This is a rise of 36 per cent on last year and the bank also said going into the new year, its pipeline was 122 per cent higher than it was at the same point last year.
Net mortgage lending fell slightly from £7.3bn to £7.2bn which it said was due to high levels of redemptions including the maturity of large portfolio buy-to-let loans. Net lending rebounded in the second half of the year, however, as fewer redemptions were made.
Net loans to owner occupiers rose seven per cent to £2.3bn and originations generated by this borrower type increased from £500m to £600m. It noted that it temporarily withdrew products to manage risk appetite and cope with volume.
The majority of growth in the owner occupier market was seen across high loan to value (LTV) tiers.
Aldermore’s buy-to-let mortgage book reduced by five per cent to £4.9bn which it said reflected the maturity of five-year fixed deals and competition in the market. However, gross lending increased by 43 per cent to £500m which it attributed to the launch of limited edition products over the year. Also, loyalty product switches reached a record high of £800m, up from £300m last year, as the bank invested in this side of the business.
The net interest income generated by Aldermore’s retail business fell from £173.2m to £166.3, which it put down to the lower net loan balance. Its net interest margin contracted slightly from 2.4 per cent to 2.3 per cent due to competition in the market.
Overall, the retail arm of the bank made a profit of £130.3m, a dip on the £138.3m it reported last year.
Housing market slowdown
Aldermore said the housing market was expected to slow down “as rising interest rates and high inflation squeeze household incomes”. As a result, it predicts house prices will modestly decline.
It said the development of new products for owner occupiers as well as higher levels of activity in the buy-to-let market could temper this, especially as landlords take advantage of tenant demand and higher rental prices.
Higher profits
Overall, the group posted a 30 per cent growth in its profit before tax from £157.8m to £204.7m.
Steven Cooper (pictured), CEO of Aldermore Group, said: “This has been a positive year for Aldermore with significant growth in net lending and profits, resulting in a good performance, despite a challenging economic environment.
“We are pleased to have seen a strong increase in new owner occupied lending as we continue to help more people realise their home ownership dreams.”
He added: “We understand that the cost-of-living crisis has placed real pressure on people and their families, as well as businesses in recent months. Our strong profitability and capital position mean we’re on hand to support those who are facing difficulty.
“We’ve recently undertaken a strategic refresh of our business, which has reaffirmed our purpose and our credentials as a specialist lending and savings bank and will see the business renew its focus on our longstanding strengths and expertise. We remain committed to being a bank that is there to help those people and businesses whose ambitions haven’t always been supported by the high street lenders.”
Cooper said there would be a “renewed and targeted focus” on Aldermore’s property business, which the group believed would offer an opportunity for growth and improved returns. He said there were already early signs of this evidenced in strong net lending in the second half of its financial year.
