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UPDATE 1-British bank Aldermore's first-quarter lending grows
May 11, 2017 / 7:27 AM / 6 months ago

UPDATE 1-British bank Aldermore's first-quarter lending grows

(Adds details, background, analyst comment)

May 11 (Reuters) - British bank Aldermore Group Plc said first-quarter lending rose 6 percent from the prior quarter, buoyed by strong demand from small- and medium-sized businesses, homeowners and landlords.

The bank, founded in 2009 by a former Barclays executive with backing from private-equity firm AnaCap, said net loans to customers rose to 7.9 billion pounds ($10.23 billion) at the end of March from 7.5 billion pounds on Dec. 31.

First-quarter loan originations -- the process by which a borrower applies for a new loan -- grew by 17 percent to 949 million pounds from the previous year. Total customer deposits in the period grew 5 percent to 7 billion pounds.

“Subsequent to this active period and regulatory changes to affordability tests for buy-to-let mortgages, we continue to anticipate a lower level of growth for the second quarter of 2017,” Chief Executive Phillip Monks said in a statement.

The challenger bank said it expects to deliver loan growth in its guided range of 10-15 percent for the full year.

“We agree with management’s outlook and believe that cheap government funding and a specialist focus are resulting in ongoing growth. However, volumes are becoming harder to generate despite aggressive pricing,” RBC analyst Peter Lenardos said.

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.

Earlier this month, UK lender OneSavings Bank Plc delivered a resilient first-quarter trading update, with a loan book growth of 5 percent.

Aldermore on Thursday also said it increased its use of the Bank of England’s Term Funding Scheme, which allows banks to borrow at close to the lower base rate, drawing more than 750 million pounds from the scheme.

Shares of the company rose about 1 percent to 258.50 pence in early trading.

$1 = 0.7725 pounds Reporting by Tenzin Pema in Bengaluru; Editing by Sunil Nair

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