Is Metro Bank PLC MTRO on course to increase profits and reward investors with dividends?

Will the profits of Metro Bank PLC MTRO increase profits and will the company reward investors with dividends?

With interest rates likely to rise it’s easy to see how more money will be held in savings accounts. There’re many people who are cash rich and not into investing.

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This means that banks can profit from higher levels of funds they hold and control. They can invest on the stock market into high paying dividend stocks. MTRO can also lend more thereby receive interest.

Metro bank was on an expansion plan pre covid-19 and the accounts issue they suffered. But as time has past and people are returning to the high street, the retail banking industry is beginning to thrive again.

In this respect Metro bank is strongly positioned to serve the needs of its customers.

The bank has longer opening hours and their safe deposit boxes is a good profit making angle for the business.

With increased profits Metro bank is in a stronger position to reward its shareholders with dividend pay-outs.

The current share price £1.01.80 up 1.19% at the close 21 January 2022 seems like an absolute bargain considering its highs back in 2016-18 (over £40 a share in 2018) pre all the problems in ran into.

MTRO share price spiked to over £1.30 in 2021 due to Carlyle Group takeover hopes. Those hopes faded, but takeover bids are always a possibility especially while the share price remains low.

Another bid or serious interest in Metro bank and we could see an instant 30% share price rise. Billionaire Jaime Gilinski could be a player in any future bidding war given his MTRO stake.

US investor, Spruce House Investment Management bought more MTRO, increasing its holdings. And this kind of positive positioning behaviour looks like it’s continuing.

But with increased profits and a stronger business model with tighter controls over accounting, and if Metro bank reduce its overheads and manageable costs, then the share price should naturally rise overtime.

As it stands, it’s easy to see how true value is around £5. It all comes down to the balance sheet.

Certainly this stock seems undervalued. Whether it will bounce back high in 2022 remains to be seen.

Is Metro Bank PLC MTRO on course to increase profits and reward investors with dividends?

MTRO is a small cap stock with a long term proven business model therefore all positive aspects driving the business and external interest should in my view push this stock price up.

This would in turn transform the market capitalisation of this undervalued stock as optimism increases.

I would say if you’re going to buy then buy on the dips because the spreads can be wide when there’s no demand.

On the other hand, if you don’t want to wait around for lower lows to get in or get more or don’t want to set buy orders, then you might just want to load up and return when the stock price has significantly risen if that happens.

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