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Metro chairman steps down as profits plummet

Metro chairman steps down as profits plummet

Vernon Hill is stepping down as chairman of Metro Bank as customers pulled £2bn worth of deposits from the lender over the first six months of the year.

In its half yearly results out yesterday afternoon (July 24) the challenger bank also reported a decrease in profit before tax of 84 per cent compared with the same six months last year — £3.4m compared with £20.8m in 2018.

Mr Hill said he was stepping down because he believed the bank had “now reached a size and scale where it was appropriate to appoint an independent chair”.

The transition was also to ensure the board continued to evolve “in-line with best practice”, the announcement, published separately on the stock exchange yesterday, stated.

Metro had an embattled start to 2019 after the Bank of England found an accounting error in the bank's books.

The bank had miscalculated its loan book risk level and over-reported its capital ratios as a result, causing its share price to plummet and its profits to halve in the first quarter.

Metro then raised £350m of equity, confirming in May its plans to raise funds were “well advanced” to “support its growth”.

Yesterday's results also show a reduced net interest margin, dropping 23 basis points to 1.62 per cent.

The bank’s mortgage lending increased however, to £10.4bn, up 8 per cent from the end of 2018, while its earnings per share slipped from 19p to 8.1p over the same time period.

Metro also confirmed the sale of a £521m loan portfolio in its trading update. The bank confirmed on Monday (July 22) it was in discussions about such a sale.

Although the bank has not confirmed a buyer, earlier this week reports circulated that Cerberus Capital Management, a US-based private equity firm, was the potential buyer.

Cerberus hit the headlines over the past years for its involvement in the mortgage prisoners issue after it bought old Northern Rock loans from the government after the financial crash.

Craig Donaldson, chief executive of Metro Bank, said: "This has been a challenging first half for the bank, with deposit outflows following intense speculation at the time of our capital raise in May. 

“Despite this, we have delivered a resilient performance with both personal and business current accounts growing alongside increased revenues and fee income, with deposit growth returning to normal in June and July to date.”

Mr Donaldson described 2019 as a “year of transition” for the lender, but said the bank had continued to focus on its strategic initiatives and upgrade its cost savings guidance.

Mr Hill will continue as chairman until a successor is appointed, after which he will remain as a non-executive director, founder and president.

Sir Michael Snyder, senior independent director, said: "Mr Hill is the inspiration behind Metro Bank, the first high street bank to open in the UK in over 100 years. 

“It is thanks to his vision and leadership that we have grown to 67 stores around the country, serving over 1.8m customer accounts and have recently been ranked as the number one bank for overall quality of service for personal banking.”