The Metro Bank chain of stores applauded the signs of a “gradual return to normalcy” as lending remained flat in the third quarter.
The group revealed loans of £ 12.3 billion for the three months to the end of September, holding up the previous quarter.
But lending has remained lower year over year – down 18% – after selling its residential mortgage portfolio to NatWest for £ 3bn in February as it seeks to focus on specialty mortgages and unsecured loans.
The group has not taken advantage of the increase in mortgages enjoyed by rivals amid the boom in the real estate market supported by relief in stamp duty and changing demands.
Metro Bank said it was seeing improvements in its loan portfolio and was benefiting from the transition to more profitable loan types.
But that progress was offset by the offloading of residential mortgages, as well as initial repayments of coronavirus rebound loans among small business clients.
Deposits grew 5% year-over-year, but fell 1% from the previous quarter to £ 16.4bn, moving from a high-cost fixed maturity to growing accounts current and instant access balances.
Metro Bank Managing Director Daniel Frumkin said: “We are seeing signs of a gradual return to normalcy and have adopted a hybrid way of working for office colleagues.
“We remain focused on executing our plans and returning the bank to profitable and sustainable growth.”
Interim figures for July showed Metro Bank cut its pre-tax losses by around £ 100million, although it remained in the red by just under £ 139million in the first six months of the year.
Liberum analyst Shailesh Raikundlia was not impressed with the Q3 update.
The banking expert said: “Given the strong growth in the broader sector and our expectation of continued second half loan growth for Metro Bank, we see this update as a bit of a disappointment.”