Deposits fell from £15.66 billion on December 31 to £15.1 billion on March 31, with Metro saying that “adverse sentiment” had led to a small number of business customers going elsewhere.
Metro Bank stunned the City in January when it revealed that it had miscategorised some loans as less risky than they really were, sending its shares diving and triggering investigations by the Prudential Regulation Authority and the Financial Conduct Authority. It announced plans the following month to raise £350 million in additional equity capital. There was no more detail on that last night, but Craig Donaldson, chief executive, said that Metro expected to complete the deal next month.
Launched in 2010, Metro emphasises customer service, traditional branches and seven-day opening and has features such as safety deposit boxes and coin-counting machines.
Mr Donaldson, 47, said: “Adverse sentiment following January’s update impacted deposit growth in the quarter, with a small number of large commercial and limited partnership customers making withdrawals, but we are pleased to see a return to net inflows in April.”
Personal depositors are protected up to £85,000 in the event of a British bank failing, but business customers do not have the same protection, making them more nervous about bank strength.
Statutory profit in the first quarter halved from £8.6 million to £4.3 million. On the company’s preferred “underlying” basis, profits were down from £10 million to £6.9 million. New accounting rules reduced profits by £2 million, Metro said. The depositor setback is likely to exacerbate concerns among some investors that the business model, which is predicated on fast loan and deposit growth and rapid branch expansion, could be affected. Metro, however, pointed to an extra 97,000 customer accounts in the first quarter, taking the total number to 1.7 million.
The announcement came after the close in London. Metro shares had ened the day at 774p, up 24p, having traded at about £22 before the January shock and having floated at £20 in March 2016.
Metro said that it recruited additional experts after the accounting problem and had introduced new controls.
Source: Business Matters