Metro Bank profits dive, chairman to stand down

Metro Bank's founder Vernon Hill will step down as chairman, the British lender said on Wednesday, as it reported customers had pulled 2 billion pounds ($2.5 billion) out of the bank this year following a major accounting error in January.

The company also reported a steep fall in first-half profit and said it had sold a 521 million pound portfolio of loans to hedge fund Cerberus to bolster its finances.

The ten-year-old bank's market value plunged in January after it disclosed it had under-reported the risk of its loan book by nearly 1 billion pounds. It raised 375 million pounds from shareholders in May to shore up its capital base.

"This has been a challenging first half for the bank, with deposit outflows following intense speculation at the time of our capital raise in May" Chief Executive Officer Craig Donaldson said.

The bank added deposits had returned to net growth in the last eight weeks.

It said Hill would stay as chairman until a successor was appointed, after which he would remain as a non-executive director, founder and president.

Half-year profits slumped to 3.4 million pounds from 20.8 million a year earlier.

The bank's net interest margin - a closely-watched measure of underlying profitability - fell to 1.62% from 1.85% the previous year. Its core capital ratio, a measure of financial strength, was 15.8%, above its regulatory minimum of 10.6%.

Total deposits of 13.7 billion pounds were in line with the same time a year earlier, but fell 13% from the end of 2018.

The lender said 2019 deposits would be broadly in line with the end of 2018, with a loan to deposit ratio of about 100% by the end of this year.

Metro Bank's shares closed down 4.2% at 476.4 pence before it reported the results - a far cry from a high of 4,056 pence in March 2018.