Management at Aldermore (ALD) is adamant the recent cut in the base rate will not have a material impact on the challenger bank's net interest margin, since most of its loans charge a fixed rate of interest. But its shares fell as much as 6 per cent on the release of these ostensibly healthy performance figures.
New loans were up a quarter to £1.5bn, with small business lending and buy-to-let mortgages leading the way. Buy-to-let loans grew 12 per cent to £2.7bn, partly due to an inevitable borrowing rush before the stamp duty hike came into force. Asset finance business was robust, with net loans up 11 per cent to £1.5bn. However, the value of organic business growth in invoice finance fell 5 per cent to £19m as management steered away from the smaller end of the market.
Growing the top line also meant a reduction in the bank's cost: income ratio, which improved by 8 percentage points to 49 per cent. However, return on equity also fell by 5 basis points to 16.3 per cent, which management says was a result of the bank growing faster than the rate at which it is generating internal capital. This is expected to stabilise soon.
Analysts at Investec Securities expect tangible net assets of 153p a share at December 2016, up from 126p the previous year.
ALDERMORE (ALD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 145p | MARKET VALUE: | £500m | |
| TOUCH: | 145-145.3p | 12-MONTH HIGH: | 309p | LOW: 102p |
| DIVIDEND YIELD: | nil | PE RATIO: | 6 | |
| NET ASSET VALUE: | 165p | LEVERAGE: | 14.1 | |
| Half-year to 30 Jun | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 105 | 39.5 | 8.8 | nil |
| 2016 | 128 | 59.1 | 10.3 | nil |
| % change | +22 | +50 | +17 | - |
