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Calculating Metro Bank's Net Asset Value

With some corrections / additional comments in blue below.

Now that Metro Bank has a new £375m on deposit, I thought I would work out the net asset value and shareholder equity.

Total Assets at 31 March '19        £22,194m
New Capital                                       £375m
-------------------------------------------------------
Total                                              £22,569m

Total Liabilities at 31 March         £20,788m


Shareholder Equity                          £1,781m
Total Voting Rights                    172,420,458
Net Asset Value per share                   £10.33
Current Share Price                                 789p
Discount to NAV                                    23.6%


Same figures for a couple of other banks

Lloyds NAV 53p currently trading at 58p (8% premium)
CYBG (inc Virgin Money) NAV 128p currently trading at 182p (42% premium)

I think that makes Metro Bank a buy, as they literally have pounds in the bank that you can buy for 76p. They're not printing that stuff anymore (well not at the moment). I guess one valid reason to have such a discount to NAV would be if you thought Metro Bank might make a large loss; let's say 23.6% of the equity that they have 0.236 x £1,781m = £420m

In the most recent quarter (Q1 '19) they made a profit before tax of £6.9m down from £10m the year before.

Issuing equity has a cost to it. This image is from p110 of their 2018 Annual Report. It looks like it costs £3m to bank £300m, so let's call it £4m to bank £375m


(Correction) thanks zccax77 on LSE for pointing out the cost was £13m for this share issue.

Let's say that the turmoil of this year has caused a massive legal bill. Those guys don't come cheap, let's say that's £5m to £10m spent. There must have been some increased PR costs, let's call that £1m to £2m.

(Correction) Given that the costs of the share placing are listed on p10 in this document, it's likely that any legal and PR costs have also been lumped into the total cost to be fully transparent. £1m of the £13m was booked in the Q1 results, so there's an additional £12m. 

So we've got an underlying £6.9m profit less £12m (cost of equity issue), let's also take off £10m (unexpected costs and reduced profitability) to be sure we've got all the costs included (other legal and PR costs for example). I make that a loss for the quarter of £15.1m

Why can't I get that to add up to £420m; surely I must be doing something wrong...

Please don't take this as investment advice. Please do your own research. I own shares in Metro Bank.

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