Investors keep faith with Metro Bank after major share placing

INVESTORS gave Metro

Bank their vote of confidence yesterday after the challenger bank furthered its growth ambitions through a share placing and insisted it remained on track for its first year in the black.

The FTSE 250 bank announced after the markets closed on Tuesday night that it was raising £278m to replenish its capital base following last month’s £600m purchase of a portfolio of buy-to-let mortgages.

Analyst opinion on the bank, which has made a loss every year since beginning in 2010 and has tried to bring the bricks-and-mortar bank back to the high street, was, however, split. Ian Gordon, an Investec analyst, said the capital raise was “very necessary”, given that its tier one common capital ratio, a signifier of a bank’s health, would have fallen dangerously low by the end of 2019, while broker Jefferies told clients that the interim results showed the strength of Metro’s model.

Investors yesterday erred with the latter despite the bank pushing back its return-on-equity target to 2022, with Metro advancing 144p to £36.09, a 4.2pc increase.

On the FTSE 100, Paddy

Power Betfair lagged behind a rising market after analysts at UBS initiated coverage of the bookmaker with a “sell” rating, weakening investor faith already damaged by fellow broker Investec’s double downgrade last week.

Paddy Power dived 225p to £74.10, a 3pc fall, after UBS argued that “even the best can’t escape the behest of the regulator”, with little scope for market share gains given its leading position in the UK and Australia, two countries looking to tackle unfair practices within the industry.

Overall, the blue-chip index faded during the afternoon to close just 17.50 points higher at 7,452.32, as US indices, in contrast, reached fresh all-time highs after another batch of expectation-beating earnings on Wall Street.

A “relief rally” helped ITV advance as much as 4.5pc in intraday trade before settling at 180.2p, a 4.3p gain, after it soothed investor concerns of an 8pc drop in advertising revenue by maintaining full-year guidance. It sweetened the deal by upping the interim dividend by 5pc.

Packaging giant Mondi pushed 33p higher to £20.51 after Finnish rival Stora Enso’s second-quarter results pointed to an improving picture within the sector.

Brent crude hitting its highest price in almost two months buoyed the mid-cap oil stocks in London with

Tullow Oil rising 12.2p, or 7.9pc, to 165.9p despite reporting a £400m pre-tax loss, and Premier Oil gaining 3.5p to 62.5p. Oil giant BP could not take advantage of the uptick, edging down 1.3p to 445.15p.