Aldermore reiterates loan growth targets despite regulatory hurdles

The challenger bank reported a 6% rise in net loans for the first three months of the year to £7.9bn versus the year-end 2016 level, with organic new lending rising by roughly £1.0bn.

Analysts at Barclays had forecast loan book growth of 1% in the quarter to £7.5bn, driven by total new originations falling from the buy-to-let boosted £814m last year to around £693m.

Phillip Monks, the lender's CEO said: "Aldermore has made an excellent start to the year, with continued strong progress on our strategic priorities and financial performance ahead of our expectations."

Monks also indicated Aldermore was on track to deliver on its financial guidance as outlined in March.

Net interest margins for the quarter were stable at 3.5%.

Asset Finance growth was "strong" with a "particularly significant" rise in Buy-to-Let observed during the period, boosted by conversion of the large pipeline of applicants with which it ended 2016, the company said in a statement.

New mortgage lending was up 19% at £646m, alongside an 11% rise in loans to business finance customers to £303m.

Management also claimed its capital generation was in-line with its targets, with its common equity Tier 1 capital ratio steady at 11.5% and tangible book value per share 5% higher at 160.3p.

Despite regulatory changes to affordability tests for buy-to-let mortgages, which will negatively impact on its second quarter growth, Aldermore said it remained on track to deliver loan growth within its guidance range for between 10% to 15% for the full year.

Commenting on Aldermore's results, Numis analysts James Hamilton, Jonathan Goslin and David McCann highlighted how the lender's first quarter numbers were up against very tough comparables, adding that the shares - trading at 8.3 times 2017 earnings - offered "good value".