* Shares up in early trading
* Bank starts to see progress across its loan book
* Total loans in first quarter down 17% year-on-year (Adds analyst comment, details from statement)
April 28 (Reuters) - Metro Bank reported a 17% slide in lending in the first quarter on Wednesday, but the British lender said it was starting to see improvement across its loan book as coronavirus restrictions eased.
Metro, one of the highest profile so-called challenger banks since it launched in 2010, is trying to turn around its finances after two years of losses and restore investor faith after a major accounting error in January 2019.
“Dull is probably what the market wants from Metro at the moment,” Panmure analysts wrote in a note.
Shares in the company, which have plummeted in value since the accounting mishap, rose 1.1% to 116.8 pence by 0746 GMT on the London Stock Exchange.
Total net loans fell to 12.05 billion pounds ($16.7 billion) in the first three months of 2021, versus 14.51 billion pounds a year earlier. Deposits jumped 13% to 16.41 billion pounds as stuck-at-home Britons had fewer opportunities to spend money.
“Customer activity dipped in January following the introduction of the third national lockdown late-December, recovering as the quarter progressed and helped by the gradual easing of restrictions in April,” Metro said.
“We are also beginning to see progress across our loan book, with strong growth in consumer lending and specialist mortgages as we focus on assets delivering higher risk-adjusted returns.”
The lender plans to expand its consumer-finance lending 10-fold to 2 billion pounds within three years in a bid to drive up margins, Reuters reported earlier this month.
Metro is dealing with record low interest rates set by the central bank to reinvigorate the economy, which has led to lower margins, while higher provisions to cover bad loans due to the economic downturn have also eaten into the lender’s profit.
The company said credit impairments continued to be benign and in line with its latest forecasts. ($1 = 0.7203 pounds) (Reporting by Muvija M in Bengaluru and Iain Withers in London; Editing by Sherry Jacob-Phillips and David Clarke)