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Metro Bank PLC on Wednesday as it was profitable on both an underlying and statutory basis in September, ahead of previous guidance.
Shares in Metro Bank were up 15% at 83.90 pence on Wednesday in London.
The London-based retail and commercial bank said September's performance was driven by "assertive" balance sheet action, strong net interest margin expansion, and continued cost discipline.
Net interest margin expanded to 1.98% in the third quarter of 2022, from 1.81% the previous quarter.
At September 30, assets totalled £22.55 billion, flat against £22.55 billion at June 30.
Loans at September 30 rose 3.8% to £12.83 billion from £12.36 billion at June 30. Metro Bank explained that residential mortgages and consumer unsecured lending grew in the quarter, partially offset by repayments of government-backed lending and reduction in Commercial real estate lending.
Deposits at September 30 fell by 0.8% to £16.37 billion from £16.51 billion at June 30. Metro Bank said it continues to attract low-cost high-quality deposits, evidence by growth in the underlying deposit franchise, which is now 96% of the deposit base.
Metro Bank's loan to deposit ratio was 78% at September 30, up from 75% at June 30.
Looking forward, Metro Bank said the main drive of capital consumption moving is likely to be loan-related risk-weighted asset growth, which it said is being "assertively managed" to ensure the bank continues to operate within buffers.
Chief Executive Daniel Frumkin said: "I am really pleased to see the business return to profit in September on both an underlying and statutory basis. This performance reflects our tight control of both costs and risk, close management of our deposit franchise and lending channels, and the supportive prevailing interest rate environment, all of which help build a balance sheet that delivers sufficient margin to cover costs.
"Whilst we remain watchful of economic conditions and continue to monitor our credit metrics closely, our book remains in good health. The underlying potential of our business is encouraging and, though the tight capital position currently constrains RWA growth, the business still seeks to grow margins with ongoing optimisation and discipline."
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