Metro Bank tumbles as Q1 profit halves, customers head for the door

Metro Bank shares tumbled in early trade on Thursday after its first-quarter numbers - released after the close the day before - revealed a big drop in profits and the loss of several large customers following the discovery of a major accounting error earlier this year.

First-quarter underlying pre-tax profit declined to £6.9m from £10m in the same period a year ago, with statutory pre-tax profit falling to £4.3m from £8.6m.

The bank said "adverse sentiment" following January's trading update resulted in a "modest" 3.6% reduction in total deposits during the quarter, namely across a small number of large commercials and partnership accounts in January and February.

Revenues during the quarter were up 17% to £107.5m and the net interest margin was 1.64% versus 1.76% in the final quarter of 2018. Meanwhile, the bank's core capital ratio, a key measure of financial strength, declined by a percentage point to 12.1%

Chairman and founder Vernon Hill said: "We have faced challenges this quarter, but we firmly believe that our model offers a superior banking experience for our customers."

The bank said it remains committed to its medium-term guidance of 20% deposit growth per year, but that given the "challenging" first quarter, it expects a slower rate of growth in 2019.

Metro said the £350m fundraising it announced a couple of months ago - which caused the shares to tank - was expected to launch in the second quarter.

At 0830 BST, the shares were down 16% to 648.10p.