Increased funding demands from small and medium-sized business landlords and residential homeowners have generated a £78m profit at leading challenger bank Aldermore.
A significant uplift during a time of Brexit-related uncertainty, this capital boost offers some insight into how landlords are managing to further their businesses.
£1.6bn in new loans approved
Aldermore approved £1.6bn in new customer loans during the last six months – a rise of 10% year on year – and mortgages saw a 9% uplift at a total of £6.2bn.
Pre-tax profits are up 32% to £78m for the bank, which was set up by former Barclays’ employee Phillip Monks. It suggests the company's overall mission to capture customers from the five main high street lenders is working.
"In terms of Brexit-related uncertainty, the majority of our business customers are telling us they have not started to feel a slowdown," Monks said.
"We are addressing a market opportunity that is as real today as it was in the aftermath of the global financial crisis."
Monks reasoned additionally that potential deals to further increase this financial year’s profits could come from ‘joint ventures, portfolios of assets or M&A’.
Just last month, the Bank of England warned that lending was being outrun by rises in income and that lenders were ‘dicing with the spiral of complacency’. However, Aldermore as well as key rival Virgin Money have both enjoyed profit boosts and the former may pay its first dividend since its IPO in 2015.
The positive move is attributed by Monks to ‘growth opportunities, changes in capital requirements and the economic environment’. Both banks target small and medium-sized businesses, homeowners and landlords, addressing weaknesses amongst the UK’s largest banks and seeking to refresh the service and culture available to their target customers.
This shows how small business landlords are managing to continue building their businesses in a time of uncertainty, through using non-traditional lenders or off-high-street institutions. This is particularly important when larger institutions are more wary of working with smaller companies and traders who might be less proofed against sudden market downturns than bigger organisations.
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