From Citywire3 Feb 2021 18:26
Jefferies upbeat about Metro-Ratesetter deal
Jefferies is upbeat about Metro Bank (MTRO)’s £384m acquisition of a portfolio of loans from Ratesetter that will increase its exposure to unsecured personal lending.
Analyst Joseph Dickerson retained his ‘buy’ recommendation on the stock, which closed up 4%, or 4.8p, at 122.5p yesterday.
‘Metro’s acquisition of the £384m Ratesetter backbook should be taken positively as it is evidence of management executing on their strategy to diversify the loan book away from mortgages,’ he said.
‘On our numbers, these loans replace roughly half of the revenue lost from the £3bn residential mortgage sale to [NatWest Group] in December.’
Dickerson said a source of investor ‘pushback’ may be that the purchase is ‘taking place in the midst of a pandemic credit cycle’, but that such a reaction would be ‘misplaced’.
‘Our thinking is that this is a good time to add a seasoned book such as this, particularly without having to pay a portfolio premium,’ he said.