Profits double at Aldermore ahead of float
CHALLENGER bank Aldermore reassured potential investors by doubling profits over 2014, in an important declaration of strength after it had to cancel its stock market flotation last year.
Pre-tax profits surged to £56m for the year and return on equity climbed to 19 per cent for the second half of 2014.
Aldermore’s net loans increased 42 per cent to £4.8bn, compared with £3.4bn in 2013.
That growth was split between small business lending, which rose 32 per cent to £2.2bn, and residential mortgages which increased 53 per cent to £2.6bn.
The challenger diversified its funding sources, doubling SME deposits to £1bn, and issuing a £333m retail mortgage-backed security.
Those helped to push down funding costs and to raise its net interest margin to 3.6 per cent – even when other banks were being squeezed by sustained low rates.
The success with SME deposits follows steps to make the service more accessible. Customers can open accounts in 15 minutes online, and can match deposit maturities with bills coming out of their accounts.
The bank’s boss said the strong profits would boost the current investors.
“We’re absolutely chuffed, that is a frankly stonking performance, we’re all jumping for joy,” chief executive Phillip Monks told CityAM
“We are turning to existing investors and saying, you should be very happy, we have delivered what we said we would.”
Aldermore had hoped to float on the stock market in September, but conditions turned sour, forcing the bank to pull the listing.
It has not announced a float date, but is expected to brave the markets over the coming month.