Metro Bank sees profits halve and big customers leave after accounting error

By Roger Baird on Thursday 2 May 2019

Digital Banking

The bank’s chief executive Craig Donaldson calls the last three months “challenging”.

Metro Bank saw its profit cut in half in the wake of an accounting fiasco that also led to a number of large firms leaving the lender.

The challenger bank reported its first quarter figures on Wednesday - two months after it said a need to raise £350m in fresh capital from investors after underestimating how much shock absorbing capital it held.

The error, first revealed in January, led to the bank’s shares plunging by 40 per cent, wiping £800m from its market value.

Metro Bank said its profit before tax tumbled to £4.3m in the three months to March, from £8.6m a year ago, while customer deposits fell 3.6 per cent in the period after it disclosed the error.

The bank’s chief executive Craig Donaldson called the first three months of the year “challenging”.

He added: “Adverse sentiment following January's update impacted deposit growth in the quarter, with a small number of large commercial and partnership customers making withdrawals, but we are pleased to see a return to net inflows in April.”

The lender said it added 97,000 new accounts overall during the first quarter, taking its total to 1.7 million.

The FTSE 250 bank, founded in 2010, said it aims to complete its share issue to raise £350m in the second quarter and that it has banks standing by to underwrite the deal.

Metro, which runs 67 branches, added it had been hit by wider issues buffeting the banking sector, such as stiff competition in the mortgage market and a sharp slowdown in corporate loans linked to uncertainty over Brexit.

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