Metro Bank (MTRO) reached a crucial milestone in 2017, turning its first statutory annual pre-tax profit. Net customer lending continued at breakneck pace, helping accelerate net interest income growth at a faster rate than its operating expenses. However, this fast growth came at a cost – the common equity tier one ratio declined to 15.3 per cent, from 18.1 per cent the previous year.
Building delays also meant the challenger bank opened just seven new branches last year, behind its expectations. Chief executive Craig Donaldson says he is confident the banking group will open a further 12 in 2018, but management reduced its branch target to 100 by 2020 (down from the 110 initially anticipated).
Customer deposits were up almost a half to £11.7bn. However, that growth was outstripped by the increase in lending of almost two-thirds. Residential mortgages led the way, rising by almost three-quarters to £6.2bn. That pushed up the loan-to-deposit ratio to 82 per cent – management increased its guidance for 2020 to between 85 and 90 per cent.
Analysts at RBC Capital expect a book value of 1,306p a share at 31 December 2018, up from 1,298p at the same time the previous year.
| METRO BANK (MTRO) | ||||
| ORD PRICE: | 3,504p | MARKET VALUE: | £3.1bn | |
| TOUCH: | 3,504-3,506p | 12-MONTH HIGH: | 3,872p | LOW: 3,162p |
| DIVIDEND YIELD: | nil | PE RATIO: | 274 | |
| NET ASSET VALUE: | 1238p | LEVERAGE: | 17.1 | |
| Year to 31 Dec | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013* | 31.5 | -55.4 | -158 | nil |
| 2014* | 75.4 | -48.9 | -70 | nil |
| 2015* | 120 | -56.8 | -83 | nil |
| 2016 | 195 | -17.2 | -22 | nil |
| 2017 | 294 | 18.7 | 13 | nil |
| % change | +51 | - | - | - |
| Ex-div: | na | |||
| Payment: | na |
