The Chief executive of Aldermore yesterday shrugged off the impact of UK tax changes on the challenger bank’s growth trajectory, as the firm revealed that it more than doubled profit in the first half of the year.
The six-year-old bank beat expectations with an underlying pre-tax profit of £44m as it issued more mortgages and loans to small and medium-sized businesses.
Aldermore, which is listed on the FTSE 250 after floating earlier this year, said that lending rose 13 per cent to £5.4bn over the period, putting the bank on track to deliver full-year net loan growth of £1.4bn.
Read more: Aldermore shares jump nine per cent as it reports strong rise in profits as loans increase
Its shares rose 7.9 per cent to close at 300p.
The government is preparing to slash tax relief on mortgages for buy-to-let landlords, but chief executive Philip Monks said the change would be “immaterial” to Aldermore. “Most of our commercial mortgage business is held in corporate structures so will not be affected,” he told City A.M.
“Meanwhile, 94 per cent of our residential mortgage business is with landlords who own more than two properties, so they are unlikely to be dissuaded,” he added. “The changes come into force in 2017 so they will have plenty of time to adjust.”
A new eight per cent surcharge on banks’ UK profits above £25m comes into effect on 1 January, replacing the old levy that taxed worldwide balance sheets.
Monks conceded that the old levy was better for Aldermore – which only operates in the UK – but said it was looking at ways to mitigate the new surcharge.