Profits and lending up at Aldermore

There's little to fault in this first-half performance. Aldermore boosted lending to small and medium-sized firms (SMEs) and residential mortgage customers by 12 per cent and 14 per cent respectively. That was funded largely by growth in deposits, which rose 11 per cent to £5bn. There was a particularly strong deposit contribution from SMEs, many of which the bank says are unaware of the poor rates they are receiving on cash balances.

Chief executive Phillip Monks was keen to remind investors that Aldermore is not a new bank. He also emphasised that SME and home-owner demand for loans continues to outstrip supply - as was the case when the bank launched in 2009 to step into the breach opened up by the crisis-struck high-street giants.

On which point, Mr Monks says the bank's lack of legacy issues, as well as positive, un-edited customer feedback on its website, have been crucial to its marketing efforts. But in addition to providing good customer service, Aldermore must remain competitive against several new entrants to the asset and invoice finance market as well as established mortgage lenders with a greater focus on buy-to-let. The bank’s strategy has been to target customers with prime credit records that have been alienated by the "cookie-cutter" approach of larger banks.

So far, this seems to have worked, with little evidence that Aldermore has compromised its margins or loan-book quality in its thirst for growth. Impairment losses for the half-year fell 12 per cent to £5.2m. The capital position also remains robust, with a core tier-one ratio of 12 per cent, up from 10.4, aided by the £75m raised by the IPO.

Analysts at Numis expect pre-tax profits of £95.5m for the year to December, giving EPS of 19.4p (up from £50.3m and 11.3p last year).