You’ll be able to put money into a RateSetter account again
Metro Bank is planning to launch a RateSetter-branded savings account, as part of its focus on “enhancing its deposit proposition”.
The challenger bank, which acquired the former peer-to-peer lender in September 2020, said it is set to offer a broader range of savings accounts including a savings-boost proposition and a RateSetter-branded account.
“Given earlier investment prioritisation elsewhere, our market share in these products is lower than for other core products and therefore represents an opportunity for growth,” Metro Bank said.
The launch of a RateSetter savings account would expand the growth of the brand under Metro Bank’s ownership.
Currently, 95 per cent of Metro Bank’s consumer loan book is comprised of lending through the RateSetter brand, including £5m of car finance, £45m of overdrafts and £23m of credit cards.
The challenger bank increased the size of its consumer loan book by two thirds last year, taking advantage of the low-interest-rate environment to scale up.
But in its latest half-year results, Metro Bank said that is consumer loan book reduced to £1.41bn as at 30 June 2023, compared to £1.48bn at the end of last year. It said that “the bank has not sought to build the consumer lending portfolio during the period”.
Metro Bank said that it has moderated originations within its RateSetter portfolio as a result of macroeconomic uncertainty, which has resulted in the average borrower salary increasing to £49,000 from £46,000 in the half year to 30 June 2022, “ensuring we continue to maintain a strong level of credit quality”.
“The performance of this portfolio is aligned with expectations with continual enhancements being performed in relation to the affordability and creditworthiness assessment in light of the economic environment,” Metro Bank said. “Increases in arrears and non-performing loans have been observed but are in line with the growth of the book as well as historical cohorts and our internal forecasts.”
Read more: Metro Bank plots growth of RateSetter brand
Metro Bank reported underlying pre-tax profits of £16.1m for the half year ended 30 June 2023, with the second quarter of the year representing the third consecutive quarter of underlying profitability.
Underlying revenue remained flat half-on-half at £285.6m, which it said reflected “improved lending yields offset by increased cost of deposits and limited loan growth given capital availability.”
Commercial lending fell by seven per cent to £2.7bn, due to a reduction in its buy-to-let and real estate portfolios.
Metro Bank acquired RateSetter in September 2020, after the pandemic triggered a liquidity crisis at the P2P lending platform. Metro Bank paid an initial consideration of £2.5m and a further £9.5m after completion of the deal.
In February 2021, Metro Bank acquired RateSetter’s loan book for a cash consideration of £384m.