This FTSE bank stock could crush Lloyds and Barclays shares over the next 12 months, if City analysts are right

While British investors have been piling into shares of Lloyds and Barclays this year, thereâs a FTSE bank stock with more potential in the medium term, if City analysts are to be believed. This stock â which isn’t nearly as popular as the two aforementioned names â has been a dog in recent years but now appears to be in turnaround mode.

Interested to know what bank stock Iâm talking about? Read on and Iâll tell youâ¦

A unique British bank

The one Iâm referring to is Metro Bank Holdings (LSE: MTRO). Itâs a Â£785m market cap challenger bank that offers retail, private, business, and commercial banking services and currently has around 75 branches across the UK.

Founded in 2010, it does things a little differently to a lot of other banks. For example, its branches are typically open on Saturdays until 4pm.

Problems in the past

Now, itâs fair to say that this one is riskier than a lot of other bank stocks. Because the company has had quite a few issues in the past (accounting errors, balance sheet problems, etc) and we canât rule out more problems in the future.

However, profits have risen recently due to cost control measures and a renewed focus on corporate and commercial lending. For the first half of 2025, for example, underlying profit before tax was Â£45m â more than triple the profit figure posted for the second half of 2024.

And as a result of this improvement in profitability, The City is becoming more bullish on the stock. For example, analysts at RBC Capital recently upgraded it to Outperform (Buy) and slapped a Â£1.55 price target on it.

That price target is roughly 33% above the current share price. For reference, RBCâs price targets for Lloyds (95p) and Barclays (Â£4.35) are only 13% and 14% above their current share prices.

Rising earnings and a low valuation

Of course, analystsâ price targets should never be relied upon. Often, they donât come to fruition.

However, I do think this stock looks quite interesting right now. Next year, earnings per share (EPS) are expected to more than double to 15.5p. If that EPS forecast is accurate, we’re looking at a forward price-to-earnings (P/E) ratio of just 7.6. That seems low given the level of earnings growth.

Itâs worth noting that in recent months, there’s been talk of a takeover here. Nothing has come of it yet, but the rumours suggest that the company could have more potential than the share price and valuation are implying.

So, it could be worth a closer look as an investment.

Better opportunities in the market?

That said, taking a three-to-five year view, there are other financial stocks that Iâm more bullish on right now. In this sector, I like companies that are really scalable…

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Edward Sheldon has no positions in any shares mentioned. The Motley Fool UK has recommended Barclays Plc and Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.