Metro Bank Share News (MTRO)

(Sharecast News) - Metro Bank's chairman has warned shareholders to expect a significant rise in bad debts during the economic slowdown caused by the Covid-19 pandemic.
Michael Snyder also said changes in customer behaviour such as fewer transactions could lead to weak fee income during the downturn for the struggling challenger bank.

Britain's banks are bracing themselves for soaring bad debts as businesses and households struggle during the worst recession since world war two. Metro Bank did not report on bad debts when it last updated investors on 6 May.

In his statement to the bank's annual general meeting, broadcast on the internet, Snyder said low interest rates and government intervention in the economy would support repayments and Metro had a conservative loan book.

"Nonetheless, we are seeing short term economic disruption which will naturally result in significantly higher credit risk impairments than in recent years, with the actual quantum depending largely on the magnitude and length of the economic slowdown," Snyder said. "We have also seen behavioural changes, such as a reduction in transaction volumes, which may result in lower than expected fee income for a while."

Like other companies Metro is not allowing shareholders to attend its AGM because of distancing restrictions. The meeting was held with a minimum number of people at its London head office.

The meeting took place after a year of upheaval for Metro that started with the revelation it had underestimated the riskiness of £900m of commercial property and other loans. The bank's share price plunged and the Financial Conduct Authority launched an investigation.

In September, Metro had to cancel a bond sale launched to strengthen its finances and in October founder Vernon Hill quit amid doubts about the company's governance. He was followed two months later by Craig Donaldson, who had led the bank since its establishment in 2009 as a challenger to Britain's big lenders.

Snyder thanked Hill, Donaldson and four other directors who had stepped down from the board in the past year.

"I would like to pay tribute to Vernon and Craig's vision and dedication, through which Metro Bank grew from a standing start to over 2m customer accounts," he said.