Metro Bank gets tails wagging with first annual profit as it takes on rivals

METRO Bank swung to its first annual profit while the chief executive raised doubts about Lloyds’ expansion plans.

The challenger bank, founded by charismatic dog-loving American, Vernon Hill, says it is grabbing market share from the big players. “We are winning,” said chief executive Craig Donaldson.

As Lloyds unveiled a strategy to become even more dominant, Donaldson was sceptical. He said: “Lloyds being bigger might be good for Lloyds but is it good for UK plc?”

Metro made a profit of £10.8 million, up from a loss of nearly £17 million last time. But there are no plans to pay a dividend while Donaldson grows the business. He said 17% of London business customers that switch account come to Metro. Donaldson says competition in banking is harmed by the extra capital which smaller banks are required to hold. He believes the “open banking” revolution will be a success, eventually.

“I think it will work, people are going to be disappointed in the early days, but in 10 years’ time they will say it was a seminal moment. I am excited by it.”

Metro revenues rose 51% to £293 million. It has 55 branches and 1.2 million customer accounts.

Shares slipped 6% to 3402p. Investment bank Jefferies says the shares are worth 4700p and that the results “show ongoing strength” in the bank’s ability to grow low-cost deposits from loyal customers.