Metro Bank said its gross new residential mortgages fell by more than a third after the sale of a £2.5bn portfolio of loans, but adds that its “pivot towards specialist mortgages continues”.  

The challenger bank said its retail mortgages fell 34% to £5.1bn from a year ago after a portfolio sale of prime home loans to NatWest in July. 

But it added in its annual report: “The pivot towards specialist mortgages continues, following recent investment to re-platform the mortgage business and enhance the product offering.  

“Metro Bank’s operating model is tailored to more complex underwriting which enables the group to meet the needs of more customers and scale underserved markets while offering improved risk-adjusted returns.” 

It adds that mortgages remain the largest component of its lending book at 56%. 

The lender offers a range of buy-to-let lending to new landlords and limited companies. 

The business also sold £584m slice of unsecured personal loans to an undisclosed buyer yesterday.  

The bank said the, “transactions create additional lending capacity to enable Metro Bank to continue its shift towards higher-yielding corporate, commercial, and SME lending, and specialist mortgages”.

Its overall arrears levels increased to 5.6% at the end of December from 3.8% a year ago, driven by “the sale of retail mortgage assets and the run-off of the unsecured personal loans portfolio”. 

The lender swung to a pre-tax loss of £212.2m from £30.5m the year before. 

It added that its full-year after-tax profit was £42.5m up from £29.5m over the same period.  

Metro Bank chief executive Daniel Frumkin said: “We have made significant progress in creating a simpler, more agile Bank and continued, at pace, the strategic shift towards corporate, commercial, and SME lending, and specialist mortgages – a compelling opportunity in an underserved area of the market.”