Wednesday 30 January 2019 3:23 pm | Updated: Monday 03 June 2019 2:32 am

Metro Bank shares plunge after warning on UK operating environment

Shares in Metro Bank fell more than 10 per cent this morning after the challenger bank felt the ripple effect of Banco Santander’s cautionary comments on the UK market.

In its full-year results this morning Banco Santander said the UK’s operating environment is “competitive and uncertain”, dragging down the share price of Metro Bank which issued a profit warning last week.

The challenger bank has less room to disappoint than its rivals, AJ Bell investment director Russ Mould said, due to its high growth expectations.

The lender's shares fell 10.8 per cent from 1,366p to 1,217p today, before recovering slightly to 1,251p this afternoon.

“Metro’s shares have fallen a lot more than those of Paragon – which did not disappoint at all with its statement this week – or OneSavings Bank, whose November update was also reassuring, or for that matter CYBG and Secure Trust Bank," Mould said.

“This is because growth expectations at Metro are so much higher, and its valuation on earnings much richer and its dividend yield much lower, so there is less scope for disappointment on the numbers.”

Metro Bank shares plunged around 30 per cent last week after it revealed it had missed analysts’ underlying profit expectations by £9m.

The bank also warned that mistakes in the way it had calculated the weight of some commercial loans and buy-to-let loans to major landlords would take a chunk out of its risk-weighted assets.

Hargreaves Lansdown senior analyst Laith Khalaf said: “It’s been another grim day for Metro Bank shares, following the steep falls we saw last week off the back of its recent results.

"If you looked at the numbers themselves, you could be forgiven for thinking it was a tremendous period of trading, but when the market has already pencilled in stellar growth, disappointment comes at a hefty price for shareholders.”