Aldermore Group's profit has more than doubled in the first half of the year, beating expectations, as the challenger bank issued more mortgages and loans to small and medium-sized businesses.
Aldermore, among a handful of London-listed banks set up to challenge the dominance of Britain's big five lenders, reported underlying pre-tax profit of £44 million for the six months to the end of June.
It joined rivals Virgin Money, OneSavings Bank Plc and Shawbrook Group in reporting a bigger first-half profit fuelled by a housing recovery and more lending to small and medium-sized enterprises.
An eight percent surcharge on profits above £25m could slow the momentum of these banks when it comes into effect from January 1. The British Banking Association has said the levy could reduce annual lending by up to £10bn.
Aldermore chief executive Phillip Monks said he aimed to mitigate the impact of this surcharge. He did not give details about how the bank planned to do this.
Aldermore, founded in 2009 and publicly listed since March, said it was on track for net loan growth of about £1.4bn, or 30 per cent, for full-year 2015.
With residential mortgages accounting for a large proportion of the bank's loan book, a rise in UK mortgage lending to a seven-year high in July has helped to underpin Aldermore's growth.
But challenges lie ahead with a recent survey from Nationwide showing British house prices rose this month at the slowest annual pace in more than two years.
Tax relief on mortgages for wealthy buy-to-let landlords is also due to be cut, a move designed to remove some of the advantages they have over people who buy their own homes.
Mr Monks said the impact of these cuts to Aldermore would be "minimal" because the bank deals largely with professional landlords.
Properties owned by so-called professional landlords are held in a corporate structure and therefore may not be subject to the cuts.
RBC Capital raised its rating on the stock to "outperform" and increased its target price to 325 pence from 300 pence.
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