Metro Bank plc (lon:mtro)
Metro Bank – Crashes On Not Good Enough News!

Metro Bank plc Financials

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Metro Bank plc Share Price
Grade:The Green Grade - Shares That I Think Are Oversold..
Title: Metro Bank – Crashes On Not Good Enough News!
Company: MTRO - Metro Bank plc
Share Price Then: 1491p
Author: Ian Smith
Date: Wed 23 Jan 2019
Comments: Metro Bank dropped to 1,491p or 30% on what appeared to be an okay trading update, this drops the P/E ratio to around 117!

So is this an over reaction or the case of a bank “buying” business as it doesn't have the uniqueness that it likes to promote itself as having?

Whilst Metro is mostly a retail bank with 1.5million accounts and 60 “stores” (branches) it is also a provider of commercial loans.

From the this update and the 3rd quarter report the simple numbers are £50million profit on £14billion worth of loans and £16billion of deposits, apparently the expected profits were supposed to be close to £60million.

About 33% of loans are to commercial customers, 65% residential mortgages and 2% other consumer loans and unless I am misreading the last quarterly report they seem to be allowing 0.2% of the loan value for bad debt under IFRS 9 rules!

In July 2018 Metro bank raised £300 million by issuing new shares representing about 10% of the issued shares, so a £50million profit is pretty small change and coming back for more cash doesn’t seem impossible.
Read Count: 167/5042

Buy/No Buy In A Nutshell
NegativesThe impetus of being a new bank with a new image has gone and it is still not clear that the bank can be meaningfully profitable.
PositivesA valuable customer base for an existing bank.
Initial Review Price112p
Last Review Price95.28p
Last Review Date02-Sep-2020
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