RateSetter loans help boost Metro Bank’s consumer book to £1.5bn
Metro Bank increased the size of its consumer loan book by two thirds last year, in its second full year since completing its acquisition of RateSetter.
The challenger bank, which acquired the peer-to-peer lender in September 2020, said that its consumer lending grew by £590m to £1.480bn last year and now makes up 11 per cent of the total loan book. For 2021, that figure was seven per cent.
The bank said the increase was driven by “high-quality, new organic lending”.
Read more: Exclusive with Rhydian Lewis: A moment in time
“We continued to shift the balance towards assets with better risk-adjusted returns on regulatory capital, growing our unsecured consumer finance under the RateSetter brand along with higher-yielding residential mortgage lines and asset finance,” Metro Bank said.
The statement also revealed that its consumer portfolio is geared towards prime customers, with an average borrower income for RateSetter loans of £48,000 last year.
It also said that the proportion of higher-rated credit scoring applicants and the average income of new customers has increased in the RateSetter portfolio.
“From my first few months in the role I can see clearly that the Metro Bank model works,” said chief executive Daniel Frumkin. “Our customer service focused model is ideally suited to a normalised rate environment, and with the acquisition of RateSetter we now have the asset flexibility to generate yield if interest rates fall again.”
Metro Bank’s revenue grew by 31 per cent to £522.1m over the 12 months to 31 December 2022, which it said reflected “the shift in deposit and asset mix, the impact of the higher Bank of England base rate, and a recovery in customer activity.”
It narrowed its pre-tax loss to £70.7m from £171.3m due to the conclusion of legacy issues.
Metro Bank recently launched a digital car loan product under the RateSetter brand. The loans, effectively hire purchase facilities for used cars, are available through brokers using RateSetter’s technology.
RateSetter founder Rhydian Lewis left Metro Bank last month after less than two years. There was no mention of him in Metro Bank’s announcement of his successor’s appointment as managing director of consumer finance.
When asked by Peer2Peer Finance News, Metro Bank said Lewis was leaving Metro Bank “to seek a new challenge and leadership opportunity.”