Challenger hurt by war in the mortgage market

TRADERS wiped off more than £300m from the value of

Metro Bank after it warned of a squeeze from fierce competition in the mortgage market.

Profits at the lender surged to £10m in the three months to September 30 – more than double a year earlier – and revenues climbed 34pc to £105m.

But chief executive Craig Donaldson warned that a price war on mortgages is making it harder for Metro to earn money.

The Bank of England hiked interest rates in August but Donaldson said that, in a highly unusual move, rates on fixed-rate mortgages actually fell the following month. Normally, if rates rise they would be expected to follow, boosting lenders’ profits.

Though this may be good news for borrowers, it pushed Metro’s shares down by 12.3pc, or 316p, to 2258p.

Russ Mould, investment director at AJ Bell, said: ‘Margins are being squeezed as it fights for business, which explains why its share price got a hammering.’ Its net interest margin, which measures the difference between how much interest it earns from lending compared to how much it pays out, fell to 1.77pc in the third quarter of the year from 1.85pc in the previous three months.

Aston Martin, the James Bond car maker which hit the public markets earlier this month, continued to stall, sliding 2.6pc, or 37p, to 1375p.

Originally worth 1900p when it floated, the shares have now lost 27.6pc of their value.

Aston Martin is worth £1.2bn less than when it debuted, which has left critics saying the host of bankers who worked on its float pushed up its value to rake in more fees.

Travel agent Thomas Cook provided some good news for the FTSE 250 as its shares climbed 8.5pc, or 3.42p, to 43.52p amid a broader industry uptick as traders took a punt ahead of its fullyear results in November.

Its shares have plummeted by 67.8pc so far this year, meaning a relatively small rise in its price has a significant effect.

Deutsche Bank analysts gave the European airline sector a hand as they said the recent sell-off of airline stocks looked overdone.

Rising oil prices and lacklustre results from companies such as Ryanair had caused investors to take flight. The hesitant vote of confidence caused EasyJet to rise 0.8pc, or 8.5p, to 1141p, Wizz Air was up 2.6pc, or 61p, to 2430p, and British Airways owner IAG climbed 0.8pc, or 4.4p, to 565.8p.

The FTSE 100 recovered slightly from Tuesday’s tremors, ending the day 0.1pc higher, or 7.77 points, at 6962.98.

BT climbed 4.1pc, or 9.75p, to 250.2p as investors backed the telecoms giant to up its game against competitors such as City Fibre. The younger rival, backed by Goldman Sachs and private equity firm Antin, is to spend £2.5bn on rolling out fibre networks for faster broadband.

Precious metals miner Fresnillo slipped, as it released disappointing third- quarter production results and cut its outlook for silver production. The Mexicofocused firm blamed low-quality ore grades at two mines, though it did say gold production should be stronger than previously thought. Shares fell 4pc, or 39.2p, to 938p.

Packaging company DS Smith dealt a blow to hedge fund billionaire Crispin Odey, whose firm took a £28.5m short position last week.

Short sellers, most often hedge funds, bet the price of a particular stock will fall. Though DS Smith has been on the decline, it showed a glimmer of hope as its shares rose 1pc, or 3.8p, to 367.7p. Odey is still in the money, though, as its shares are 17.4p lower than last Friday when he took his stake.