Underlying profits before tax dropped 38% quarter-on-quarter from £11.2m in Q4 2018 to £6.9m in the Q1 2019, and 30% year-on-year from £10m.
In January, the bank revealed it had miscalculated the low-risk weightings on part of its loan book. This meant it would have to increase the total of its risk-weighted assets by £900m to £8.9bn.
Metro Bank belatedly admitted that the Bank of England’s Prudential Regulation Authority had found the error, having said previously that an internal review had brought it up.
In yesterday’s financial summary for Q1 Metro Bank announced that its statutory profits before tax decreased by 50% year-on-year from £8.6m to £4.3m.
The bank attributed the reduction in profit to the effect of adopting IFRS 16 in January 2019 and quarterly interest expenses on debt issued in June last year.
Metro Bank also revealed that £566m worth of deposits from retail and corporate customers had been withdrawn, a 4% quarter-on-quarter decrease.
“Adverse sentiment following January’s update impacted deposit growth in the quarter, with a small number of large commercial and partnership customers making withdrawals, but we are pleased to see a return to net inflows in April,” said Craig Donaldson, CEO of Metro Bank.
He said he was happy with the bank’s resilience, pointing to to a 6% quarter-on-quarter increase in customer accounts and said that the bank aims to implement an “evolved strategy” in 2019 to optimise “the balance of growth profitability and capital efficiency”.
In February, in spite of the accounting error Metro Bank was still able to secure £120m in funding from independent organisation Banking Competition Remedies to help stimulate SME banking.
In April the bank lost its second director in as many months after Keith Carby announced he would depart his role from the board and from the bank’s audit committee.