Metro Bank Holdings (LON: MTRO), the UK high street bank, saw its shares fall over 9% in early trade on Tuesday after reporting a record half-year underlying profit of £61m, as markets focused on weakening capital buffers and rising loan-loss charges rather than the headline earnings beat.
The shares dropped to 163.4p from a previous close of 179.6p, a decline of 9.02%, having fallen as low as 158.2p during the session. The move came in the hours after Metro Bank published its half-year results before markets opened this morning.
Metro Bank’s results for the six months to 30 June showed underlying pre-tax profit of £61m, up 34% year-on-year from £45.1m and the highest half-year figure in the bank’s history, alongside record core lending growth of 43%. The bank reaffirmed its guidance for 2026 to 2028, including a target of returns on tangible equity above 13% by the fourth quarter of this year, rising to above 15% in 2027 and above 18% in 2028.
Beneath those headline numbers, capital ratios weakened. The CET1 ratio, a core measure of a bank’s capital strength against its assets, fell to 12.3% from 12.8% a year earlier, while the liquidity coverage ratio, which measures a bank’s ability to meet short-term outflows, dropped to 270% from 315%. Credit quality also deteriorated: the cost of risk rose to 0.22% from 0.14%, and the charge for expected credit losses jumped 56% to £9.8m, even as the bank described the credit environment as “benign”. Return on tangible equity was just 7.5%, roughly half the Q4 2026 target being reaffirmed, and the net interest margin of 3.18% remains well short of the 3.40% to 4.00% exit-margin range guided for the full year.
Chief executive Daniel Frumkin defended the trajectory, saying: “As we move into the next half of the year, our record-high credit approved pipeline gives us a strong platform for further targeted lending which, along with the repricing of treasury assets, will deliver additional NIM and RoTE uplift. We look ahead with confidence and are reaffirming all guidance, including RoTE greater than 13% in Q4 2026, greater than 15% in 2027, and greater than 18% in 2028.”
The gap between current returns and reaffirmed targets leaves markets to judge whether Metro Bank can deliver an unusually steep improvement in the second half, a question the fall in capital and liquidity ratios alongside rising credit charges makes harder to answer with confidence.