Metro Bank (MTRO) lost almost a third of its market value after warning that profits and regulatory capital levels for 2018 would be below expectations. Underlying pre-tax profits for the year were £50m, lower than the consensus forecast of £59m, with management citing a softening performance during the final quarter.
Risk-weighted assets of £8.9bn were around £900m higher than analyst expectations, after the challenger banking group was forced to increase the risk weighting assigned to certain commercial loans secured on property and certain specialist buy-to-let loans to large portfolio landlords. A spokesperson for the high-street lender said the group – which uses the standardised approach for assessing credit risk – had “misinterpreted” how those loans should be categorised.
The total capital ratio is expected to have fallen to 15.8 per cent, down from 19.1 per cent at the end of September, but still ahead of its regulatory minimum. That should translate to a common equity tier one ratio of around 13 per cent, according to forecasts by RBC Capital, behind 15.7 per cent at the end of September.
