Bumper Q3 for Aldermore loan book, analyst sees more ahead

The challenger bank announced Thursday morning that its loan book grew by £0.4bn to £5.8bn – up by 20% or £1bn for the first nine months of the year.

“Growth across the board is strong, with loans to SMEs up by 19% to £2.7bn and lending to homeowners up by 22% to £3.1bn”, Phillip Monks, CEO of Aldermore, said.

“We refreshed our buy-to-let customer offering in July and I’m very pleased that, across both SME commercial and residential mortgages, buy-to-let origination during the third quarter was around 19% higher than from the same period last year.”

The bank’s deposits also grew sizeably, with customer deposits up 20% to £5.4bn and SME deposits up 28% to £1.3bn.

Monks assured investors the bank has not seen any impact from recently announced changes to tax relief for some buy-to-let landlords.

“Macro-economic conditions and the credit environment remain relatively benign in the UK, with base rates unchanged and continued growth in our target markets.

“We are on track to deliver net loan growth of around £1.4bn in 2015 while maintaining our margins, robust capital position and prudent risk appetite.”

The bank's total capital ratio stood at 15.6% at the end of the reporting period, slightly below the 15.8% of 2014.

Investec says buy, highlighting low p-e multiple

Commenting on the lender's trading statement analyst Ian Gordon reiterated his call for loan growth of £1.45bn, which he said was consistent with a return on tangible equity of approximately 21%.

The analyst's forecast also implied a further acceleration in net loan growth in the final quarter of the year.

Gordon emphasised that the £930m market-cap lendr remained the "cheapest" UK bank, trading on a price-to-earnings multiple of just 8.2 times for 2017.

"We think the story has further to go. BUY."

As of 10:22 shares in Aldermore were 3.87% lower at 275.9p.