Metro Bank has today posted a much bigger annual loss and said it expects defaults to rise through the year in line with its provisions as government support measures set in place due to the Covid-19 crisis are wound down.
The mid-sized company is part of a breed of challenger banks set up to take on the dominance of bigger and more conventional lenders in Britain.
It said its underlying pretax loss came to £271.8m for the 12 months ended December 31 compared to £11.7m a year earlier.
"The pandemic has clearly impacted performance, leading to significant expected credit losses," chief executive Daniel Frumkin said.
"But our transformation strategy is firmly on track and we have accelerated initiatives to shift our asset mix, bringing higher yield and improving net interest margin, as evidenced in the second half," the CEO added.
Metro, which relieved some of the pressure on its capital levels last year by selling one of its portfolios to NatWest, estimated impact from the coronavirus pandemic to be £124m.
The bank, whose net interest margin fell to 1.22% from 1.51% in a low interest rate environment, said provisions to cover loan losses amounted to £126.7m at the end of 2020, compared with £11.7m a year earlier.
Metro Bank said the increase in expected credit losses was driven by deteriorating macro-economic scenarios that have increased the probability of defaults.
