Metro Bank has reported its strongest half-year profit on record, with pre-tax profits surging 41 per cent to £60.7 million in the first six months of 2026. The FTSE 250 lender's performance defies an industry-wide trend of branch closures, as it continues to expand its physical network and grow its small business lending portfolio.
Revenue growth and interest income drive performance
The profit increase was underpinned by a five per cent rise in total revenue to £301 million. Net interest income, which accounts for approximately 80 per cent of the group's total income, led the way with an eight per cent increase to £241.5 million. However, fee and other income fell 13 per cent to £55 million, partially offset by a £4.4 million gain on asset sales – a turnaround from a £200,000 loss recorded in the first half of 2025.
Metro Bank's total loan book expanded four per cent to £9.2 billion, according to City AM. The bank has strategically positioned itself to capitalise on the small business lending market, an area that typically delivers higher margins for lenders due to the ability to charge elevated interest rates, especially as larger industry players retreat from the sector.
Strategic shift towards specialist lending
The bank's core target lending, encompassing corporate, small business and specialist mortgages, surged 43 per cent year-on-year to £6.2 billion. This growth helped offset legacy residential mortgage and consumer run-off books. As part of a broader strategic shift towards specialist lending, Metro Bank offloaded its £584 million portfolio of unsecured personal loans at the start of 2025.
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.
Future targets and regional expansion
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.
This expansion stands in contrast to major banks, which have broadly sought to scale back their physical presence in recent years. Notably, 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.
