Achieving its ambitious growth targets was never going to come cheap for Metro Bank (MTRO). The challenger bank, which raised £400m at its IPO in March 2016, has completed a £278m share placing with new and existing shareholders, with the proceeds to be held to back a growing loan book. As a result of the increased share capital, its 18 per cent return on equity target has been pushed out two years to 2022.
Customer deposits grew by nearly half to £9.8bn at the period-end. The bank also continued its rapid lending growth during the first six months of the year: total loans reached £7.8bn, up two-thirds. This was partly due to the purchase of a £600m portfolio of UK mortgages from investors Cerberus European Residential Holdings. While this depressed the net interest margin at 1.92 per cent – as the bank was forced to hold the sum as cash until the sale completed – it is now expected to be margin accretive. Management has also increased its target loan-to-deposit ratio to 85 per cent by 2020, up from 80 per cent.
While no new branches were opened during the period, eight are in the progress of being built, which should be operational during the second half. Analysts at Numis expect net tangible assets of 1,210p a share at the end of December, up from 927p a year earlier.
| METRO BANK (MTRO) | ||||
| ORD PRICE: | 3,663p | MARKET VALUE: | £2.95bn | |
| TOUCH: | 3,657-3,663p | 12-MONTH HIGH: | 3,872p | LOW: 1,897p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 1,009p | LEVERAGE: | 18.7 | |
| Half-year to 30 Jun | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 84.1 | -18.1 | -24 | nil |
| 2017 | 131 | 4.42 | 3.9 | nil |
| % change | +56 | - | - | - |
| Ex-div: | na | |||
| Payment: | na |
