Metro Bank today announced its first ever full-year profit, with a strong expansion seeing its assets and loans both grow by more than 60 per cent.
The challenger bank reported a statutory profit before tax of £18.7m, while the underlying figure was £20.8m compared to an £11.7m loss the year before.
Shares fell by more than five per cent at the time of writing, but chief executive Craig Donaldson said the lender had a "cracking year". "We've done exactly what we've said we'll do," he said.
Metro Bank is following an aggressive expansion plan, reflected in surging customer deposit growth of £3.7bn, up 47 per cent to reach £11.7bn in total. Deposits per branch grew by £76m per year.
The bank also set a raft of hugely ambitious targets as far ahead as 2023 – an unusually long period – to raise deposits to at least £50bn, with a network of between 140 to 160 branches – almost triple the 55 it has now.
Donaldson said the 2023 deposit target was a "staging post" on the way to his previously stated ambition of £100bn in deposits. That should be "easily achievable", he said, which would give Metro Bank approximately four per cent of the British current account market.
He said: "How big can Metro Bank grow? The honest answer is more than £100bn."
Customer account numbers broke through the one million mark for the first time, with 302,000 opened during 2017. The bank previously announced plans to add 12 new branches and another 900 jobs throughout 2018.
The bank will likely stop adding branches at between 200 and 250 in total, Donaldson said. "I have no intention of going outside the UK," he added.
Metro Bank will also aim to slash its cost to income ratio to between 55 per cent and 58 per cent as revenues per branch rise, down from the 90 per cent announced today for 2017. Return on equity will reach at least 17 per cent if all goes to plan, implying its pace of rapid expansion will slow by 2023 as it seeks to mature.
Joseph Dickerson and Kapilan Pillai, analysts at Jefferies, said: "It's clear from the 2023 targets that Metro has national-scale ambitions, which sets up well for bidding on RBS SME customers," referring to the pot of money Royal Bank of Scotland is being forced to hand over to boost competition for small business lending.
However, John Cronin, UK banks analyst at Goodbody, said he still has "reservations" around the pace of growth, which could "come at the expense of margins and, potentially, credit quality".