Investing.com -- Metro Bank (LON:MTRO) was initiated with a "neutral" rating and a 183 pence target price by Citi on Monday, with the brokerage saying the UK lender's shift from restructuring to growth offers upside but execution risks remain in newer lending segments.
The target implies about 11% upside from the bank's reference price of 165 pence.
Citi said Metro's low-cost funding base is a key structural advantage, with non-interest-bearing deposits expected to rise to around 50% by 2029 and the cost of deposits falling below 1%.
However, the brokerage is more cautious than management on the pace of growth, forecasting a 6% loan compound annual growth rate through 2028, below management's 8%-11% target.
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The bank is repositioning its balance sheet toward corporate lending, asset finance and specialist mortgages, with corporate loans expected to account for more than 70% of total loans by 2029, versus 44% in 2025, according to Citi.
The brokerage said these segments can deliver higher yields but require more bespoke underwriting and Metro has limited experience operating at scale in some of them.
Citi also expects Metro's net interest margin to rise to 4.1% in 2028, helped by the shift toward higher-yielding assets and its funding advantage.
At the same time, the brokerage expects the cost-income ratio to improve from 75.4% to 61.6% by 2028, but remain above management's 50%-55% target.
Citi forecasts attributable profit rising from £52 million in 2025 to £115 million in 2027 and £151 million in 2028, while dividends are expected to resume in 2027 with a 20% payout ratio.
The brokerage also expects Metro's debt interest expense to fall sharply as its MREL requirements decline, from £85 million in 2025 to £5 million by 2029.
Original Article
Metro Bank gets Neutral rating from Citi with 183p target as growth risks persist
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