Metro Bank Holdings PLC (LSE:MTRO) shares fell 9.3% to 162.93p on Tuesday, despite the challenger bank reporting its most profitable half-year and reaffirming guidance for the full year and beyond.
Underlying pre-tax profit rose 34% to £61 million in the six months to June, the highest half-year figure in the bank's history.
Core lending increased 43% from a year earlier as Metro Bank said it gained market share. Its net interest margin (the difference between what a bank earns on loans and pays on deposits) reached 3.25% at the end of June, up 0.3 percentage points year on year.
The bank said it continued to have the lowest cost of deposits among UK high street lenders. It has been shifting towards higher-yielding corporate, commercial and specialist mortgage lending to improve returns.
Return on tangible equity reached 7.5% during the half. Metro Bank maintained its target for the measure to exceed 13% in the fourth quarter, before rising above 15% in 2027 and 18% in 2028.
The lender also reported a record credit-approved pipeline, which it expects to support further loan growth. The repricing of treasury assets should provide an additional lift to margins and returns.
Chief executive Daniel Frumkin said: "The first half of the year has been another period of strong momentum and strategic delivery for Metro Bank."
Metro Bank is also investing in its branch network, having signed leases for three new stores, and is adding products and services in response to customer demand.
The share price reaction appeared to be some profit-taking, as the shares had risen 50% since the start of the year.
