Aldermore Group’s results reflect a resilient performance, despite the continued uncertain economic environment, with a profit before tax of £157.8m (FY2020: £48.8m), the company said in a statement.
The financial performance of the Group reflects continued growth in lending, improved margins, due to reduced funding costs and changes in business mix, and lower impairments as the macroeconomic outlook improved over the year.
Steven Cooper, CEO of Aldermore Group said: “First of all, I wish to thank Phillip Monks, my predecessor, who in just over a decade grew Aldermore into a business that’s now backing over 650,000 customers (customer numbers at 30 June 2020: 490,000); it’s an honour to be able to lead the Group into the future.
“During the year, we’ve delivered a robust performance and achieved growth through a period of unprecedented economic uncertainty. Our priorities throughout the Covid-19 pandemic have been to support our customers as well as safeguard our colleagues’ wellbeing.
“We helped almost 200,000 customers buy a vehicle and increased deposits by 14 per cent with our consistently competitive savings products. We also granted payment breaks to almost 57,000 customers, with 98 per cent now resuming full repayments, and provided over 800 SMEs with government-backed funding.”
Net lending to customers up 8 per cent to £13.4bn (30 June 2020: £12.4bn)
MotoNovo Finance up £1.2bn to £3.0bn reflecting continued growth and pent-up demand in the months following the UK lockdown periods. This growth was partly enabled by the launch, in June 2020, of the risk-based pricing proposition MotoRate.
Compared to the prior year, Business Finance is down 5 per cent at £3.1bn (FY2020: £3.3bn) as customer activity levels were significantly impacted during lockdown periods and the Group made the decision to participate only in CBILS and RLS from the range of government Covid-19 assistance schemes. Net loans are in line with December 2020 as customer activity has increased in recent months.
Aldermore Group profit before tax was £157.8m (FY2020: £48.8m) largely reflecting an 18 per cent increase in net interest income to £436.4m (FY2020: £370.5m) as MotoNovo continued to grow, reduced funding costs and a materially lower impairment charge of £52.1m (FY2020: £131.7m).
Net interest margin increased to 3.4 per cent (FY2020: 3.2 per cent) benefitting from an improved cost of funds in the low-interest-rate environment and the positive impact on the business mix as a result of MotoNovo Finance growth.
Cost to income ratio of 53 per cent has increased (FY2020: 51 per cent) reflecting investment in automation and operational resilience, and the reintroduction of staff bonuses. The cost to income ratio excludes costs and income incurred by MotoNovo Finance Ltd in servicing the existing backbook of loans on behalf of FirstRand London Branch.
Cost of Risk reduced to 40bps (FY2020: 114bps), lower than the first half of the year (HY 2021: 76bps) as the macroeconomic outlook has continued to improve throughout the year and the majority of customers requiring payment holidays have returned to full payments.
As a result of higher profitability, group return on equity has increased to 10.9 per cent (FY2020: 3.1 per cent)
CET1 ratio (on an IFRS9 transitional basis) remains strong at 13.9 per cent (FY2020: 13.3 per cent) reflecting increased profit and the continued utilisation of the capital previously injected to pre-fund MotoNovo Finance lending growth.