Metro Bank reported that its specialist mortgage lending jumped by more than three-quarters in the first six months of the year, although its overall home loan numbers were flat.
The firm said that its gross retail mortgage lending came in at £5.2bn in the half-year to the end of June in a trading statement, broadly flat from the end of last year.
However, the business added that its specialist mortgage lending jumped by 78% in the period to £1.2bn. Its prime home loan underwriting fell 12% to £4bn.
The firm has shifted towards landlord lending and residential underwriting to borrowers with sub-prime credit histories over the past three years, or so.
Metro Bank chief executive Daniel Frumkin said: “We continue our strategic shift to corporate, commercial, and SME lending, and specialist mortgages at pace.
Frumkin added: “We continue to enhance our specialist proposition and launched two further products, houses in multiple occupancy and multi-unit freehold blocks in July.
“New lending, together with attrition of legacy portfolios at lower yields, has led to a 49 basis points year-on-year improvement in overall yield.”
The bank added that its “mortgage portfolio is concentrated within London and the South East, which is representative of our original customer base and store footprint.
“We are expanding our footprint, which will reduce the geographical concentration of lending over time.”
The bank, which has a turbulent history of writedowns and mergers, is reported to have been approached about a takeover by investment firm Pollen Street Capital in June. Neither firm has commented.
Also, last September, the bank sold a portfolio of around £2.5bn of prime residential mortgages to NatWest.
Frumkin said: “We continue to run off low-yielding legacy portfolios, and replace them with high-yielding corporate, commercial and SME lending and specialist mortgages.”
The bank posted an underlying pre-tax profit of £45.1m, more than tripling the £12.8m it reported in the previous six-month period.
