Metro Bank stumbles as loans remain flat and deposits shrink

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Metro Bank (LSE:MTRO) PLC is one of the losers on Wednesday, down 5% to 110.39p after issuing a brief update on third-quarter trading where loans remained flat and deposits shrank 1%.


Chief executive Daniel Frumkin said the bank was focusing on shifting its business mix towards higher-margin consumer unsecured and specialist mortgages.


“We have seen improvements in our lending mix from our expanded product offering. We are seeing signs of a gradual return to normality and have adopted a hybrid way of working for office-based colleagues. We remain focused on executing on our plans and returning the bank to sustainable profitable growth.”


The statement, said broker Liberum, highlighted that “while the group’s mix shift towards higher margin consumer unsecured and specialist mortgages is progressing, this has been offset by the attrition of residential mortgages and commercial which includes the initial repayment of the Bounce Back Loan Scheme”.


Overall, given the growth in the broader sector, and expectations of continued loan growth in the second half for Metro Bank, Liberum’s analysts regarded the update as “a little disappointing” and leaves them continuing to believe the business model “is challenged”.


2.39pm: System1 surges on increase in automated product sales


System1 Group PLC (AIM:SYS1) investors are robot-dancing on the table as shares in the marketing group resume their climb, up 11% to 278.5p so far today, after reporting a marked increase in sales of automated data products.


These products, including Test Your Ad, grew to represented 45% of revenue in the second quarter from 28% in the first, as half-year revenue grew 22% to GBP12.3mln and last year’s loss was turned into a pre-tax profit of GBP1.3mln.


“We have been delighted by the continuing adoption by both new and existing customers of System1’s repeatable, fast-turnaround and scalable data products as they displace the historic large bespoke consultancy projects that dominated the group’s activity until H2 last year,” the company said.


Management said they believe these revenues “will in due course more than offset the reduction in bespoke consultancy projects as more customers switch to using our automated data products”.


12.49pm: UKOG needled by Isle of Wight


UK Oil & Gas PLC (AIM:UKOG) shares tumbled after a planned oil and gas testing programme was blocked by the Isle of Wight council planning committee.


UKOG, which holds a 95% interest in the PEDL331 license that hosts the Arreton discovery, said it will consider launching an appeal after the council refused planning for the project despite a recommendation last week by its own planning officers to approve the proposal.


Investors in the AIM-quoted firm will be familiar with its history of local government planning battles, such as in Surrey for its Horse Hill project.


The shares plunged to 0.1% in early trading but have come back to 0.13p, where there are down 6% since yesterday’s close.


11.47am: Reabold Resources (AIM:RBD) climbs off floor


Reabold Resources (AIM:RBD) PLC shares surged this morning after Corallian Energy, in which it owns 49.99% stake, has hired advisers to help it carry out a formal review of “various strategic options available to maximise value for shareholders”.


As part of the review, adviser Hannam & Partners will approach third parties that are felt could potentially be interested in making an offer for Corallian, which wholly owns the Victory gas discovery 80km north-west of the Shetland Isles.


Reabold said Victory is “a relatively simple, sub-sea tie-back gas development (in 158m water-depth), which has been fully appraised and requires no additional pre-development drilling”, with a Competent Persons Report recently estimated a total field best/mid-case technically recoverable resource of 179bcf dry gas.


Stephen Williams, co-CEO of Reabold, said: “Reabold is in full agreement with the Corallian board that the time is right to assess options going forwards via this strategic review, and that our significant exposure to the Victory project will at the appropriate time deliver considerable value to Reabold and our shareholders.”


Shares in Reabold, having recently sunk to an all-time low, were up 20% to 0.185p by late morning.


10.30am: Accrol bogged down by rising costs and driver shortage


Accrol Group Holdings PLC (AIM:ACRL) shares skidded over 23% to a year’s low below 34p this morning after the toilet paper maker issued a profit warning on the back of further raw material price increases, the shortage of HGV drivers, and a slower than expected recovery of footfall at its retail customers.


These factors have combined to limit sales and profit growth, with the group now expecting 25% net revenue growth and 20% adjusted EBITDA expansion for the year to 30 April 2022.


“Whilst the group’s supply chain has shown significant resilience and supply shortages have been managed, considerable cost increases had to be absorbed in the short term,” the Blackburn-based company said in a statement.


It said it was successfully passing on these cost increases, with the impact on earnings coming from the time lag in this process, even though profit margins will remain in line with those achieved from the past year.


While the group has seen very substantial cost increases over the past six months, broker Liberum said Accrol “is in a structurally much stronger position to deal with these pressures than at any time in the past”.


9am: Arena snapped up


Arena Events Group PLC (AIM:ARE) shot to the top of the leaderboard on Wednesday morning, up 43% to 20.27p, after agreeing a takeover by a Middle Eastern consortium.


Saudi-based Tasheel Holding, which already owns 23.9% of Arena’s shares, and UAE-owned IHC Industrial Holding will pay 21p per share, a 35% premium to the average price for the prior six months, but below the level the shares were at in early 2020.


Directors of Arena, which was hit hard by sales lost from the cancellations of events it services last year, such as Wimbledon and The Open golf championship, said they believe the offer “provides attractive value to shareholders and is in the best long-term interests of all stakeholders”.


Another early riser was Synairgen PLC (AIM:SNG, OTC:SYGGF) after it was given the green light for its SNG001 anti-viral lung treatment to advance to Phase III trials as part of a US government-sponsored programme.


The ACTIV-2 study has been recommended to be tested on non-hospitalised adults experiencing mild to moderate COVID-19.


Synairgen chief executive officer Richard Marsden added: “The advancement of SNG001 from Phase 2 to Phase 3 of the large ACTIV-2 trial is very welcome news and continues to build the case that our formulation of inhaled IFN-beta may have an important role in combatting COVID-19 and future emerging virus threats.”


Synairgen shares jumped 12% to 164.4p in the first hour of trading.

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