Metro Bank has reported a return to profitability following a major cost-cutting overhaul, which included slashing nearly a third of its workforce and offloading a significant portion of its mortgage book. The bank, which secured a crucial £925 million rescue package in 2023, described the past year as a “pivotal” period in its history.
Over the financial year, the lender made £80 million in annualised cost savings, with the bulk of these coming from a significant reduction in staff numbers. Initially, Metro Bank had planned to cut around 20% of its workforce but ultimately exceeded that target, reducing headcount from approximately 4,460 to 2,970 employees.
A return to profitability
The extensive restructuring has had a notable impact on Metro Bank’s financial performance. The lender posted an underlying pre-tax profit of £12.8 million for the six months to December 2024, marking a strong turnaround from the £26.8 million loss recorded the previous year.
However, on a statutory basis—which includes one-off costs such as asset sales and refinancing expenses—the bank reported a pre-tax loss of £212 million for the full year. Despite this, executives remain confident that the cost-saving measures and strategic pivot towards higher-margin lending will continue to drive profitability in the future.
Chief executive Daniel Frumkin expressed optimism about Metro Bank’s progress, stating:
“It has been a transformational year for Metro Bank as we made substantial progress against our strategy, ending the period ahead of guidance, profitable, and with strong momentum going forward. We have successfully continued our pivot towards higher margin business in the form of corporate, commercial and SME lending and specialist mortgages, while also taking significant steps to reduce our costs and optimise our funding model.”
Asset sales and strategic shift
As part of its restructuring efforts, Metro Bank has been reshaping its business model, moving away from traditional retail lending towards specialist mortgages and business lending. Last year, the bank sold a £2.5 billion portion of its residential mortgage portfolio to NatWest, a move aimed at reducing its exposure to lower-margin lending.
Furthering this strategy, Metro Bank announced on Wednesday that it had agreed to sell a £584 million portfolio of personal loans to an undisclosed buyer. The bank noted that macroeconomic pressures, including falling house prices, the rising cost of living, and higher interest rates, had contributed to some deterioration in its lending book.
Loan arrears have increased over the past year, with the overall level of loans in arrears rising to 5.6% at the end of 2024, compared to 2.8% in 2023.
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Rescue package and new ownership
Metro Bank’s turnaround follows a challenging period in which the lender struggled with regulatory hurdles, profitability concerns, and balance sheet constraints. The bank’s future was secured in 2023 through a £925 million funding package, which provided much-needed capital to stabilise operations.
As part of this deal, Colombian billionaire Jaime Gilinski Bacal, through his investment firm Spaldy Investments, became the majority shareholder. His involvement has been seen as a crucial factor in restoring investor confidence and enabling the bank to implement its strategic shift.
Looking ahead
Despite the headwinds facing the financial sector, Metro Bank is now positioning itself for long-term stability and growth. The lender’s focus on higher-margin corporate and SME lending, coupled with its cost-cutting measures, has set the stage for a more sustainable business model.
While challenges remain, particularly in the wider economic environment, Metro Bank’s return to profitability signals that the bold restructuring efforts are paying off. If it can maintain this momentum, the lender may yet re-establish itself as a significant player in the UK banking landscape.
