Aldermore Bank posts higher profits but warns of continued Brexit uncertainty

Aldermore Bank reported higher profits as it warned that Brexit uncertainty is weighing on an already fiercely competitive banking industry.

MPs are set to vote on a tweaked version of Prime Minister Theresa May’s Brexit deal on Tuesday, having rejected an earlier version of the agreement. Failure to get the deal through Parliament risks Britain crashing out of the European Union without a deal.

The challenger bank said: “As we await the outcome of the UK’s Brexit negotiations, there is a high degree of uncertainty in terms of the economic outlook.

“Competition among banks is intense and the operating environment is expected to remain challenging, with bank margins under continuing pressure.

“Within this environment, we will continue to focus on maintaining a high-quality diversified portfolio”.

The lender made a pre-tax profit of £74.7 million in the six months ended December 31 compared with £62.8 million in the same period a year earlier.

Aldermore increased its loans by 4% to £9.4 billion and maintained a net interest margin – the difference between what a bank pays savers and charges borrowers – of 3.6%.

Return on equity, a key measure of a bank’s profitability, grew to 16% from 13%.

Chief executive Phillip Monks said: “In a competitive market we have achieved good profitability and returns while managing risk appropriately. We have a balanced portfolio of assets that has served us well.”

The results come ahead of the bank’s 10th birthday in May with the lender having grown rapidly over the past decade from just 30 employees to more than 1,000.

It floated on the London Stock Exchange in 2015 and last year was bought by South African giant FirstRand for £1.1 billion.

Mr Monks, a former Barclays executive, said: “Ten years ago, many small businesses were losing a battle for survival as the banking establishment pulled up the drawbridge.

“Founded as a start-up in 2009, Aldermore was the first of a new breed of challenger banks to offer a strong alternative and I’m proud of the additional choice we have made available to businesses, homeowners and landlords”.