Aldermore fuels float speculation after profit surge

Aldermore prompted renewed speculation that it could float on the stock market this autumn after posting a surge in profits last year.

Pre-tax profits jumped from £1.5 million to £22.4 million and its balance sheet grew by 66% to £4.2 billion on its policy of lending to small and medium-sized businesses and homebuyers.

Chief executive Philip Monks said: “This is a great set of results which underline the fact that we have created a very straightforward, very sustainable banking model. This is a success story by every measure.”

He declined to comment on any plans for an initial public offering but the bank’s main shareholder, AnaCap, has hired Credit Suisse and Deutsche Bank to look at options with analysts suggesting the bank could be valued at between £800 million and £900 million.

Monks said: “We are incredibly well capitalised and continue to grow strongly.” Gross lending grew by 64% to £3.4 billion last year with mortgage lending up 76% to £1.68 billion and SME lending up 53% to £1.69 billion.

The number of retail and SME customers rose from 99,700 to 136,000. Monks does not like the term “challenger bank” despite politicians’ tendency to lump Aldermore in with Virgin Money, Shawbrook, Metro and TSB as the banks set to challenge the big four High Street banks. The last three of these banks are expected to join the race to the stock market this year.

He said: “I don’t particularly like challenger bank as a description because we are now a well-established bank. We employ nearly 700 people and unlike the High Street banks we have no legacy issues.”

During last year, Aldermore broadened its funding with a five-fold increase in deposits from SMEs and a £40 million capital raising which brought in Toscafund and Lansdowne Partners as investors. It is at present marketing a £330 million mortgage-backed securitisation.