Aldermore on ‘stonking’ form in liquid market

The rise of the challenger banks continued apace on Thursday when Aldermore Group delivered what its chief executive called a “stonking” set of results.

Phillip Monks also says small firms who borrow from Aldermore are optimistic about the economy.

The bank saw loans up 6% to £7.9 billion in the first quarter. It took advantage of the Bank of England’s Term Funding Scheme, increasing the amount drawn to £750 million.

The debt market is “awash with liquidity” says Monks, adding: “Our business customers are saying trading is the same or better than a year ago. There is ongoing confidence in the market.”

Ian Gordon at Investec thinks the shares (steady today at 256p), are undervalued. He told clients: “The shares may have rallied by 145% over the past 10 months but we still think the stock remains too cheap.”

Aldermore’s figures follow similarly upbeat news from OneSavingsBank last week. RBC analyst Peter Lenardos said: “We… believe that cheap government funding and a specialist focus are resulting in ongoing growth.”

UK lenders have so far defied predictions that Brexit could trigger higher bad debts.