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Metro bank has always been a darling to many users. Since it was founded in the UK by Anthony Thomson and Vernon Hill in 2010, the bank has been a real threat to the major and widely known banks.
Its new and fresh energy welcomed many customers, and so did the free dog biscuits that they offered to people who showed up to any of the branches with their dogs. They also had a branch based model which featured seven-day opening. This was a gesture of loyalty and care for their customers, and it won many hearts.
However, it seems like the charm was not meant to stay for long. Even though the bank will get a profit of £50 million for 2018, this is below the forecasted £59 million. The management of the bank publicly accepted this, and they explained that it was because of the soft fourth last quarter in 2018 that they experienced.
While it experienced an increase in profits in the first three quarters of the year, the last one had a decrease of 28%. The drop was attributed to by variation in customer behavior and continued mortgage margin pressure. They also linked the low profits to the cost of opening new branches. This is quite valid because, in 2018, specifically in the last quarter, they opened new branches in Moorgate, Bath, Crawley, Ashford, Putney, and Piccadilly.
Russ Mould, the bank’s investment director, further explained that the mortgage market had had stiff competition and this is a major issue, and so is the increase in the savings rate.
While giving a statement, the bank’s investment director assured that with the many branches along the high streets which function seven days a week, the bank will not have a lot of problem getting back on its feet. He, however, mentioned that one thing that may be a threat to Metro bank getting the intended profits is the fact that the high competitiveness of the banking industry.
The miss on the forecasted profit was an alarm and shone red light to investors as many started worrying about what more to expect. Even the investment director’s statement seems not to have been reassuring enough because the bank has begun experiencing drops on its shares.
Immediately after the announcement, the bank’s shares fell by 30% at 1,548.44 pence. This, however, does not come as a huge shock since the shares had been crumbling down throughout 2018.
Many are waiting to see if the bank will ultimately lose its mojo or if it will get back on its feet, just as the officials have assured.