Section Items

Clarification
The comments on this page are some of the thoughts that I had when considering this company and not a recommendation to take an action or to refrain from taking an action.

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Is This Just Pump And Dump?
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Commentaries tend to be created when I look at a share and decide if it is one that I want to buy either now or when I next have an unallocated pot.
Financials
As companies often report numbers in slightly different ways there are a number of entries to cover this and as these are rough notes there will usually be empty items.

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Commentary On Metro Bank plc

Title: Metro Bank – 2020 Q1 Trading Update
Company: MTRO - Metro Bank plc
Share Price Then: 82p
Author: Ian Smith
Date: Wed 06 May 2020
Comments: I have followed Metro Bank’s decline with interest but I am now beginning to think that the share price is interesting especially as Vernon Hill has now departed possibly allowing for a board that is very focused on the banking part of the bank.

The trading update said that assets, loans and deposits are all down 4% from Q4 2019 but pretty much unchanged from Q1 2019. Although this means that there was no growth this is to be expected as the new branch opening program is on hold and there has been some more careful management of the loan book.

With 2m customers according to the last annual report and no indication of an exodus beyond any that happened in early 2019 when there was a lot of negative publicity as an outsider we are left with trust us it will be profitable.

When the statutory loss was £130.8m but an underlying loss of £11.7m was also reported there is almost £120m of losses which we are told don’t worry about these as they are one offs. These losses includes Impairment and write-off of PPE and intangible assets £77.7m and Remediation costs £26.8.

These are huge sums of money and if you accept that they are part of the past and a new culture means that they won’t happen again then you can just reluctantly accept them. But are they part of the past or will different impairments appear this year and more different ones next year?

That seems to be the big risk if Metro are to remain as an independent bank, but with a share price of around 80p the market cap is around £140m or £70 per customer, or triple it to 240p/£210 per customer and does this make it an attractive take over target, surely it does?

With a share issue in May 2019 at 500p per share for a company that floated at 2,200p and peaked a around 4,000p it is easy to believe that many share holders would just want out.

Clearly it is hard to be sure on this but it seems that the annual report issued on the 20th April had relatively little effect as COVID-19 is causing peaks and troughs so excluding COVID effect the price may be closer to 200p.

So it does look like a safe-ish hold and wait for a recovery share but there are a lot of shares out there that have halved because of COVID even where the virus isn’t that relevant to their business.
Financials:
ItemCurrent PeriodPrevious Period
Year20192018
Period12 Months12 Months
Revenue£316m£294m
Earnings
Adjusted Earnings
EBITDA
Adjusted EBITDA
Statutory Profit(£131m)£41m
Adjusted Profit(£12m)£50m
Total Debt
Net Debt
Read Count: 133

Commentary History