Metro Bank (LSE:MTRO) reported underlying profit before tax of £98 million for the year ended 31 December 2025, marking the highest annual profit in the bank’s 15-year history and surpassing its cost reduction targets.
The lender recorded a 22% increase in net interest income to £460 million, which helped drive a 16% rise in underlying revenue to £585 million. Net interest margin for the year reached 2.98%, an increase of 107 basis points year-on-year, while the exit net interest margin stood at 3.17%, in line with management guidance.
Operating efficiency also improved during the period. Underlying operating costs declined 7% year-on-year to £473 million, exceeding the bank’s previous cost reduction target of 4–5%.
Total loans fell slightly by 2% to £8,823 million as the bank continued repositioning its lending portfolio toward higher-yielding segments. Corporate and commercial lending grew strongly, rising 34% to £3,570 million after the bank completed record gross new lending of £2 billion during the year.
Specialist mortgage lending also expanded rapidly, increasing 137% to £1,657 million. Meanwhile, customer deposits declined 7% to £13,445 million as Metro Bank deliberately reduced excess liquidity. The cost of deposits improved significantly, falling to 1.06% from 1.95% in the previous year.
The bank’s capital position strengthened, with its Common Equity Tier 1 ratio reaching 12.5%. Its total capital plus Minimum Requirement for Own Funds and Eligible Liabilities (MREL) ratio increased to 26.1%, compared with 23.0% previously. From 1 January 2026, Metro Bank was reclassified as a Transfer firm under the MREL regime, meaning its requirements will now align with minimum capital thresholds.
“Through focused execution of our strategy and pivot to higher margin business, we have boosted underlying profits to £98 million, the highest in our 15-year history, whilst reducing operating costs ahead of target,” said Daniel Frumkin, Chief Executive Officer.
Looking ahead, Metro Bank expects return on tangible equity to exceed 13% by the fourth quarter of 2026, rise above 15% in 2027 and surpass 18% by 2028. The bank forecasts exit net interest margins of between 3.40% and 4.00% for 2026 and between 3.75% and 4.50% for 2027, while operating costs are expected to remain broadly flat in 2026 compared with 2025.
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