Metro Bank - Profitability achieved and targets reiterated

Metro Bank (Metro) has published a trading update that shows that it returned to profitability in October. This is consistent with previous guidance of a return to profitability during Q424 and the bank has reiterated its guidance for a mid- to upper single-digit FY25 return on tangible equity (RoTE). The October net interest margin of 2.48% also points to faster improvement than we had anticipated. Separately, the bank reported that it has resolved Financial Conduct Authority (FCA) enquiries into legacy transactions monitoring systems and control. The £16.7m financial penalty is non-recurring and equivalent to c 2.5p of tangible book value per share. At this stage, we have not adjusted the forecasts set out in our recent initiation note and will review these with the full year results.

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