Metro Bank’s Stock Took A Nosedive As The Bank Reported Poor Performance In The Q1 FY2019

London-based Metro Bank Plc (MTRO) is engaged in the business of retail and corporate banking. It offers a variety of service to the customers, ranging from saving account, current account, currency exchange, term deposit, credit card, mortgage back loans, business loan and personal loans as well.

On May 01, 2019, the group reported its first quarter result for the period ended March 31, 2019. The group’s total revenue during the quarter surged by 17% to £107.5 mn from £91.8 mn in the first-quarter of FY18. Loan book grew by 38% to £15,167 mn and deposits surged by 19% to £15,095 mn. Group’s loan to deposit ratio for the first quarter of FY19 stood at 100%. The group’s underlying profit before tax dipped by 31 per cent to £6.9 million and Statutory profit before tax declined by 50 per cent to £4.3 million which primarily shows net £2 mn on account of adaptation of IFRS 16 (which categorises interest expense on the lease liability which was partly offset by a reduction in lease expense) from January 01, 2019 and an interest expenses of £3.5 mn on the Tier 2 debt issued in June 2018.

Net Interest Margin of the bank declined by 21 bps to 1.64% from 1.85% in the corresponding quarter of the previous financial year.

Underlying, earnings per share (basic) was 42% lower at 5.1 pence. For the quarter ended March 31, 2019, the group's Tier 1 capital stood at £1,160 mn (CET1), which was 12.1% of the risk-weighted assets and above the threshold target of 10.6%.

Craig Donaldson, CEO at Metro Bank Plc – Message

He said, "the first quarter was a challenging one, no doubt" but also pointed out that "the bank has a strong foundation and we are in good health".

Stock Performance

4-day daily price chart (as on May 03, 2019), after the market closed. (Source: Thomson Reuters)

Post the announcement of the first quarter result, the shares of Metro Bank have witnessed a steep plunge in the stock price. As on May 03, 2019, after the market closed, MTRO stock closed at GBX 638.5, down by 11.5 points or 1.769 per cent lower from the previous day closing price level. During the past one-year, the shares have registered a 52w high of GBX 3,512.0 and a 52w low of GBX 609.50. On a yearly basis, the stock has plunged by 80.52%, and in the last 5-days, the stock was down by 20.29% respectively.

The London headquartered Metro Bank Plc is now left with the outstanding market capitalisation of £622.03 mn and declined significantly over the last one year.