27th Aug 2015 06:55
LONDON (Alliance News) - Aldermore Group PLC on Thursday reported a jump in profit in the first half and said it is on track to deliver its goals for 2015.
The retail bank listed on the London Stock Exchange in March, when it raised GBP75 million, and has since become a member of the FTSE 250 index. It is looking to serve customers such as smaller businesses and some homeowners in the UK that it deems to be underserved by the traditional high street lenders.
Pretax profit amounted to GBP39.5 million in the six months to the end of June, up from GBP18.6 million in the corresponding period the prior year. Excluding the costs of its initial public offering, the bank's pretax profit increased to GBP43.6 million from GBP20.8 million.
Net interest income, effectively the difference between interest received on loans made to customers and the cost of the bank's own interest payments, increased to GBP92.0 million from GBP61.2 million, driven by lending growth and lower funding costs. Its net interest margin improved to 3.6% from 3.3%.
Impairment charges on bad loans decreased by 12% to GBP5.2 million, and Chief Executive Phillip Monks said he would expect to see continued good performance on that front in the second half if credit conditions remain "relatively benign" and there are low levels of large losses.
Monks said the bank is on track for net loan growth of around GBP1.4 billion, a net interest margin of about 3.6% and underlying expense growth in the mid-teens in 2015. He wants to achieve that while maintaining a fully loader CRD IV common equity tier one capital ratio - a measure of financial strength for banks - of about 11%.
The chief executive said that Aldermore will look to mitigate the hit to returns expected from the UK government's plans to apply an 8% surcharge to UK banking profits above GBP25 million from 2016.
Monks said government plans to restrict relief on mortgage interest for individual buy-to-let landlords from April 2017 are unlikely to have big consequences for the bank.
"We also lend to landlords who prefer to invest via a corporate structure, these customers are not impacted by the proposed changes. Although it is too early to be completely definitive, we do not believe that this will have a significant impact on the economics of investing in, or demand for, buy-to-let properties," Monks said.
By Samuel Agini; [email protected]; @samuelagini
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