Metro Bank profit jumps 41% as it expands branch network and grows small business lending

The FTSE 250 bank recorded a £60.7m pre-tax profit in the first half of 2026, up 41 per cent from the same period last year

Metro Bank posted its strongest half-year profit on record during the first six months of 2026, defying an industry-wide trend of branch closures while expanding its small business offering.

The FTSE 250 lender reported a pre-tax profit of £60.7m, representing a 41 per cent increase on the same period last year.

The result was underpinned by a five per cent rise in revenue to £301m. Net interest income — accounting for approximately 80 per cent of the group’s total income — led the way with an eight per cent increase to £241.5m.

Fee and other income, however, fell 13 per cent to £55m. This was partially offset by a £4.4m gain on asset sales, a turnaround from a £200,000 loss recorded in the first half of 2025.

The bank’s total loan book expanded four per cent to £9.2bn, as reported by City AM.

Metro has positioned itself to capitalise on the small business lending market as larger industry players retreat from the sector. The area that typically delivers higher margins for lenders due to the ability to charge elevated interest rates.

The bank’s core target lending, encompassing corporate, small business and specialist mortgages, surged 43 per cent year-on-year to £6.2bn, helping to offset legacy residential mortgage and consumer run-off books. The lender offloaded its £584m portfolio of unsecured personal loans at the start of 2025 as part of a broader strategic shift towards specialist lending.

The group’s net interest margin – a key indicator of profitability from lending – climbed to 3.18 per cent in the half, with Metro reporting it closed the second quarter at 3.25 per cent. The bank is aiming for a margin range of 3.4 to four per cent by December 2026.

Metro reaffirmed its targets for return on tangible equity, a key profit metric, expecting to achieve over 13 per cent by the final quarter of 2026 and over 18 per cent by 2028.

The lender also disclosed plans to press ahead with its regional expansion into Northern economic hubs, having secured new store leases across Newcastle, Leeds and Nottingham during the first half.

Major banks have broadly sought to scale back their physical presence in recent years. Barclays announced a significant reversal of strategy in April, choosing to grow its branch network beyond its current 206 sites, despite having shuttered around 80 per cent of its locations since 2019.