Metro Bank shares tumble as crisis pushes challenger to £240m loss
Metro Bank shares plunged more than 13.5 per cent this morning, after the challenger bank declared a £240.6m loss for the first six months of 2020.
Its profit for the same period last year was £3.4m, representing a crash of more than 7,000 per cent.
Today’s share price fall worsens an existing collapse of more than 90 per cent in its stock price since the bank became involved in an accounting scandal in January last year.
Metro Bank said it had been forced to take provisions to cover coronavirus crisis-related loan impairments, resulting in a £109m hit from the pandemic overall.
It added that it may have to raise up to £300m in debt capital early next year, and warned it might temporarily fall below the threshold acceptable to regulators in the mean time.
Analysts said the results were worse than expected, with impairments higher than forecast and its core capital level coming in lower at 14.5 per cent, down from 15.6 per cent at the end of last year.
“Some will question should Metro Bank be writing new business at all given serious questions regarding line of sight on its ability to earn anything close to its cost of capital on marginal lending activity,” said John Cronin, an analyst at broker Goodbody.
Metro chief Daniel Frumkin was optimistic, saying the bank had opened six new branches during the period and continued to increase customer account numbers.
“Our ambition to become the UK’s best community bank has never been more important and I’m confident we can build on this progress in the second half of the year,” he added.
Metro Bank this week closed an acquisition of peer-to-peer lender Ratesetter for £12m. The lender had previously raised £43m in equity funding, backed by the likes of Artemis and troubled fund Woodford Investment Management.