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Aldermore Group PLC H1 2016

POSTED: 11th August 2016
IN: Newsroom
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Underlying profit before tax(1) up by 45% to £63m (H1 2015: £44m)

  • Reported profit before tax increased by 50% to £59m (H1 2015: £40m)
  • Net interest margin stable at 3.6% (H1 2015: 3.6%)
  • Underlying cost/income ratio(1) further improved by 8pts to 45% (H1 2015: 53%)
  • Another excellent credit performance; cost of risk again at 20bps (H1 2015: 20bps)

Delivering a high-teens underlying return on equity(1)

  • Underlying return on equity(1) of 18.0% (H1 2015: 18.6%)
  • Reported return on equity of 16.3% (H1 2015: 16.8%)
  • Earnings per share grew by 17% to 10.3p (H1 2015: 8.8p)

Continued and balanced growth across the diversified portfolio

  • Excellent loan origination; up by 26% to £1.5bn (H1 2015: £1.2bn)
  • Net loans up by 11% to £6.8bn (31 December 2015: £6.1bn)
  • Asset Finance +11%; SME Commercial Mortgages +12%; Buy-to-Let +12%; Residential Mortgages +9%

Strong capital position is in line with management expectations

  • Total capital ratio of 14.0% (31 December 2015: 15.1%)
  • CET1 capital ratio of 11.0% (31 December 2015: 11.8%)

Phillip Monks, CEO, commented:

“It has been another strong six months of operational and financial performance as we delivered double digit growth and an underlying return on equity in the high teens. New lending increased by more than a quarter compared with the first half of last year as we continue to expand our customer base. I’m very pleased with the strong and balanced growth we have achieved across our diversified portfolio whilst maintaining our prudent underwriting approach.

“We have also driven another significant increase in profits as we have successfully maintained our net interest margin and leveraged the scaleability of our operations, further reducing our cost to income ratio. These actions, combined with our continued focus on prudent lending, have led to a 45% increase in the Group’s underlying profit before tax to £63 million for the first six months.

“Following the EU Referendum, we all face a period of heightened political and economic uncertainty. As a purely UK-focused business, we are not directly exposed to potential changes in access to European markets. However, we are exposed to the wider economic effects of the result. To date, we have seen no direct impact on our business but we continue to monitor the situation closely and have a proven ability to react quickly to a changing environment.

“We remain optimistic about our future. We are a diversified business and continue to focus on supporting our customers who are under- or poorly served by the wider banking market. Building on our strong track record of delivery across our prudently constructed portfolio and with our experienced management team, modern systems and efficient operating platform, we remain confident that we will successfully navigate the challenges ahead as well as take advantage of the opportunities that change may bring.”

  • Excluding goodwill impairment of £4.1m (pre-tax and post-tax) in H1 2016 and IPO related costs of £4.1m pre-tax and £3.2m post-tax in H1 2015

Enquiries:

Analysts

Media

Claire Cordell

Holly Marshall

Tel: +44 (0) 20 3553 4274

Tel: +44 (0) 20 3553 4828

 

 

Amit Deshpande

Andy Homer

Tel: +44 (0) 20 3553 4251

Tel: +44 (0) 20 3553 4244

 

 

 

FTI Consulting

 

Paul Marriott

 

Mobile: +44 (0) 7703 330 390

 

 

A live webcast of the analyst presentation, including the question and answer session, will be broadcast on our IR website www.investors.aldermore.co.uk at 9:30am today and is available via a listen only conference call by dialling +44 (0) 20 3059 8125. An indexed version of the webcast will be available on the website by the end of the day and copies of the slides to be presented at the analyst meeting will be available on the website from 9.00am today.

Note on rounding and % movements

In preparing the 2016 interim financial statements, the 2015 comparative numbers were restated from the original £ thousands to £ millions to one decimal place. As a result of rounding issues arising from this change, the presentation of some of the comparative numbers may differ slightly to the H1 2015 financial statements. All percentage movements shown are calculated using the financial data in £ millions to one decimal place as shown in the consolidated financial statements. We have adopted the convention of favourable movements being shown as a positive, e.g. a reduced expense is shown as a positive variance.

Important disclaimer

Visit www.aldermore.co.uk for more information. This press release contains certain forward-looking statements with respect to the business, strategy and plans of Aldermore Group PLC (“Aldermore”) and its current goals and expectations relating to its future financial condition and performance. Such forward-looking statements include, without limitation, those preceded by, followed by or that include the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "may", "anticipates", "projects", "plans", "forecasts", "would", "could", "should" or similar expressions or negatives thereof. Statements that are not historical facts, including statements about Aldermore’s, its directors’ and/or management’s beliefs and expectations, are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future. Factors that could cause actual business, strategy, plans and/or results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements made by Aldermore or on its behalf include, but are not limited to: general economic and business conditions in the UK and internationally; market related trends and developments; fluctuations in exchange rates, stock markets, inflation, deflation, interest rates and currencies; policies of the Bank of England, the European Central Bank and other G8 central banks; the ability to access sufficient sources of capital, liquidity and funding when required; changes to Aldermore’s credit ratings; the ability to derive cost savings; changing demographic developments, and changing customer behaviour, including consumer spending, saving and borrowing habits; changes in customer preferences; changes to borrower or counterparty credit quality; instability in the global financial markets, including Eurozone instability, the potential for countries to exit the European Union (the “EU”) or the Eurozone, and the impact of any sovereign credit rating downgrade or other sovereign financial issues; technological changes and risks to cyber security; natural and other disasters, adverse weather and similar contingencies outside Aldermore’s control; inadequate or failed internal or external processes, people and systems; terrorist acts and other acts of war or hostility and responses to those acts; geopolitical, pandemic or other such events; changes in laws, regulations, taxation, accounting standards or practices, including as a result of an exit by the UK from the EU; regulatory capital or liquidity requirements and similar contingencies outside Aldermore’s control; the policies and actions of governmental or regulatory authorities in the UK, the EU or elsewhere including the implementation and interpretation of key legislation and regulation; the ability to attract and retain senior management and other employees; the extent of any future impairment charges or write-downs caused by, but not limited to, depressed asset valuations, market disruptions and illiquid markets; market relating trends and developments; exposure to regulatory scrutiny, legal proceedings, regulatory investigations or complaints; changes in competition and pricing environments; the inability to hedge certain risks economically; the adequacy of loss reserves; the actions of competitors, including non-bank financial services and lending companies; and the success of Aldermore in managing the risks of the foregoing.

Aldermore

Aldermore Bank PLC is an operating entity of Aldermore Group PLC. Aldermore Group PLC’s shares (ALD.L) are listed on the Main Market of the London Stock Exchange. Aldermore Bank PLC is regulated by the Prudential Regulation Authority and the Financial Conduct Authority and is registered under the Financial Services Compensation Scheme.

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