Business Overview
Metro Bank Plc is a banking institution. The bank's activities include the provision of banking and related services. It focuses on retail customers and SMEs. It offers personal and business banking services.

Recent News
On 4^th December 2019, Metro Bank announced that Craig Donaldson, Chief Executive Officer (CEO) of the bank, would step down at the end of the year. On 17^th December 2019, the bank announced that its Non-Executive Director, Vernon Hill, has stepped down with effect from 17 December 2019. 

Trading Update for Q3-FY2019 (30^th September 2019, GBP, million)

(Source: Interim Report, Company Website)

In the third quarter of the financial year 2019, the bank’s assets decreased by 2 per cent to GBP 21,002 million as compared to GBP 21,357 million in the second quarter of the fiscal year 2018. The bank’s loans declined by 1 per cent to GBP 14,891 million as compared to GBP 14,989 million in Q2-FY2019 due to proactive management of the Bank's capital and liquidity positions. The loan to deposit ratio was 105% at Q3 2019 (Q2 2019: 109%). The bank expected to maintain the loan to deposit ratio towards 100%. 106,000 new customers joined the bank in Q3 2019 as compared to 93,000 in Q2 FY2019, bringing the total to 1.9 million accounts. The bank’s total deposits grew by 4 per cent to GBP 14,231 million in Q3 2019 versus GBP 13,703 million in Q2 FY 2019 due to the elevation in the price of fixed-term retail deposits during Q3.

Share Price Performance  

Daily Chart as on 19^thDecember 2019, before the market closed (Source: Thomson Reuters)

On December 19^th, 2019, Metro Bank Plc shares were trading at GBX 201.20 at the time of writing before the market close (at 8:55 AM GMT), down by 0.50 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 2,216/GBX 155.20. The stock price has declined 88.15 per cent in the last one year. However, the stock price is recovering, giving 1.2 per cent return in the last one week.

Conclusion
The bank’s total loans have declined during the third quarter of the financial year 2019. Underlying loss before tax was GBP 2.2 million in Q3 FY2019 as compared to a profit of GBP 6.7 million in the Q2 FY2019. The bank faces certain risks such as credit risk, liquidity risk, market risk and regulatory risk, which could impact the overall business of the company. However, the number of customer accounts is increasing, which results in an increase in deposits. The bank is awarded as the best bank for overall quality of service for personal current account customers. It was awarded second for business current account customers in the latest Service Quality Survey. The bank is reducing costs, increasing fee income, and further strengthening its capital and liquidity position, which would help it to improve its performance. It can be an excellent opportunity for investors to invest for generating good returns.

The bank’s net interest income has grown from GBP 88.9 million in FY2015 to GBP 330.1 million in FY2018 giving 54.85 per cent growth on a CAGR basis which shows the decent performance of the company historically, and the bank can sustain it in future.

Based on the above rationale, we have given a "HOLD" recommendation at the current price of GBX 199.94 (as on 19th December 2019, before the market close at 8:25 AM GMT).

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