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Thanks for replying ripley94. Amusingly, when I followed your link it was citing your original post on this forum a its key source! Got to love AI! Share price moves don't feel like the market is moving on a deal narrative- just feels like Metro moves around with a high beta- which i don't really get since as often stated the "turnaround" just needs the bank not to mess up and for rates to stay high. hence i will keep buying the dips. NO idea what the half years will prompt. The big SP upturn did came after the 2024 half years, despite performance at that point being poor- while later improved results have seen a drop in SP in the days after the results. Again, it feels like it will only properly re-rate if we see sustained buying from a committed investor, or if something in the results suggests management have messed up again- either on credit quality or sacrificing the predictable path to higher returns with a punt on re-platforming.

Have you got a source for the Pollen St rumour? I couldn't find any recent press coverage but noted it was almost exactly a year ago when there was reported interest. I would be surprised if they would be back again, having been messed around atleast 3 times already, but you never know. I had heard rumours the bank was about to embark on a major re-platforming, which would be worrying from both a capability perspective and the challenge of running core tier one so low. Galinski has deep pockets but can't see how he can put money in without a full take private approach- so bringing in another anchor investor would make some sense but can't see Pollen as a junior partner

I must say, it grates when people talk about a turnaround and this is linked to the CEO's ridiculous incentive package. When modelling the bank back in 2022, it was clear that the bank would print money if rates went above 3%. As for a turnaround, the cost base of the bank has hardly changed despite slashing front office capacity which has killed deposit franchise growth. The "pivot" to commercial has resulted in a commercial book no larger than it was before they started running it off in 2019. Specialist lending is only proportionately larger because they sold an unhedged prime mortgage book for a £100m loss. Switching out of an asset yielding <2% into any asset class in 2024 would have resulted in a significant income uplift. Its not rocket science. But we will pay the same CEO who diluted us at a valuation of 8% of book in 2023 because of his own mismanagement, over £20m for sitting on a book of low cost funding that he did nothing to build and has significantly damaged the capacity to grow further. But atleast he let Galinski make a killing- corporate governance at its worst (but at least we now have the expertise of the former Colombian president to complement that of Galinski's daughter on the board to ensure the bank continues to be run in the interests of all shareholders). That said, I think the bank will make a profit of >£200m in 2027 so is actually still undervalued. So I am still buying the dips through clenched teeth!

Would broadly agree. The current yield curve is hugely helpful to Metro if they manage it properly (poor track record, but got to hope they now understand how to hedge). Shame we long term investors have missed out on most of the upside. A £1b valuation on the 172m shares outstanding before the 2023 fiasco would have had us at £5.80 a share.

Moves tend to be based on days with >5m in trading volumes. Not had one of those this year. Expect to see that today- but so far trading looks light. Can’t see why these results really move anything. It’s whether the market expects someone to want out, or whether galinski wants it to look that way

This stock doesn’t move on fundamentals. It’s about what the big holders want to do. We won’t get a sense of trajectory until we see some big trades- which do tend to happen around the results

You are not wrong re growth. The "transformation" has been slash and burn, hence a once distinctive service offer is now ranked below Barclays! But earnings growth momentum will keep coming because of the unhedged book (i.e. the fixed rate mortgages and gilts the bank wrote/bought when rates were <50bp) which you could think of as a massive structural hedge which will tick up substantially each year base rates hold above 3%. Even ex-growth (which it is at the moment) the bank looks under-valued. But as you say, it is hard to see the long term prospects under current management- who are being richly rewarded (despite being entirely responsible for massive value destruction in the past) for being in situ during a period where it would be hard not to print money with a deposit franchise largely made up of current accounts particularly once free of MREL.

So overall results as expected. As noted before, there is profit momentum in the book as the unhedged assets roll off. For as long as rates stay up, the bank should get to where it is signalling without having to do anything really. Digging deeper, commercial growth not that strong- they have had to turn to higher yield specialist mortgages to deploy lending capacity but that is not a particularly worrying thing, and post the roll off of MREL they can acquire assets if needs be. The deposit performance is weak- 77k current accounts compares to c200k pre October 2023 which shows how much damage they have done to the franchise. 32k business accounts compares to c50k, so better but with higher attrition I suspect very little net growth in accounts. Costs (including restructuring) at £485m is ok. But if they want to do something to shore up the franchise, this will go up next year. But if this is a dress for sale it looks on track.

I don’t really get the negative sentiment recently given the biggest threat to meeting guidance is base rates and current events mean higher for longer. I don’t rate management and strongly suspect there is some dodgy underwriting on commercial lending but they would have had to disclose major one offs. So I see profits above guidance of £70m and a clear path to £200m pbt by 2027. Makes £1.14 look like a buying opportunity.

Hope latest bounce based on more than just the latest round of layoffs. Cost efficiency is a good thing but having hollowed out their retail franchise would be nice to hear about platforms for growth beyond loosening credit standards in SME lending

I would say that has been my general investment thesis for Metro, but it has been severely tested by this particular idiot. But now it has a deep pocketed controlling investor there seems to be more room for error, so I am long the stock-despite the fact that a late cycle play into risky lending rarely ends well.

Those are forecast earnings based on management guidance- so while I don’t disagree with your broad point, it shows what a huge discount the market is putting on managements capability to deliver. Absent credit issues creeping out the woodwork I do struggle to see why they can’t deliver the numbers projected by cycling assets (either organically or via acquisitions) . But re-enforces my view that a different management team would be in everyones interests.

Not obvious who the buyer would be at the moment now Shawbrook has listed. Its was the current account that made the business interesting. It is remarkable how little commentary there has been on the damage done to this franchise- in latest CMA survey, what was once was the clear #1 on customer service is now #10 (behind Barclays) with # of new accounts opened falling from c. 200k per year to less than 80K (i.e. a 60% fall in market share). The strategy is to squeeze profits out of what is left of the franchise, but overall growth in lending is anemic at 1% Q on Q. But with all that said, with such a low loan to deposit ratio, there is plenty of room to acquire loans, and getting out of MREL makes this much more attractive. The challenge is, this management's track record on acquisitions (as per most things) is dreadful. We have to weigh up the obvious potential from increasing the Loan to Deposit ratio to drive pretty decent profits (should get to >£200m by 2027) with the risk that they overpay for or are sold a complete pup at the top of the cycle. I still hope that Galinsky will provide some cover for the CEOs obvious incompetence

Nothing in the update to justify any significant adjustment. Share price moves remain a puzzler on this one

It is worrying given how little is disclosed in Q3 results. Fear the market makers have got wind of a sell off Q3 but hard to judge why.

DTA is deferred tax assets. The huge losses Frumkin accrued can be offset against future tax on profits (rough rule of thumb is that Metro will pay about half the tax rate for next few years). As noted on the half year call, this is not accounted for through the P&L but through equity accrued on balance sheet- essentially if they made £100m PBT and had a tax charge of £25m, core equity would actually grow by c£87m rather than £75m (from a value perspective it’s the same as halving the tax rate in terms of free cash generation)

All the banks took a tumble today on fears of a Labour tax raid. Given the relative shelter of the DTAs, a substantial hit to Metro from a higher tax would be a nice problem to have

Agree that removing MREL dis-synergy makes acquisitions better. Let’s hope they don’t make as horrific a mess of it as they did Ratesetter

Agree that removing MREL dis-synergy makes acquisitions better. Let’s hope they don’t make as horrific a mess of it as they did Ratesetter

My modelling suggests 2027 might be a bit early for a dividend (assuming target CET is >12%), so a notional 3p is possible. But in 2028 I reckon they can afford to pay out £150m (so 22p a share) and c.£200m (30p) thereafter assuming they decide to pay out capital so as not to grow into the MREL regime.

Assuming it has not been sold and/or the credit environment hasn't done for them