‘Awful quarter’ for challenger bank as pre-tax profits halve and customer deposits fall
Metro Bank shares plunged to all-time lows on Thursday after it revealed an accounting error contributed to a 50% drop in quarterly profits and the loss of some of its bigger customers.
The challenger bank’s share price fell as much as 21% in reaction to a first-quarter earnings report published late on Wednesday. It detailed the fallout from the accounting blunder centred on how it classifies its loan book.
Metro’s chief executive, Craig Donaldson, said the bank suffered a 4% drop in deposits following an “adverse” reaction to the disclosure in January. He said a “a small number of large commercial and partnership customers” had withdrawn their funds, while pre-tax profits halved to £4.3m, from £8.6m a year earlier.
The lender confirmed in January that hundreds of millions of pounds of commercial property loans and loans to commercial buy-to-let operators had been wrongly classified in risk terms and should have been among its “risk-weighted assets” . Metro is being investigated by the Financial Conduct Authority and Prudential Regulation Authority over the error.