Metro Bank — Strong Q325 demonstrates solid execution

Metro Bank (LSE: MTRO)

Last close As at 04/11/2025

GBP1.09

−6.40 (−5.55%)

Market capitalisation

GBP734m

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Research: Financials

Metro Bank — Strong Q325 demonstrates solid execution

Metro Bank has announced strong Q325 results, characterised by strong lending growth to higher-margin targeted areas, up 12% versus H125. This targeted lending to corporate/commercial/SME clients has borne fruit, with Metro’s exit net interest margin (NIM) in September reaching 3.03%, within the year-end guidance of 3.00–3.25%. We expect further expansion over the next years, and the Q3 results give us added comfort that the story is evolving ahead of our growth expectations. We have slightly increased our estimates for FY25 on the back of these positive results. The market reacted positively, with shares up c 8% at the beginning of trading.

Martyn King

Written by

Martyn King

Director, Financials. Property and Insurance

Banks

Q325 trading update

5 November 2025

Price 109.00p
Market cap £734m

Shares in issue

673.3m
Code MTRO
Primary exchange LSE
Secondary exchange N/A
Price Performance
% 1m 3m 12m
Abs (7.0) (11.4) 43.2
52-week high/low 137.6p 75.0p

Business description

Metro Bank is a community bank that serves both retail and commercial customers in major cities in the UK. It operates a network of 76 ‘stores’ in prime locations, a key source of new lending and low-cost deposits. Metro Bank is undertaking a strategic repositioning towards a mid- to upper-teens return business model focused on commercial, corporate and SME lending and specialist mortgages.

Next events

FY25 results

February 2026

Analysts

Martyn King
+44 (0)20 3077 5700
Jonathan Richards
+44 (0)20 3077 5700

Metro Bank is a research client of Edison Investment Research Limited

Note: PBT is on an underlying basis. TBVPS, tangible book value per share. ROTE, return on tangible equity.

Year end PBT (£m) TBVPS (p) ROTE (%) DPS (p) P/TBV (x) Yield (%)
12/24 (14.0) 121.3 4.7 0.00 0.90 N/A
12/25e 98.9 166.9 7.8 0.00 0.65 N/A
12/26e 180.3 184.7 12.2 0.00 0.59 N/A
12/27e 260.3 213.4 15.7 0.00 0.51 N/A

Strong targeted lending, exit NIM ahead

Metro Bank reported strong Q325 targeted lending growth, with gross loans increasing to £4.8bn, up 12% versus H1. These higher-margin loans will in turn drive a higher NIM for the group, with Metro’s exit NIM in September reaching 3.03%, already meeting the year-end guidance of 3.00–3.25%. Overall, net loans of £8.8bn increased by 1%, due to the run-off book contracting by 9%, and deposits decreased by 1% in the quarter. This move was in line with management’s strategy to reposition the loan book towards higher-margin corporate/commercial/SME lending while concurrently lowering the cost of deposits by allowing expensive fixed term deposits to fall away. This has led to the cost of deposits falling to 95bp, the lowest of any UK high street bank. As the business has become more efficient, the loan-to-deposit ratio rose to 67% versus 65% in H1, further increasing profitability with scope for significant asset growth over the medium term.

Guidance reiterated, transfer firm reclassification

Metro continues FY25 with strong momentum, and management has reiterated guidance for FY2527. We expect the deposit optimisation, loan growth in the higher-margin target areas and cost discipline to drive growth over the next years. Management expects lending growth to continue in H225, with a robust £750m pipeline for targeted areas. Credit quality has remained strong with the portfolio highly collateralised and prudently provisioned. Finally, management expects to be positively reclassified as a transfer firm in January 2026, which it believes could add c £60m to net interest income on the MREL call date in 2028. We have slightly increased our estimates for FY25 on the back of these positive results.

Valuation: Further re-rating potential

Shares reacted positively on the morning of results as the market appreciated the growth delivered. On valuation, Metro trades on a consensus FY26 price-to-book ratio of c 0.7x versus UK banks’ average of c 1.0x. Given the prospect of a mid- to high-teens return on tangible equity, a multiple in line with the peer group average would result in a valuation equating to a 160180p per share.

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