Metro Bank shares surge as predicts net interest margin expansion

Metro Bank Holdings PLC on Wednesday retained full-year guidance as it reported an improved net interest margin in the third quarter and said credit quality remains strong.

In response, shares in the London-based retail and private bank shot up 13% to 172.60 pence each in London on Wednesday morning. It was the best performing stock in the FTSE 250 index, which was up 0.6%.

In a trading update, Metro Bank reported gross loans and advances to customers rose 4.9% to £9.43 billion in the third quarter of 2026 from £8.99 billion a year earlier, driven by 37% growth in target lending segments to £6.62 billion.

Net loans increased 5.3% to £9.29 billion from £8.82 billion, while customer deposits declined 1.4% to £13.03 billion from £13.21 billion.

Net interest margin expanded by 42 basis points year-on-year to 3.45%, which Metro Bank noted is already within its full-year guidance range of 3.4% to 4.0%.

The lender highlighted a "clear path" for further expansion of NIM and of return on tangible equity across the fourth quarter of 2026 and into 2027, supported by the maturity of fixed-rate treasury assets and continued asset rotation.

RBC Capital Markets analyst Benjamin Toms said Metro Bank's forecast NIM expansion in 2027 bucks a recent trend seen at other UK banks.

Credit quality remains "strong", with low arrears and resilient performance across all segments, Metro Bank added.

Cost of deposits is the "lowest of any UK high street bank", it claimed.

Metro Bank reaffirmed all guidance, including return on tangible equity greater than 13% in the fourth quarter, greater than 15% in 2027, and greater than 18% in 2028.

Chief Executive Daniel Frumkin said the figures show a business that is "executing consistently and with conviction".

"We are winning market share in our target segments, with loan growth up 37% year-on-year, as we expand relationships with the businesses that drive UK growth," he added.

The CEO noted Metro Bank's exit NIM is already within its full-year guidance range, "demonstrating the quality and pace of the balance sheet rotation we have been delivering".

"We enter the final quarter of the year with confidence and clear momentum and reaffirm all guidance," Frumkin said.

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