March 4 (Reuters) - Metro Bank forecast on Wednesday that its return on tangible equity will more than double from current levels over the next 6 months and nearly triple over 18 months, driven by its
Metro Bank targets tripling of return on tangible equity as turnaround plan pays off
Metro Bank's Financial Performance and Strategic Turnaround
By Rishab Shaju
March 4 (Reuters) - British lender Metro Bank expects a key profitability metric to more than double over the next six months and nearly triple over the next 18, it said on Wednesday, after the company returned to pretax profit in 2025.
Turnaround Strategy and Profitability Metrics
The bank's turnaround strategy, executed after it recorded a loss in fiscal year 2024, saw cost cuts, acceleration into higher-return lending for corporate, commercial, small and medium enterprises, and specialist mortgage lending.
Return on Tangible Equity Goals
The company expects to deliver a return on tangible equity, a key metric investors use to assess a bank's performance, of 18% or greater for 2028 from 6.4% in 2025.
Underlying Profit Before Tax
The FTSE-250 listed bank's underlying profit before tax rose to 98.1 million pounds ($131.10 million) for the year ended December 31, as compared to a loss of 14 million pounds in the prior year.
Cost Management and Workforce Changes
Workforce Reduction
After cutting 20% of its workforce in late 2023, CEO Daniel Frumkin told journalists on Wednesday he does not expect any major downsizing in 2026 as costs are expected to be flat this year.
Market Context and Specialist Lending
Private Credit Market Concerns
The recent collapse of UK mortgage lender Market Financial Solutions has stoked fears amongst investors as markets grapple with widening cracks and poor lending standards in the private credit market.
Metro Bank's Exposure to Specialist Lending
However, smaller players like Metro Bank have significant exposure to specialist mortgage lending, aimed at customers who fall outside of traditional lending criteria and follow strict standards.
CEO's Perspective on Market Opportunities
Frumkin said the collapse "should actually create volume for us, so that's a good thing".
Market Reaction and Additional Information
Share Price Movement
The bank's shares were down about 3% at 0924 GMT following a rout in global markets, after rising as much as 8.2% in early trade.
Exchange Rate
($1 = 0.7483 pounds)
Reporting Credits
(Reporting by Rishab Shaju and Sri Hari N S in Bengaluru; Editing by Rashmi Aich and Harikrishnan Nair)
