RateSetter loans boost Metro Bank balance sheet
RateSetter’s loan book helped Metro Bank narrow its losses in 2021, thanks to a “strong increase in organic lending” in the bank’s growing consumer lending business.
According to Metro Bank’s latest full-year results, consumer lending increased to seven per cent of the total loan book last year – up from two per cent a year earlier.
This was credited to the bank’s acquisition of peer-to-peer lender RateSetter in late 2020, in a deal worth up to £12m.
Consumer loan originations averaged more than £50m per month last year. By comparison, consumer originations were worth less than £2m per month during the previous year.
Read more: The P2P lenders replacing Zopa and Funding Circle this ISA season
The challenger bank reported a pre-tax loss of £245.1m, compared with a loss of £311.4m in 2020. Metro Bank highlighted the success of the bank’s “turnaround plan”, which included a focus on improving its lending mix and maximising risk-adjusted returns on capital.
“2021 saw the bank complete the second year of its turnaround plan and despite the external headwinds it was a year of significant progress,” said Dan Frumkin, chief executive of Metro Bank.
“I’m pleased to report the bank ends the year in a significantly stronger position than when I took over the reins as chief executive in 2020.”
Read more: RateSetter’s losses deepen in final year as P2P lender
Frumkin went on to single out RateSetter as “a leading provider of consumer credit in the open market”.
“During the year we have made meaningful strides in reshaping the bank’s balance sheet,” said Dan Frumkin, chief executive of Metro Bank.
“We acquired the RateSetter back book, significantly increased the volume of consumer lending and ramped up specialist mortgages.
“In tandem we actively managed down high-cost fixed term deposits and increased the proportion of current accounts and low-cost instant access savings accounts. These activities have resulted in increased yield and a lower cost of deposits.
“At the end of the period, RateSetter has established itself as a leading provider of consumer credit in the open market.”
Read more: Who are the new ‘Big 3’ in P2P?