Metro Bank is in the process of divesting its £584m portfolio of unsecured personal loans as it shifts focus towards specialist lending. The sale, hinted at the end of January, is expected to net the FTSE 250 bank a profit of £11m.
The transaction details are yet to be revealed but come just before the company is due to announce its annual results on Thursday morning, as reported by .
Analysts from Peel Hunt, including Robert Sage, Stuart Duncan and Stephen Payne, commented: "By downsizing exposure to legacy unsecured personal loans more rapidly than expected, Metro can free up funding and capital to scale up its commercial and corporate lending balances, which have higher risk-adjusted returns sooner than guided."
They noted a surge in demand for commercial and corporate lending, suggesting that the sale could reinforce the bank's balance sheet.
The analysts further remarked: "The steadily rising groundswell of positive news for Metro continues with this announcement."
They praised the bank’s management strategy: "Having set out an ambitious and transformative strategy aiming to generate returns above the sector average, management is now showing how it may be able to deliver on its plans even more rapidly than its already tight stated timeframe."
They have also planned to update their target price and recommendations after reviewing the full-year financial results from the bank.
Meanwhile, Metro Bank, boasting roughly three million º£½ÇÊÓƵ customers, hasn't offered new personal or unsecured loans since 2023, reflecting its concentrated effort on specialist lending.
The lender unveiled a series of cost-saving measures at the start of the year, which included cutting 1,000 jobs and reducing the opening hours of its high street branches.
Speaking about the sale, Chief Executive Daniel Frumkin stated: "The sale of our unsecured personal loan book is in line with our strategy and positions Metro Bank strongly for future growth. " He added, "Upon completion, the transaction is capital accretive and will allow us to further optimise our balance sheet as we strengthen our position as a specialist lender of choice."
