Aldermore Group half year results to 31 December 2021

Aldermore Group has delivered profit before tax of £110.1m, up 91% on the prior year (31 December 2020: £57.6m). The Group continues to deliver growth in lending, improved margins, and a lower cost of risk whilst investing for future growth.

Steven Cooper, CEO of Aldermore Group said: “Despite ongoing macroeconomic uncertainty, I’m pleased with our performance in the first half of the year and the momentum on which we can build. In the last six months, we’ve grown to 690,000 customers and we’re proud to have helped them through a difficult period, including investing in our in-life management process for those customers in financial difficulty. We’ve also reintroduced our full range of product propositions to support the ambitions of SMEs, homeowners, landlords, vehicle owners and savers.

“We continue our focus on helping UK businesses and have seen growth in demand for specialist finance across all our SME product areas. Within Retail Mortgages there was steady growth in the Owner Occupied book and Buy to Let achieved record levels of product switches. Through improvements in our operational capacity, we’ve driven increases in the pipeline, leaving us well positioned for the second half of the year. MotoNovo Finance delivered strong new business volumes as we’ve loaned over £1bn to personal and business customers to help them buy a car, van or motorbike in the first six months of the financial year. MotoRate, our risk-based pricing model, has gone from strength to strength since its launch last year and has been integral to the success of the business.

“We have responded quickly to market changes and customer demand to deliver consistent choice and competitive products for savers. The growth in our deposits demonstrates the success of our customer-focused offering and the stability of our funding model to support our growing lending portfolio.

“Looking ahead, we are confident in our ability to build on this momentum, making use of our financial strength, business expertise and first-class products and services to back our customers through the current challenging economic environment and beyond.”

Steady loan growth and strong operating profit growth delivered at half year: 

  • Group net lending increased 3% to £13.9bn (30 June 2021: £13.4bn)
    • MotoNovo Finance lending increased £0.4bn to £3.4bn as originations benefitted from high levels of activity and higher prices in the used car market
    • Business Finance net lending increased £0.2bn, to £3.3bn with growth achieved across all business lines
    • Retail Mortgages net loans of £7.1bn are £0.2bn lower than June 2021, as growth in Owner Occupied was offset by high levels of redemptions in Buy to Let driven by an expected increase in 5-year fixed product maturities
  • Total customer deposits increased 5% to £13.1bn (30 June 2021: £12.4bn), with the majority of growth in personal savings as the Group sought to optimise deposit mix whilst actively responding to market and customer demand
  • Aldermore Group profit before tax of £110.1m increased £52.5m on the prior year period (6 months to 31 Dec 2020: £57.6m) largely reflecting lower impairments, with Cost of Risk at 16bps (6 months to 31 Dec 2020: 76bps) due to the significant improvement in the macroeconomic environment
  • Net interest margin improved to 3.6% (6 months to 31 Dec 2020: 3.3%) largely driven by the benefit of a change in deposit mix positively impacting cost of funds as gross margins remained resilient despite the low interest rate environment for the majority of the period
  • Cost to Income ratio of 52% has increased (6 months to 31 Dec 2020: 50%) as we continue to invest in the future growth of the Group. Operating expenses for the first half also include a one-off charge as we’ve reviewed the accounting treatment of our IRB programme
  • As a result of higher profitability, Group Return on Equity is 13.9% (6 months to 31 Dec 2020: 8.0%)
  • CET1 ratio remains strong at 14.1% (30 June 2021: 13.9%)