MARKET REPORT: Metro Bank slides after it taps shareholders for £303m


After releasing its results almost a day earlier than planned and announcing a surprise fundraising, Metro Bank took a hit.

It paints itself as a more consumer-friendly alternative to high-street institutions like Lloyds and Barclays, but disappointed analysts who were expecting £195million of revenues were given £190million.

Profit of £18.2million also fell short of the £26.8million predictions. Though the bank succeeded in placing 8.9m new shares, worth 3422p each and raising a total of £303million, investors seemed perturbed.

Earlier this year, Metro’s chief executive Craig Donaldson promised the bank would not raise any more money this year.

Metro Bank has disappointed analysts who were expecting £195m of revenues but were given £190m

Metro Bank has disappointed analysts who were expecting £195m of revenues but were given £190m

Metro Bank has disappointed analysts who were expecting £195m of revenues but were given £190m

He said yesterday: ‘We’re growing so well we’ve brought this money in to provide growth capital.’ And he insisted there had been no pressure from regulators to raise the extra cash.

But Metro’s regulatory capital ratio – or how much spare money it holds compared to the risks on its books – has slid. 

Rob Murphy, an analyst at Edison Investment Research, said the raise was clearly a response to the decline in the capital ratio, which Metro set at a minimum target of 12 per cent.

A number of the shareholders who participated in the fundraiser on Tuesday are understood to be connections of Metro’s founder and chairman Vernon Hill, an American businessman. Hill himself had said he would spend up to £10million on new stock.

Stock Watch – Gfinity

E-sports business Gfinity, which runs major competitions for video gamers around the world, has announced a partnership with pizza business Domino’s.

It will see Domino’s make a ‘significant investment’ into the Gfinity Challenger and Elite Series UK competitions.

Executive chairman Garry Cooke said: ‘E-sports has become the entertainment of choice for brands looking to connect with young adult consumers.’ Shares climbed 6.1 per cent, or 0.75p, to 13.12p.

But the rest of Metro’s investors were less impressed, as shares fell 1.5 per cent, or 52p, to 3370p.

Indivior, the drugs company buffeted by competition from an Indian rival making generic alternatives to its opioid addiction treatment, also suffered as it released half-year results.

The figures confirmed fears that its sales had been knocked, as revenue sank 7 per cent to £398million in the first half of the year and operating profit dropped 20 per cent to £200million.

In the FTSE 100, precious metals miner Fresnillo dropped 7.3 per cent, or 81p, to 1025p as it lowered its silver expectations.

It said that total silver production for the year would likely be closer to 64.5m to 67.5m ounces, rather than the previously announced 67m to 70m ounces.

Events and exhibitions business Informa failed to impress, despite announcing a 1.9 per cent increase in underlying profit to £294.4million.

The £10billionn company said it would try to milk £15million more of savings from its £3.9billion takeover of UBM by the end of 2021, and use £10million to help fund its struggling portfolio of fashion events.

Shares fell 4 per cent, or 34p, to 816p.

Overall, the FTSE 100 index lost 0.66 per cent of its value, or 50.79 points, to end the day at 7658.26. 

Wealth manager Brewin Dolphin made steeper gains, climbing 6.4 per cent, or 21.6p, to 358p, after it reported record total income for the third quarter.

Total funds under management swelled by 6.5 per cent to £42.3billion, and analysts at Shore Capital said Brewin remained their only ‘buy’ recommendation in the discretionary fund manager space.

Budget East European flight operator Wizz Air took a dive, falling 8.5 per cent, or 302p, to 3256p as it lowered its growth targets.

Despite seeing a 19.7 per cent rise in passengers carried in the first quarter of its financial year to 8.6m people – more than the population of London – it trimmed its full-year growth target from 20 per cent to 18 per cent. Wizz blamed rising fuel prices and strike disruption.

Burford Capital, which uses investors’ money to fund legal cases and aims to pay them a return out of the damages or settlement won, had a stellar day as it climbed 15.5 per cent, or 254p, to 1896p. Operating profit at the business was up 18 per cent to £139.3million.



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