Metro Bank launches £280m fundraise as lending growth accelerates

metro bank fundraise

Metro Bank tabled plans to raise up to £278m through a share issue after experiencing “strong and accelerating organic lending growth”, which had propelled it to its fourth straight quarterly profit.

The challenger bank said lending rose 67 per cent year on year to £7.8bn in the three months ended June 30, the Telegraph reports.

This was partly down to its purchase of a portfolio of UK mortgages worth almost £600m from US investment firm Cerberus early last month, which increased the size of its mortgage book by around 15 per cent.

“In order to support this momentum and the company’s future growth ambitions”, Metro said it had brought forward its plans to raise equity capital.

It is looking to issue up to 8m shares at £34.65 each, which was the closing price on Tuesday.

Shares in Metro have risen 80 per cent in the past year. The placing launched on Tuesday evening.

Metro Bank said in the recently ended quarter it had also experienced a 49 per cent rise in deposits from customers to £9.8bn, but the cost of deposits had fallen from the prior quarter.

Both the rise in lending and deposits had caused underlying pre-tax profits to double to £4m in the second quarter from £2m the prior quarter.

On a year-on-year basis, Metro Bank swung to an underlying first-half pre-tax profit of £6m from a loss of £13m a year earlier.

The high street lender is on track for its first year in the black, having recorded annual losses each year since it was founded by billionaire American chairman Vernon Hill seven years ago, who had been seeking to mount a challenge to the established high street banks such as Barclays and Lloyds.

Unlike its big rivals Barclays, Lloyds Banking Group, HSBC and Royal Bank of Scotland, which, to focus on online banking, have been closing branches in recent years, Metro has been opening sites.

During the recently-ended quarter, Metro said its customer account numbers had surpassed the 1m mark, having grown 58,000 over the three months.