FTSE Bank Stock Poised to Outperform Lloyds and Barclays in the Next 12 Months According to City Analysts

Recent analysis from City experts suggests that Metro Bank Holdings may have greater potential than more popular UK banks such as Lloyds and Barclays over the next year. While these traditional banks have garnered significant interest from investors, Metro Bank is gaining attention for its turnaround strategies after facing several challenges.

Metro Bank Holdings Overview

Metro Bank Holdings (LSE: MTRO) is a challenger bank with a market capitalization of £785 million. Since its founding in 2010, it has differentiated itself by offering retail, private, business, and commercial banking services through approximately 75 branches across the UK. Its branches often stay open later, even on Saturdays, catering to customer needs.

Previous Challenges

The bank has had its share of challenges, including accounting errors and balance sheet difficulties. Despite these issues, Metro Bank has started to see profits rise due to effective cost management and a renewed emphasis on corporate and commercial lending.

Recent Performance Metrics

• Underlying profit before tax for the first half of 2025: £45 million
• Profit increase: More than triple compared to the second half of 2024

Such growth has prompted analysts to take a more optimistic view of Metro Bank’s future. Recently, RBC Capital upgraded Metro Bank’s stock to “Outperform” with a price target of £1.55, representing a potential increase of about 33% from current levels.

Comparative Analysis with Other Banks

For context, RBC’s price targets for Lloyds and Barclays stand at 95p and £4.35 respectively, showing smaller projected increases of 13% and 14%. This makes Metro Bank appear more attractive based on potential capital appreciation.

Valuation and Future Outlook

Analysts predict that earnings per share (EPS) for Metro Bank will exceed 15.5p next year. If this projection holds true, it will result in a forward price-to-earnings ratio of just 7.6, a figure that suggests the bank may be undervalued given its growth trajectory.

Rumors of Acquisition

Recently, there have been rumors of a possible takeover of Metro Bank, indicating that the market may not fully recognize its potential. While these discussions have not materialized, they underscore the bank’s possible value beyond current price assessments.

Investment Considerations

While Metro Bank shows promise, investors should be cautious. The banking sector includes various other financial stocks that could also present favorable opportunities in the coming years. Investors should carefully consider scalability and growth potential in their decision-making.

In conclusion, Metro Bank Holdings stands out among UK bank stocks, showing signs of recovery and stronger future earnings potential that could place it ahead of more established players like Lloyds and Barclays over the next 12 months.