Metro Bank shares fall despite rise in customer deposits
Metro Bank experienced a lull in lending over its first quarter but customer deposits jumped by £77m since the end of December, it told investors today.
Customers ignored lower interest rates on deposits to store more money with Metro Bank to bring deposits to £14.55bn over the first three months of 2020.
Meanwhile, net lending fell by £169m to £14.51bn compared to the end of 2019 following “proactive management of lending growth”. That brought Metro Bank’s loan to deposit ratio, a key measure of liquidity, down to 100 per cent.
Metro said its capital ratios remain above regulatory minimums after controlling growth of risk-weighted assets.
It said the impact of coronavirus on its customers is difficult to predict. However, the bank said it would update investors on the economic fallout of the virus at its half-year results
“Our colleagues have shown incredible commitment to serving our customers and communities in the face of the challenges caused by COVID-19,” chief executive Daniel Frumkin said.
“We are doing everything we can to meet customer needs through all our channels.”
“Despite the unfolding situation, I’m pleased that deposits continued to grow in the first quarter. Our ambition to become the UK’s best community bank has never been more important, and we’ve made early progress on the strategic initiatives announced earlier in the year.”
“The bank is supporting customers’ requests for repayment holidays, participating in the Coronavirus Business Interruption Loan Scheme and applying to participate in the Bounce Back Loan Scheme,” Metro Bank added.
John Cronin, a Goodbody financial analyst, said there were “no major surprises” in the update.
However, shareholders sent Metro Bank 6.3 per cent down to 81.3p in early trading.
Cronin said he remains negative on buying Metro shares, warning: “In the absence of a further significant strategy overhaul, we see Metro’s longevity dependent on IRB migration.”