Updates

Aldermore - Cost to income ratio improves to 45%

October 2016

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Shares in challenger bank Aldermore rallied after solid interims to end June with underlying pretax profit up 45% to £63m (ahead of consensus of £60.4m). Eps rose 17% to 10.3p.Loan origination increased 26% to £1.5bn with the overall loan book up 11% to £6.8bn, a 26% increase from H1 ’15. Asset finance rose 11%, buy-to-let 12%, SME commercial mortgages 12% and residential mortgages 9%.The cost-to-income ratio improved further from 53% to 45%, while net interest margin (spread between borrowing and lending) remained at 3.65%.Forecasts are unchanged with eps expected to rise to 26.5p this year and 30.4p next, while tangible NAV should progress from 126p to 153p and 182p. That means the PE is ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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