"We are going from strength to strength" – says a characteristically upbeat Vernon Hill’s as he comments on Metro Bank’s first results as a quoted firm. As the UK lender celebrates its sixth birthday, he tells Douglas Blakey Metro is on target to move into the black by the year end

“No other new bank in history has grown so fast in its 6 years,” Vernon Hill tells RBI.

It seems scarcely seven years since Hill told the writer of his plans to launch Metro Bank in the UK in an empty shell of an office that was to become the bank’s debut store in Holborn.

And looking back at his pre-launch plans and initial targets, Hill explains: “Metro is way ahead in loans and way ahead in deposits albeit with fewer stores currently open than we had planned by now at launch.”

“TSB put out a press release saying that they were opening 1,250 new accounts per month – that is with a network of 600 branches. Metro is doing that from a network of 42 stores. The average UK bank branch opens 20 new deposit accounts a month.”

There is however, by Hill standards, the merest hint of a change in strategy in terms of the bank’s geographical expansion plans.

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“We will move north and west and will open a store for example in Bristol.”

In the bank’s core London market, one of many highlights of the quarter just ended is a blindingly high brand awareness figure of 81%.

He can also be understandably proud of a net promoter score of 77%.

Given that the bank spent a miserly £50,000 in total advertising in the second quarter, the statistics are impressive.

Looking ahead, by 2020 Hill forecasts that the bank will have a 3% market share of the London market.

Shorter term, the bank remains on target to achieve two key goals.

Metro Bank ended the quarter with a loan-to-deposit ratio of 70% (up from 58% a year ago) and well on target to reach an 80% figure next year.

In terms of moving into the black, the bank will break even by the end of 2016 and be profitable next year, boosted by 33 of its 42 stores already making a positive contribution.


New store openings in the pipeline for the second half of the year will result in a network of almost 50 outlets by the year end.

Highlights of the first half of 2016 included:

  • Net deposit growth per store per month of £5.7m in Q2 2016 versus £6.6m in Q1 2016, and £4.0m in Q2 2015;
  • Comparative store deposit growth (a measure of deposit growth using deposit numbers from stores that have been operating for more than a full year) is 66%;
  • Total deposits of £6.6bn up from £3.79bn at 30 June 2015; representing year-on-year growth of 74%, and
  • Total loans as of 30 June were £4.63bn up from £2.21bn at 30 June 2015; an increase of 110% year-on-year

Loans to commercial customers represent 35% of total lending as of 30 June while deposits from commercial customers represent 52% of 30 June 2016.

Hill is justifiably upbeat about the contribution the bank receives from renting out safety deposit boxes.

Such revenue contributes 81% of the rent of all stores that have been open for 12 months.

“That is an amazing figure. The big five UK banks have all given up offering their customers safety deposit boxes because it was too much trouble for them.”

Metro ended the quarter with ongoing strong customer acquisition: total customers exceeds 780,000 an increase of 43% year-on-year.

Over-reacting Brits

On Brexit, Hill gives short shrift to the doom-mongers.

“You Brits are over-reacting. I see no change in customer behaviour. There is no effect on our credit book or our flow of new business nor are growth numbers affected.

“London remains the most dynamic growth market. It is a very large market and there is al lot of market share to take.

“Brexit has had no effect on us and there will be no policy changes.”

While Hill would understandably like the yield curve to be steeper, bank policy remains to stick to the bank’s conservative, risk-averse model built on winning low cost, diverse, reliable profits.

He concludes: “The Metro Bank model goes from strength to strength. We are delivering exactly what we said we would do.”

Hill’s target remains a store network of 110 in or around 2020, although that figure does appear to be ambitious.

Don’t bet against them.