Metro Bank PLC (LON:MTRO) shares tanked after the lender said its profits halved in the first quarter following a £900mln loans error.
Pre-tax profit fell to £4.3mln in the quarter from £8.6mln a year ago.
Shares plunged 12.9% to 673.5p in morning trading.
READ: Metro Bank to raise £350mln in emergency cash call and CEO to waive bonus after accounting blunder
Metro said it lost a small number of large customers after admitting in January that many commercial loans had been incorrectly classified in an accounting error.
The discovery of the loans fiasco led to a sharp fall in Metro’s market value and forced it to reduce its long-term growth plans. Shares are down 54% since the start of the year.
“Adverse sentiment following January's update impacted deposit growth in the quarter, with a small number of large commercial and partnership customers making withdrawals, but we are pleased to see a return to net inflows in April,” said chief executive Craig Donaldson.
Rights issue to go ahead
The lender also repeated plans to issue a £350mln rights issue by the end of June to prop up its capital levels.
Donaldson said it had been a “challenging” quarter as it was also hit by the industry-wide pressure of tough mortgage competition, which squeezed margins.
The net interest margin – the different between interest earned on loans and money paid for funds – fell to 1.64% from 1.76% last year.
Revenue gained 17% to £107.5mln.
Metro Bank 'resilient', says CEO
Loans grew by 38% to £4.2bn and deposits increased by 19% to £15.1bn.
Customer accounts rose by 97,000 to 1.7mln.
“The bank has remained resilient with a 6% increase in customer accounts on Q4 2018 and momentum in the rest of the business continuing,” Donaldson said.
“2019 is a year of transition as we implement our evolved strategy, with the aim of optimising the balance of growth, profitability and capital efficiency."