Metro Bank to raise £350m to boost capital

Meanwhile, customer lending continued apace, with the loan book growing almost half to £14.2bn during 2018. However, that was against a 34 per cent rise in deposits, which meant that loans represented 91 per cent of deposits, against 82 per cent in the prior year. Management has set a more modest annual deposit growth target of 20 per cent in the medium term, with the aim of bringing the loan-to-deposit rate down to between 85 and 90 per cent.

Lending growth was driven by retail mortgages, which account for two-thirds of group balances. However, continued competition within that market, combined with a rise in the cost of deposits, pushed the net interest margin down to 1.81 per cent, from last year's 1.93 per cent. Underlying pre-tax profit growth during the fourth quarter was also hindered by a rise in operating costs associated with new branch openings and technology.

The lender is also facing new requirements to raise loss-absorbing debt, which has coincided with elevated pricing in the wholesale debt markets. Management blamed the pace of regulatory change for weaker progress on improving its cost-to-income ratio, which came in at 86 per cent. That is down on 90 per cent the prior year, but a far cry from management’s new target for 2023 of 55-60 per cent.   

Prior to the release of 2018 results, analysts at Investec were forecasting net tangible assets of 1,227.7p a share at the December 2019 year-end.