Aldermore increases new lending to business customers

Retail bank Aldermore’s new lending to business customers increased in the year to date, while capital growth rose in the third quarter.

For the nine months ended 30 September, net loans were up 15% to £7.1bn, compared to the same period last year, due to greater levels of new lending, which rose 20% to £2.3bn.

Chief executive Phillip Monks said: "While the economic and regulatory environment continues to evolve, we have seen no changes in customer demand, our pipeline remains strong and our credit performance robust.

“As a result, in the first nine months of 2016 we have grown the loan book by over £900m balanced across SME and mortgage customers, whilst maintaining our strict controls on underwriting standards.”

New lending to business finance customers increased 13% to £800m in the year to date and new lending to mortgage customers edged higher by 24% to £1.5bn.

The bank said there was capital growth in the third quarter, while the net interest margin was stable and in line with expectations.

Common equity tier one (CET1) capital ratio, a measure introduced in 2014 to protect the economy from a financial crisis, grew about 40 basis points to 11.5% in the quarter, which was driven by about 30 basis points of organic capital generation and an increase in the value of assets held for liquidity.

This delivers on the bank’s initial public offering commitment in March 2015, of capital self-sufficiency by the end of 2016.

In September, Aldermore was the first bank to utilise the term funding scheme from the Bank of England, which funded new lending.

The bank issued £60m of tier two notes in October at a coupon of 8.5%, which was below the cost of its existing tier two issuance.

Pro-forma total capital ratio rose to 15.7% from 14% in the second quarter and the tangible book value per share climbed 6% to 146p from the second.

Meanwhile, RBC Capital Markets upped its stance on Aldermore to ‘outperform’ from ‘sector perform’ and lifted the price target to 210p from 190p.

RBC pointed to strong growth in the quarter and reassuring guidance from the bank for the full year, with no changes in customer demand, a strong pipeline and a robust credit performance.

Shares in Aldermore were up 5.33% to 199.60p at 0857 GMT