CHALLENGER bank Aldermore has boosted its chances of a successful float on the stock exchange after profits more than doubled in 2014 as it continues to steal customers from traditional rivals.
The bank shelved its £800m IPO plans last October, blaming tough market conditions after a fall in the stock market frightened shareholders away.
Investor appetite has since revived and Aldermore said it will go ahead with the float, but declined to comment on the likely timing.
Aldermore, founded in 2009 by former Barclays executive Phillip Monks with backing from private equity firm AnaCap, has established itself among the newcomers trying to challenge Britain’s largest banks.
The bank said that its “no gimmicks” approach has proved popular in Yorkshire, where it has over 8,000 customers.
Around 50 staff are employed at Aldermore’s invoice finance division which is based in Cleckheaton, West Yorkshire. Aldermore Invoice Finance was formerly owned by Batley-based Cattles and known as Cattles Invoice Finance.
The bank said underling pre-tax profit leapt to £56m in 2014, while its net interest margin, the difference between the rate at which a bank lends and what it pays to savers, rose from 3.0 to 3.4 per cent.
Aldermore doesn’t have branches or current accounts. Instead it focuses on lending to small businesses and homeowners as well as offering savings products.
It has picked up customers from larger banks which are refusing to lend as they downsize.
Chief executive Mr Monks said Aldermore is taking customers from bigger rivals such as Royal Bank of Scotland, Lloyds Banking Group, which owns Halifax, Barclays and HSBC.
“Customers are coming to us in droves,” he said.
“They’re still finding the big banks very, very difficult to deal with.”
UK regulators are keen for banks such as Aldermore and Virgin to challenge the dominance of the so-called “big four”, which provide nine out of every 10 business loans. The country’s competition watchdog is investigating banking services for small businesses.
Aldermore said its net lending to customers rose 42 per cent to £4.8bn last year and said it expects net lending to grow in line with the current rate in 2015.
Mr Monks said he expected Aldermore’s return on equity, a measure of profitability, to hit 20 per cent by the end of 2016, earlier than an original target of 2017.
Mr Monks said reports that Aldermore has held talks over a takeover by TSB are incorrect.
“I haven’t had any conversations with TSB,” he said.
Adam Daniels, managing director, specialist finance & intermediaries at Lloyds Bank Commercial Banking, said: “These were strong results from Aldermore. The decision not to set a date for the planned flotation means Aldermore may continue to face further speculation on its future direction. When it does announce its IPO, it will be interesting to see what valuation Aldermore attracts, especially if, as reported, rival Shawbrook floats before Aldermore completes its IPO.”
Investors are showing an appetite for other challenger banks.