Metro Bank reveals customers left after accounting error
Metro Bank has revealed the impact of a major accounting error and subsequent investor cash call during a “challenging” first quarter.
The high-street bank’s shares dropped almost 40% in January when it flagged that it had miscalculated the risk weighting of commercial loans secured on property and certain specialist buy-to-let loans.
It later unveiled a £350 million cash call to make up for the shortfall on its balance sheet.
Fresh numbers revealed that quarter-on-quarter deposit growth was affected by some major customers withdrawing during the fallout from the debacle, resulting in a 3.6% reduction.
Total deposits stabilised in March and returned to growth in April.
Compared to the same time last year, deposits were up 19% to £15.1 billion.
Chief executive Craig Donaldson said: “We are proud to have built a customer-centric business over the past nine years but this quarter has been challenging.
“Adverse sentiment following January’s update impacted deposit growth in the quarter, with a small number of large commercial and partnership customers making withdrawals, but we are pleased to see a return to net inflows in April.”
Underlying profit before tax sank to £6.9 million, compared to £10 million in the same period last year. On a statutory basis pre-tax profits fell from £8.6 million to £4.3 million.
Customer numbers grew faster than the equivalent period last year, as 97,000 new accounts took the total to 1.7 million.
Earlier this week shareholders were urged to vote against the re-election of founder and chairman Vernon Hill amid the fallout from the accounting blunder.
Investor advisory firm Glass Lewis has recommended that shareholders reject Mr Hill’s reappointment at the lender’s annual meeting this month, citing millions in payments made by Metro to his wife’s architecture firm InterArch.