eight per cent to £14.477bn. The bank’s loans increased by three per cent to £14.681bn.

Metro Bank said it has a strong capital position with a Common Equity Tier 1 (CET1) ratio of 15.6%, up from 13.1% in 2018.

It also said it was rated number one for service in stores and for online and mobile banking, and its strategic ambition is to become the UK’s best community bank.

Chief executive Dan Frumkin said: “Our financial performance reflects a very challenging year for Metro Bank.

“External headwinds, internal challenges and actions we took to put the business on a more positive trajectory are reflected in the results.

“Despite this, Metro Bank’s market-leading service proposition continued to deliver growth in customer accounts, and our balance sheet ended the year in a materially stronger position.

“We’ve fully evaluated our strategy, and have a clear plan which will return the bank to sustainable growth built around a community banking model.

“An enhanced focus on costs, improved productivity, and investment in our infrastructure will enable our deposit-led franchise to deliver profitable growth over the medium term.”

He added: Thanks to the steadfast commitment of colleagues across the bank, I am confident we will successfully execute against these priorities to become the UK’s best community bank.”