Metro Bank shares plunge 30% as profit misses expectations

Profit for the full year set to be 15 per cent lower than previously expected

Metro Bank shares plummeted by 30 per cent on Wednesday after the company missed expectations with its profit guidance.

The challenger bank issued a trading update and said profit for the full year is set to come in at £50m, 15 per cent lower than the £59m analysts had expected.

The group said trading in the fourth quarter followed the trend of the previous three, with 100,000 new customers added. The company also opened six new branches, bringing the total number of Metro Bank operations to 66.

Craig Donaldson, Metro Bank chief executive, said 2018 was “another strong year of growth for Metro Bank as we continued to invest in both new stores and digital capabilities to win customers, deposits, assets and to create fans”.

“Metro Bank remains well positioned to support our growth strategy as we navigate an uncertain period for the UK,” he added.

Shares in the bank fell from just over 2,200p to £1,518p in early trading, as concerns about its profit rattled investors.

“Metro Bank seems to have no problem attracting new customers, helped by its branches having prime locations on the high street and being open seven days a week,” said Russ Mould, investment director at AJ Bell.

"However, banking remains a highly competitive industry and this issue is certainly going to be a key reason behind the profit warning."

“Intense competition in the mortgage market is a major issue at the moment and has been flagged by other lenders. Savings rates are also going up across the industry as the Bank of England has started to slowly lift base rates.

“This has created a perfect storm for some banks and is likely to have put pressure on Metro Bank.”