Shares plummet as Metro Bank misses profit target
UK-based Metro Bank had the misfortune to see a third of its share price wiped out as its profit fell short of expectations.
In today’s (23 January) financial results for FY 2018 (ending 31 December), the bank reported an underlying profit before tax of £50 million. It had been aiming for £59 million.
The fall was due to a massive blunder in how it classifies its loan book. This mistake wiped £600 million off its value.
The bank says that hundreds of millions of pounds worth of commercial property loans and loans to commercial buy-to-let operators had been wrongly classified in risk terms, and should have been among its “risk weighted assets”.
While this is a major disappointment and led to the ignominy of a share mare, this profit is still a very healthy increase of 138% on the £21 million in FY 2017.
Craig Donaldson, Metro Bank’s CEO, coolly says: “2018 was another strong year of growth for Metro Bank as we continued to invest in both new stores and digital capabilities to win customers, deposits, assets and to create FANS. Metro Bank remains well positioned to support our growth strategy as we navigate an uncertain period for the UK.”
In other news, and if we’re not mistaken, the bank says it got over 100,000 new customer accounts and during the fourth quarter opened stores in Bath, Crawley, Northampton, Putney, Ashford, and Piccadilly and neared completion of Moorgate, which opened in early January.
Metro Bank now has 66 stores with a further seven in advanced planning stages or under construction.
In terms of other results, deposits reached £15.7 billion as at 31 December 2018, an increase of 34% versus 2017, following quarterly growth of £848 million.
Customer loans totalled £14.2 billion, an increase of 48% compared to 2017, following quarterly growth of £1.1 billion. In addition, total assets were £21.7 billion, an increase of 32% on 2017.
The bank’s management intends to give an update on outlook at the full year results on 27 February 2019.
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