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CORRECTED-UPDATE 1-Aldermore forecasts strong 2017 despite Brexit uncertainty
March 2, 2017 / 9:17 AM / 9 months ago

CORRECTED-UPDATE 1-Aldermore forecasts strong 2017 despite Brexit uncertainty

(Corrects last paragraph to show Anacap bought Barclays’ French retail banking arm, not Aldermore)

By Esha Vaish

March 2 (Reuters) - Aldermore Group Plc forecast strong loan-book growth in 2017, after reporting a better-than-expected 34 percent jump in profit for the previous year due to higher mortgages and loan demand from homeowners and small and medium-sized businesses.

The UK-based bank, founded by ex-Barclays executive Phillip Monks with backing from European private equity investor AnaCap, said Britain’s exit from the European Union was unlikely to have any material impact on its business in 2017.

“We have not seen any tail-off in demand post-Brexit ... demand for the business remains strong,” Chief Executive Monks told Reuters on Thursday.

Aldermore’s underlying pretax profit rose to 133 million pounds ($163 million) in 2016, beating analysts’ consensus by 6 percent and topping the 99 million pounds reported for 2015.

Shares in the company, which said it had seen a strong start to 2017, were up 3 percent at 244.6 pence at 0839 GMT, helping it feature among London’s top midcap gainers.

UK lenders have so far defied predictions that Brexit could trigger higher bad debts and poorer lending volumes at banks already challenged by rock-bottom interest rates. Virgin Money and Metro Bank earlier posted strong results.

Aldermore on Thursday said loan originations - the process by which a borrower applies for a new loan - grew by 24 percent to 3.2 billion pounds from the previous year, resulting in total loan growth of 22 percent at 7.5 billion pounds.

It forecast loan-book growth of between 10 percent and 15 percent in 2017, with further growth thereafter.

“While we acknowledge that Aldermore’s loan book is unseasoned, we do not believe investors require any additional return to hold the stock given the diversified nature of the loan book (and) sustained momentum in the business,” RBC Capital Markets wrote, hiking their target price by 30 pence to 280 pence.

Monks said Aldermore was not interested in buying assets from up-for-sale Co-operative Bank, saying Aldermore did not need to strike big deals going forward and its focus would remain on organic growth.

Rescued from the brink of collapse by a group of hedge funds in 2013, Britain’s Co-op bank, which has 4 million customers, is seeking a buyer after struggling to meet regulatory capital requirements. Virgin Money has expressed interest.

Annacap, which currently owns about 40 percent of Aldermore and is its top shareholder, bought Barclays’ French retail banking arm, causing some speculation that it might be in the race to buy Co-op bank. ($1 = 0.8145 pounds) (Reporting by Esha Vaish in Bengaluru; additional reporting by Lawrence White in London and Noor Zainab Hussain in Bengaluru; Editing by Gopakumar Warrier and Dale Hudson)

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