Aldermore Group lending rises 20% for first nine months
Aldermore Group - For the first nine months, lending rose by £1bn, or 20%, due to the challenger bank issuing more mortgages and loans to small and medium sized businesses.

The company's stock fell 4 percent on Thursday, shedding some of the gains that had pushed it to a two-month peak a day earlier. Analysts said they had expected results to be slightly better.

Founded in 2009 by former Barclays executive Phillip Monks, Aldermore is among a handful of London-listed banks set up to challenge the dominance of Britain's big five lenders.

It follows Virgin Money, OneSavings Bank Plc and Shawbrook Group Plc in reporting higher lending fuelled by a housing recovery and demand from small businesses.

Aldermore's net loans to customers rose to 5.8 billion pounds ($8.8 billion) at the end of September from 4.8 billion pounds on Dec. 31. It said it was on track to meet its net loan growth target of 1.4 billion pounds for the year.

Investec analysts said they expected Aldermore to exceed this target by delivering growth of 1.45 billion pounds.

UK mortgage lending rose in September at the fastest rate since 2008, reflecting a rise in approvals in recent months that has helped to underpin growth at challenger banks, which tend to have loan books skewed towards residential mortgages.

The number of new approvals, however, dipped for the first time in four months, casting uncertainty over the pace of economic recovery in the final months of the year.

"The home market is dominated by one macroeconomic factor," said Monks, Aldermore's chief executive. "The UK is not building enough properties."

Demand for home loans, including buy-to-let mortgages, would increase over the next few years as house prices rise, he said.

But Aldermore could take a hit from the introduction next year of an 8 percent surcharge on banks' profits above 25 million pounds.

Aldermore is part of a group of new and smaller British banks which has proposed measures aimed at offsetting the surcharge.

Monks said the government had agreed to look at ways in which the threshold for the surcharge could be increased, among other plans to help smaller banks to stay competitive.

Aldermore's shares have risen by more than a third since the bank went public in March. After gaining 10 percent in the five trading days to Wednesday's close, they were down 3.6 percent at 276.6 pence at 1103 GMT.($1 = 0.6576 pounds)

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Robin Paxton)

By Noor Zainab Hussain