Room for further growth says head of Aldermore
‘Cautious optimism’ for Scottish market as bank plots bigger share
THE chief executive of Aldermore believes the bank still has substantial room to grow in Scotland even as its loan book here grows to £300 million.
Phillip Monks said he is pleased with the Scottish operation, where the bank employs 16 people in Glasgow, but is confident it can continue to win market share in its chosen financing categories.
Mr Monks said the bulk of the lending in Scotland is in invoice finance and mortgages but there is a growing uptake in asset finance as well. He said: “We lend around about £300m to Scotland which is about six per cent of our business.
“It ought to be a little bit more but parts of our business are quite new up here. As a new bank I think that’s good but I would [like] this office to do more. The Scottish contribution to the UK economy is about 7.8 per cent so if we started from there then I would turn round and say I am a little more comfortable with it.”
According to Mr Monks Aldermore, which was founded only in 2009, has close to £300m in customer deposits through its savings accounts in Scotland.
The bank’s Scottish operation will lend to its SME customers in a range from £20,000 up to millions of pounds.
It has also started to see much greater interest in its residential mortgages with former Skipton Building Society executive Craig Beattie hired as a relationship manager in Scotland.
Mr Monks said: “As (residential mortgages) is such a big market that is where you will see the numbers increase.
“Invoice finance is one of those businesses which is difficult to grow as you are financing invoices with a life of 30 to 60 days whereas residential mortgages you are giving people money for a lot longer.”
Mr Monks said he is mulling further hires in Scotland to provide central points of contact for other business areas.
He said: “Is it worth us having somebody for asset finance or commercial mortgages based here permanently?
“We have made the decision it is worth us having somebody here for residential mortgages because the volumes of residential brokers that deal with us makes it economically viable to do that.
“I rather suspect it is getting close to being economically viable to us having others as well. I can see more we can do with the other business lines as well.”
A spokesman for the bank’s Scottish operation indicated it is “cautiously optimistic” over the economy and said: “Generally speaking we are seeing our client base grow. We are not seeing a high level of business failures, which is good, and there does seem to be a general air of optimism.”
The bank, which floated on the London Stock Exchange in March this year, has guided that it wants to grow its net loans by around £1.4 billion annually.
In the first quarter of this year net lending rose to £5.1bn, from £4.8bn while deposits grew to £4.7bn.
Mr Monks is confident the bank is on track to meet its annual target and said: “We are in massive markets and have tiny market shares so we don’t need to compete on skinny margins or adverse credit. There is lots more for us to go.”
While there are no immediate plans to expand into other product lines Mr Monks admits it is likely additional services will be developed in the future.
He said: “For us the strategic vision is for us to service SMEs from cradle to grave in their business and personal lives. That doesn’t mean we will manufacture everything but it does mean in due course we will have the opportunity to broaden out that (product) proposition.”