Thanks Carney: Aldermore’s results boosted by Bank of England scheme
Aldermore revealed today that it has boosted its new lending during the first nine months of the year, with a little help from a recently introduced Bank of England funding scheme.
The figures
The challenger bank announced it had generated £2.3bn in new lending during the first nine months of 2016, up 20 per cent from £1.9bn for the same period last year.
In particular, net lending to business finance customers had increased to £800m, up 13 per cent from £700m last year, and net lending to mortgage customers rose to £1.5bn, up 24 per cent from £1.2bn.
Net loans on Aldermore's books have increased to £7.1bn, up 15 per cent compared with £6.1bn at the end of 2015.
Meanwhile, the bank's tier one capital ratio, a key indicator of its financial health, increased to 11.5 per cent in the third quarter of 2016.
Shares in the bank are currently up five per cent at 199p.
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Why it's important
The low interest rate environment has placed a squeeze on bank profits, a fact somewhat acknowledged by the Bank of England when it set up its Term Funding Scheme (TFS) at same time as cutting the rate to 0.25 per cent. The scheme provides term funding to those lenders with products already close to the base rate to support additional lending. Aldermore was the first bank to take advantage of the scheme.
Meanwhile, the challenger's results come just days after it announced its chairman Glyn Jones was standing down.
What Aldermore said
Phillip Monks, chief executive of Aldermore, explained to City PM that TFS "helps us to continue to diversification in our funding book".
"We'll always be dominated by retail funding, from the likes of you and me and from SMEs, but it's a useful source of funding for us…it takes the pressure off retail markets, so, all in all, it's a good thing. It's never anything we're going to go out and get drunk on though," he added.
On Jones' departure, Monks noted that a search for a successor was "in its infancy".
Monks said: "[Jones has] left an incredibly strong board behind. I feel that I have a very, very strong executive team, so while we're all very sorry to see him go, the bank is, from a governance point of view, is stronger than it's ever been and therefore we should be able to attract a very strong candidate to come in and help us."