The challenger bank is on track to meet consensus' forecast £21m Net Profit in FY17.
Companies: Metro Bank PLC
Metro Bank (LON: MTRO) has released its Q3 trading update for FY17 which shows strong profit growth and reassurance the Group is on track to meet expectations in its first full-year as a profitable business.
Revenues grew 13% to £78m when compared to Q2's £69m, while underlying Profit Before Tax grew 77% to £7.2m.
The challenger bank, who has now been in operation for seven years has 50 sites throughout the UK and over 1.1m customer accounts.
It expects to open a further 17 branches (which it calls stores) by the end of 2018.
The Group also saw deposits from customers grow 10% quarter-on-quarter to £10.8bn as lending also grew 11% quarter-on-quarter to £8.6bn
Vernon Hill, Chairman and Founder at Metro Bank, added:
"Metro Bank continues to win FANS, attract deposits, lend to consumers and businesses, and generate profits that are re-invested for the benefit of our customers. We are the Revolution in British banking, offering real choice to consumers and businesses."
Like its challenger bank counterparts, who include the likes of Monzo, Aldermore and Starling, Metro is taking on Barclays, HSBC, Lloyds and RBS by offering a customer-focused business model. This model of building customer loyalty seems to be paying off so far.
Panmure released a note on the Group off the back of its update today, detailing their SELL stance on the stock:
"Although we expect Metro bank’s profitability to trend towards their stated RoE target of c14% by FY2020 driven by good loan growth and improving operating leverage, at P/TBV of 3.2 we believe that this is more than discounted in the current share price. We prefer banks that are already generating c20% returns and trading at much lower valuations."
MTRO currently trades at a PE ratio of 54x versus the industry median of 10x and has a Market Cap of c. £3.2bn.
Today's update confirms the Group is on target to deliver its first full year of net profitability, which consensus forecasts will reach £21m from Revenues of £294, up from a Net Loss of £16m from £195m in Revenues last year.