Metro Bank delivered its highest half-year profit on record during the first six months of 2026, bucking a broader industry pattern of branch closures and accelerating its push into small business lending.

The FTSE 250-listed bank, which launched in 2010 as the first new high street bank in the United Kingdom in over a century, reported a pre-tax profit of £60.7 million, representing a 41 per cent increase compared with the same period a year earlier. Revenue climbed five per cent to £301 million, underpinned by strong performance in net interest income.

Net interest income, which accounts for approximately 80 per cent of the group's earnings, rose eight per cent to £241.5 million. Fee and other income declined 13 per cent to £55 million, though this was partially mitigated by a £4.4 million gain on asset sales, a marked improvement from a £200,000 loss recorded in the first half of 2025. The bank's total loan book grew four per cent to £9.2 billion.

Metro Bank has been strategically targeting the small business lending market as larger competitors pull back from the segment. This area typically delivers higher margins for lenders due to the ability to charge higher interest rates, and the retrenchment of major banks has left a notable gap in service availability for small and medium-sized enterprises across many UK regions.

The bank's core target lending portfolio — encompassing corporate, small business, and specialist mortgages — surged 43 per cent year-on-year to £6.2 billion, effectively replacing legacy residential mortgage and consumer run-off books. As part of this strategic shift toward specialist lending, Metro Bank offloaded its £584 million unsecured personal loan portfolio at the beginning of 2025.

The group's net interest margin, a critical measure of lending profitability, reached 3.18 per cent for the half-year. However, Metro Bank noted that it exited the second quarter at an improved 3.25 per cent. The lender is aiming for a margin range of 3.4 to four per cent by December 2026.

Metro Bank reaffirmed its return on tangible equity targets, anticipating over 13 per cent by the final quarter of 2026 and exceeding 18 per cent by 2028. The results mark a continued turnaround for the lender, which faced significant challenges in recent years, including a 2019 accounting scandal and a late 2023 capital-raising effort that brought in new investors.

The bank also outlined plans to continue its regional expansion into northern economic hubs, having signed new store leases in Newcastle, Leeds, and Nottingham during the first half of the year. For small business customers, physical branches remain important for relationship-based services such as cash handling and in-person consultations, areas where Metro Bank's model differentiates it from increasingly digital-only competitors.

This expansion stands in contrast to the broader banking sector, where major lenders have been steadily reducing their physical footprints. In April, Barclays announced a significant reversal of strategy, opting to grow its network beyond its current 206 locations, despite having closed roughly 80 per cent of its branches since 2019.