Metro Bank swings to big loss after accounting scandal
By Frank Prenesti
Date: Wednesday 26 Feb 2020
(Sharecast News) - Embattled Metro Bank reported a massive full year loss after an accounting scandal shook investor and customer confidence.
The High Street challenger swung to a pre-tax loss of ?130.8m last year, compared to a profit of ?40.6m in 2018. The bottom line was hit by an ?88m write-down, including ?27m relating to missreporting risky loans.
Underlying pre-tax losses came in at ?11.7m from a profit of ?50m a year earlier. Deposits fell by 8% to ?14.48bn as business customers pulled their cash.
The net interest margin, the difference between rates on loans and savings, fell to 1.51% from 1.81%.
Demand for Metro's, retail savings account fell by 19% and deposits from commercial customers, not including small businesses, halved. Total assets fell by 1% to ?21.4bn.
"Our financial performance reflects a very challenging year for Metro Bank," said new chief executive Dan Frumkin, who was brought in to replace Craig Donaldson who left along with flamboyant founder and chairman Vernon Hill.
"External headwinds, internal challenges and actions we took to put the business on a more positive trajectory are reflected in the results," added Frumkin, who had worked on Northern Rock after it was nationalised after the 2008 financial crash caused by the banking industry.
Metro admitted in January 2019 it had underreported its exposure to risky loans, prompting a probe from regulators and a ?375m cash call to boost funds. Shares in the bank have fallen more than 90% since the loan issue was announced.
The company said it would maintain tight control on its costs by revising its growth plans, adding that it would consider "tactical" asset disposals in the short term.
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