Aldermore Group PLC Proposed Tier 2 Transaction October 2016 - - PowerPoint PPT Presentation

DRAFT

Proposed Tier 2 Transaction

Aldermore Group PLC

October 2016

aldermore.co.uk

Transaction Disclaimer

1

Important Notice NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE U.S. By opening this presentation and/or attending the meeting where this presentation is made, you agree to be bound by the following limitations. The information in this presentation is confidential and this document is being made available to selected recipients only and solely for the information of such recipients. This document may not be reproduced, redistributed or passed on to any other persons, in whole or in part. This presentation is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. This information is not intended to provide and should not be relied upon for accounting, legal, tax advice or investment recommendations. You should consult your tax, legal accounting or other advisers about the issues discussed herein. Any purchase of the Tier 2 notes (the “Notes”) described in these materials should be made solely on the information contained in the prospectus in final form prepared by Aldermore Group PLC (“Aldermore”) (the “Prospectus”) and any other supplemental prospectus to be published in respect of the Notes (the “Offering”). The summary terms and conditions contained in this presentation are indicative of and wholly subject to the terms and conditions of the Notes detailed within the Prospectus. Prospective investors are required to make their own independent investigations and appraisals of the business and financial condition of Aldermore and the nature of the Notes before taking any investment decision with respect to the Notes. Investors should make their investment decision solely on the basis of the Prospectus in final form and not rely on the summary terms and conditions contained in this presentation. These materials do not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities of Aldermore, nor should this presentation or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation does not constitute a recommendation regarding any securities

• f Aldermore.

Investment in the Notes will involve certain risks. A summary of the material risks relating to the Offering will be set out in the section headed “Risk Factors” in the Prospectus. There may be additional risks that are currently not considered to be material or of which Aldermore and its advisers or representatives are unaware. The information set out in this presentation may be subject to updating, revision, verification and amendment and such information may change materially. Aldermore is under no obligation to update or keep current the information contained in this document and any opinion expressed herein is subject to change without notice. The information contained in this presentation has not been independently verified by Aldermore or its advisors or auditors nor by any manager who the Issuer may appoint in connection with the Offering (the “Manager”). No representation, warranty, express or implied, is made or given by or

• n behalf of Aldermore, the Manager or any of their respective directors, officers, employees, agents, affiliates or advisers, as to, and no reliance should be placed on the accuracy, completeness or fairness of

the information or opinions contained in this presentation. None of Aldermore, the Manager nor any of their affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss whatsoever arising from any use of this document or its contents, or otherwise arising in connection with this presentation. Neither this presentation nor any copy of it, nor the information contained herein, in whole or in part, may be taken or transmitted into, or distributed, directly or indirectly to the United States its territories or

• possessions. Any failure to comply with this restriction may constitute a violation of U.S. securities laws. This presentation does not constitute and should not be construed as an offer to sell or the solicitation of

an offer to buy securities in the United States, its territories or possessions or elsewhere. The Notes that are the subject of this presentation have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), nor with any securities regulatory authority

• f any state or other jurisdiction in the United States and may not be offered or sold within the United States (as such term is defined Regulation S under the Securities Act), except pursuant to an exemption

from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable state securities laws. The Notes will only be offered and sold outside the United States pursuant to Regulation S under the Securities Act. No public offering of securities will be made in the United States or any other jurisdictions. This presentation is not being made, and this presentation has not been approved, by an authorised person for the purpose of section 21 of the Financial Services and Markets Act 2000 (the "FSMA"). This presentation is made to and directed only at persons (i) who are outside the United Kingdom, or (ii) having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, in accordance with the Order (all such persons together being referred to as "Relevant Persons"). This document is an advertisement and is not a prospectus for the purposes of applicable measures implementing Directive 2003/71/EC. Any person who is not a Relevant Person should not act or rely on this presentation or any of its contents. By accepting receipt of this communication the recipient will be deemed to represent that they possess, either individually or through their advisers, sufficient investment expertise to understand the risks involved in any purchase or sale of any financial instrument discussed herein.

Aldermore Group PLC: Proposed Tier 2 transaction

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Aldermore overview H1 2016 performance update Proposed transaction Summary Appendices

3

Issuer

• Aldermore Group PLC

Issue Date

• [] 2016

Notes

• GBP [] Callable Dated Subordinated notes

Maturity

• 10 years ([] 2026)

Optional Calls

• Reset Date (Year 5) ([] 2021)

Interest

• Fixed at [] until the Reset Date, thereafter reset to the 5 year Mid-Swap Rate plus the Margin
• Payable semi-annually in arrear

Special Calls

• At the option of the issuer following the occurrence of a Capital Disqualification Event or Tax Event

Governing Law

• English

Listing

• London

Denominations

• Denominations of GBP 100,000 and integral multiples of GBP 1,000 in excess thereof

Form of Notes

• Registered

Key offering terms:

Note: Indicative only, summary terms should be read in conjunction with the full Prospectus

Aldermore Group PLC: Proposed Tier 2 transaction

Aldermore Group PLC: Proposed Tier 2 transaction

4

Aldermore overview H1 2016 performance update Proposed transaction Summary Appendices

A specialist lender, supporting the UK’s SMEs, landlords and homeowners…

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£1.5bn(1)

Customer-led strategy Delivering a track-record of profitable growth

• Focused on supporting Britain’s underserved

SMEs, landlords and homeowners

• Digitally-enabled modern bank
• Straight-forward human underwriting approach
• We are Reliable, Expert, Dynamic and Straight-

forward to deal with

• Strong broker relationships and direct distribution

1 2 3 4 5

3.4 4.8 6.1 6.8 2013 2014 2015 H1 2016 3 3.4 3.0 3.6 2013 2014 2015 H1 2016 Net loans to customers (£bn) Net interest margin(1) (%) and cost of risk(2) (bps) 42 23 19 20

(1) Net interest margin = net interest income / average net loans (2) Cost of risk = impairments / average net loans

…Building a diversified, granular and highly-secured portfolio

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£6.8bn Net loans £7.1bn Funding base

Diversified loan portfolio(1): Diversified sources of funding(1):

Asset finance Invoice finance SME Mortgages BTL Mortgages Residential mortgages 22% 2% 14% 40% 22%

Portfolio

Asset finance Invoice finance SME Mortgages BTL Mortgages Residential Mortgages

1 2 3 4 5

Average loan size(1)

c.£32k c.£136k c.£468k c.£163k c.£139k

Secured(2) (%)

82 69 64 69 77

Highly-secured and granular portfolio built on select market

• pportunities &

underwriting expertise

100%

Retail deposits 68% 21% SME deposits Corporate deposits 3% 5% FLS 2% RMBS Other

(1) At 30 June 2016 (2) Share of loan book at origination constituted by secured loans for Asset Finance; prepayment percentage for Invoice Finance; average loan-to-value ratio for SME Commercial Mortgages, Buy-to-Let and Residential Mortgages.

Aldermore Group PLC: Proposed Tier 2 transaction

7

Aldermore overview H1 2016 performance update Proposed transaction Summary Appendices

Underlying profit before tax (£m)(1) Cost of risk (bps)

Highlights: Another strong six months for the Group

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Underlying cost income ratio (%)(1) Net interest margin (%)

3.6% 3.6% H1 2015 H1 2016 44 63 H1 2015 H1 2016 53 45 H1 2015 H1 2016 20 20 H1 2015 H1 2016

(1) Excluding impairment of goodwill of £4.1m (pre- and post-tax) in H1 2016 and IPO related costs of £4.1m (pre-tax) and £3.2m (post-tax) in H1 2015 (2) H1 2016 RoE excludes impairment of goodwill of £4.1m (post-tax) and is after payment of AT1 coupon of £6.6m (post-tax)

 Underlying PBT(1) up 45% to £63m; RoE(2) of 18.0%  Excellent H1 origination, up by 26% to £1.5bn,

supports net loan growth of 11% to £6.8bn

 Maintained net interest margin at 3.6% as expected  Underlying cost/income ratio(1) further improved

by 8 percentage points to 45%

 Another excellent credit performance; cost of risk

stable at 20bps

 Strong capital position; total capital ratio of 14.0%

Highlights: Balanced growth across a diversified portfolio

9

1.3 1.5 0.2 0.2 0.8 0.9 2.4 2.7 1.4 1.5 2015 H1 2016

Asset Finance Invoice Finance SME Commercial Mortgages Residential Mortgages Buy-to-Let

6.1 6.8 +9% +12% +12% +11%

• 3%

+11% Net loans to customers (£bn)  Asset Finance grew by 11% to £1.5bn ‒ Customer numbers increased by 9% to c46,000 ‒ Origination up by 20% to £509m  SME Commercial Mortgages up 12% to £0.9bn ‒ 15% growth in customers to c1,800 ‒ Strong origination growth of 29% to £210m  Buy-to-Let grew by 12% to £2.7bn ‒ Customers numbers up by 9% to c17,000 ‒ Excellent origination of £519m up 74%; reflects

market spike ahead of stamp duty changes in April

 Residential Mortgages up by 9% to £1.5bn ‒ 8% increase in customers numbers to c11,000 ‒ Origination was robust at £243m although down by

14% compared with H1 2015

53 63 H1 2015 H1 2016 21 30 H1 2015 H1 2016

6.9% 6.9%

SME Commercial Mortgages

28 37 H1 2015 H1 2016 139 176 H1 2015 H1 2016

Actively managing portfolio to hold overall gross margin stable

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(1) Gross interest margin = interest income / average net loans

Gross interest margin (%)(1)

Asset Finance

36 44 H1 2015 H1 2016

6.5% 6.2%

4 3 H1 2015 H1 2016

Invoice Finance

4.3% 4.3%

Residential Mortgages

5.0% 5.1%

Group

5.4% 5.4%

Interest income (£m)

Buy-to-Let

5.0% 4.9%

Successfully maintained net interest margin at 3.6%

(1) Numbers may not exactly sum / reconcile due to rounding (2) Loans to Deposits Ratio (LDR) = net customer loans / customer deposits (3) Cost of funding = interest expense / average net loans (4) Net interest margin = net interest income / average net loans

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 Deposit-led funding strategy

− £6.5bn of customer deposits; up by 14% − Retail deposits grew by 15% to £4.8bn - now serving c126,000 customers − SME deposits grew by 8% to £1.5bn, with customer numbers up 12% to c16,000 − Corporate deposits now exceed £200m

 Supported by wholesale funding of £521m

− On-balance sheet FLS funding of £323m − RMBS of £156m(5), Tier 2 debt & other wholesale of £42m

 Strong liquidity buffer, 16.7% of funding liabilities

− supported primarily by level 1 assets

 Delivered stable cost of funding of 1.9%  Net interest margin maintained at 3.6%

− In line with management expectations

3.4 4.2 4.8 1.0 1.4 1.5 0.2 0.2 0.6 0.6 0.5 5.1 6.4 7.1 2014 2015 H1 2016 Retail deposits SME deposits Corporate deposits Wholesale funding 2.1% 1.9% 1.9% 2014 2015 H1 2016 Cost of funding (%) 107%

LDR(2) (%)

Increasingly diversified funding base (£bn)(1)

104%

Stable cost of funding(3)

108%

Net interest margin(4)

3.4% 3.6% 3.6% 2014 2015 H1 2016 Net interest margin (%)

(5) Reduction since 31 December 2015 reflects capital repayments on underlying mortgages

53% 45% H1 2015 H1 2016

Delivered a further 8% reduction in cost/income ratio

 Underlying operating expenses up by only 4%

as we leverage our scaleable operating model − In line with management expectations

 Other administrative expenses of £55m

− Driven by a small number of additional people to support growth

 Provisions relates to FSCS charge of £1m

− Full year charge accounted for in first half

 Depreciation and amortisation remains stable  High degree of operating leverage

− Cost income ratio reduced by a further 8 percentage points to 45% in H1 2016

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Leveraging operational efficiency 52 55 2 1 2 2 56 58 H1 2015 H1 2016

Depreciation & amortisation Provisions Other administrative expenses

Underlying operating expenses(£m)(1) Underlying cost/income ratio (%)(1)(2)

(1) H1 2016 excludes £4.1m of pre-tax goodwill impairment and H1 2015 excludes IPO related costs of £4.1m (pre-tax) (2) Cost income ratio = Underlying operating expenses / operating income

Benefit from a diversified, granular and highly secured portfolio

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Average loan balance (as at 30 June 2016) (1) % of loan book at origination constituted by secured loans for Asset Finance; prepayment percentage for Invoice Finance; average loan-to-value ratio for SME Commercial Mortgages, Buy-to-Let and Residential Mortgages. (2) Non-performing loans ratio = Individually impaired loans / gross loans

Granular Portfolio

c£32k

82% 82% 2015 H1 2016

(3) Cost of risk = Impairments / average net loans

Group cost of risk (bps)(3) Group NPL ratio (%)(2)

0.31 0.31 2015 H1 2016

NPL ratio (%)(2) Cost of risk (bps)(3) Highly secured(1)

40 34 H1 2015 H1 2016 68% 69% 2015 H1 2016 1.51 1.68 2015 H1 2016 69 127 H1 2015 H1 2016 64% 64% 2015 H1 2016 0.83 0.59 2015 H1 2016 33 27 H1 2015 H1 2016 68% 69% 2015 H1 2016 0.21 0.18 2015 H1 2016 5 7 H1 2015 H1 2016 77% 77% 2015 H1 2016 0.29 0.31 2015 H1 2016 15 12 H1 2015 H1 2016 0.37 0.33 2015 H1 2016 20 20 H1 2015 H1 2016

SME Commercial Mortgages Asset Finance Invoice Finance Buy-to-Let Residential Mortgages c£136k c£468k c£163k c£139k

11.8% 11.0% 2.0% 1.7% 1.3% 1.2% 2015 H1 2016 Tier 2 capital ratio AT1 capital ratio CET1 ratio

Maintained a strong capital base with total capital ratio of 14%

Total capital ratio (%)(1)(2) Movement in CET1 capital ratio (%)

(1) CET1 capital ratio = Common Equity Tier 1 capital / risk weighted assets (2) Totals may not sum precisely due to rounding (3) Leverage ratio = Tier 1 capital / total exposures

14

 Capital position remains strong with total

capital ratio of 14.0%

− RWAs up 16% to £4.3bn (December 2015: £3.7bn); primarily driven by lending growth − Absolute amount of total capital has increased; higher RWAs have marginally reduced ratios

 CET1 capital ratio in line with management

expectations at 11.0%

− Operational risk charge recalculated annually in Q1 based on last 3 years’ income − AT1 dividend payable annually at end of April − Organic capital generation driven by retained profits

 Leverage ratio(3) of 6.9% remains well above

regulatory minimum requirements

 Continue to assess potential to adopt IRB

11.8% 11.5% 11.3% 11.3% 11.0% 11.0% (0.3%) (0.2%) 1.1% (1.4%) 2015 CET1 ratio 2016

• perational

risk charge AT1 coupon Organic capital generation Increase in RWAs H1 2016 CET1 ratio

14.0% 15.1%

H1 only charges

Aldermore Group PLC: Proposed Tier 2 transaction

15

Aldermore overview H1 2016 performance update Proposed transaction Summary Appendices

A growing UK-focused specialist lender, building a diversified and highly-secured portfolio

16

Customer-focused Specialist lender Track-record of profitable growth Diversified and highly secured portfolio 1 2 3

£1. 5b n(1)

• Supporting Britain’s underserved

SMEs, landlords and homeowners

• Digitally-enabled modern bank
• Straight-forward human

underwriting approach

• We are Reliable, Expert, Dynamic

and Straight-forward to deal with

• Strong broker relationships and

direct distribution

1 2 3 4 5

3.4 4.8 6.1 6.8 2013 2014 2015 H1 2016

Net loans to customers grew at 34% CAGR 2013 - 2015

£6.8bn Net loans

Asset finance SME Mortgages BTL Mortgages Residential Mortgages 22% 2% 14% 40% 22% Invoice finance

Diversified portfolio with high levels

• f tangible security

3 3.4 3.0 3.6 2013 2014 2015 H1 2016 42 23 19 20

Net loans £bn NIM (%) and cost of risk (bps)

Aldermore Group PLC: Proposed Tier 2 transaction

17

Aldermore overview H1 2016 performance update Proposed transaction Summary Appendices

Commentary

Note: Numbers may not exactly sum / reconcile due to rounding. (1) Includes derivatives held for risk management, fair value adjustments for portfolio hedged risk, other assets, prepayments and accrued income, deferred tax and property, plant and equipment. (2) Includes corporate deposits.

18

(3) CET1 ratio = Common equity tier 1 capital / Risk Weighted Assets (RWA) (4) The year end 2015 leverage ratio was restated to 7.2% in the published Pillar 3 disclosures following finalisation of off-balance sheet exposures (5) Tangible book value = Ordinary shareholders’ equity less intangible assets. Outstanding number

• f shares as at 31 December 2015 and 30 June 2016 were 344.7m

Balance sheet momentum

30 June 31 December (£m) 2016 2015 Growth % Key balance sheet items Net loans 6,799 6,145 11% Cash and investments 875 806 9% Intangible assets 22 24 (9%) Fixed and other assets (1) 50 34 45% Total assets 7,746 7,009 11% Customer deposits(2) 6,538 5,742 14% Wholesale funding 521 636 (18%) Other liabilities 118 97 22% Total liabilities 7,177 6,475 11% Ordinary shareholders' equity 495 460 8% AT1 capital 74 74

• Total equity

569 534 7% Total liabilities and equity 7,746 7,009 11% Key ratios Loans to deposits ratio 104% 107% Net loan growth (£bn) 654 1,344 Fully loaded CRD IV RWAs 4,281 3,693 Fully loaded CRD IV CET1 capital 473 436 Fully loaded CRD IV CET1 ratio(3) 11.0% 11.8% Fully loaded CRD IV Leverage ratio(4) 6.9% 7.2% Tangible book value per share (p)(5) 137 126 1 3 5

• 1. Net loan growth of 11% to £6.8bn

− Excellent origination of £1.5bn; up by 26% − Customer numbers up by 8% to c77,000 − Balanced growth across a diversified portfolio

• 1. Intangible assets down by 9%

− £4m goodwill impairment reflects current lower financial services company valuations

• 1. Deposits up by 14% to £6.5bn

− SMEs form 23% of deposit base − Loans to deposits ratio of 104%

• 1. Wholesale funding of £521m

− Utilised less wholesale due to growth in deposits

• 1. 8% growth in shareholder equity driven by profits

for the first 6 months − Tangible book value per share of 137p

1 3 4 1 2 5 5 2 3 4

(£m) H1 2016 H1 2015 Growth % Key P&L items Interest income 176 139 26% Interest expense (60) (47) (27%) Net interest income 116 92 26% Net fee and other operating income(1) 13 12 5% (1) (300%) Operating income 128 105 22% Underlying operating expenses (58) (56) (4%) IPO related costs – (4) n/a Impairment of goodwill (4) – n/a Profit before impairment losses 66 45 47% Impairment losses (6) (5) (23%) Profit before tax 59 40 50% Tax (17) (8) (104%) Profit after tax 42 31 35% Underlying profit before tax(3) 63 44 45% Key ratios Net interest margin 3.6% 3.6% Underlying cost/income ratio(4) 45% 53% Cost of risk 20bps 20bps Underlying return on equity(3)(5) 18.0% 18.6% Earnings per share 10.3 p 8.8 p Net derivatives (expense)/ income and gains on disposal of debt securities (2)

45% increase in underlying profit before tax

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(3) Excludes goodwill impairment of £4.1m (pre- and post-tax) in H1 16 and IPO related costs of £4.1m pre- tax (£3.2m post-tax) in H1 2015 (4) Cost/income ratio = Underlying operating expenses/ Operating income (5) Return on Equity = (PAT / average ordinary shareholder equity)*2 less (AT1 coupon paid / average

• rdinary shareholder equity). Annual AT1 coupon payable in April 2016 of £8.9m pre-tax (£6.6m post-tax)

and in April 2015 of £3.5m pre-tax (£2.8m post-tax)

• 1. Net interest income up by 26% to £116m

− Driven by balance sheet growth − Net interest margin stable at 3.6%

• 2. Operating income increased by 22%

− Fee income growth driven by mortgage volumes

• 2. Tightly controlled cost base

− Underlying operating expenses up 4% to £58m − Underlying cost/income ratio further improved by 8pts

• 2. Rigorous focus on credit quality maintained

− Overall cost of risk stable at 20bps − Additional level of caution within collective provision charge as emergence periods extended

• 2. Underlying PBT up by 45% to £63m
• 3. Tax charge reflects UK bank surcharge and

zero relief on goodwill impairment

• 4. Underlying return on equity of 18.0%

3 1 2 4 1 1 3 4 2 5

(1) Net fees and other operating income = Fee income + Fee expense + Other

• perating income

(2) Net derivatives (expense)/income and gains on disposal of debt securities = Net income from derivatives and other financial instruments + Gains on disposal of available for sale debt securities

4

Commentary

3 6 7 5 6 7

82% 68% 18% 32% 424 509 H1 2015 H1 2016 92% 93% 8% 7% 281 243 H1 2015 H1 2016 80% 83% 20% 17% 298 519 H1 2015 H1 2016 79% 84% 21% 16% 163 210 H1 2015 H1 2016 41% 53% 59% 47% 20 19 H1 2015 H1 2016

• 5%

0.3%

Diversified portfolio

(1) Total market originations for H1 2016, except Invoice Finance which represents a stock figure as at March

• 2016. Asset Finance excludes High Value. Source: Finance & Leasing Association (Asset Finance); Asset

Based Finance Association (Invoice Finance) and CML (Buy-to-Let and Residential Mortgages) (2) Annualised market share based on H1 2016 origination for Asset Finance, SME Commercial Mortgages, Buy- to-Let and Residential Mortgages. For Invoice Finance based on June 2016 period-end balance (3) Market size for SME Commercial Mortgages based on DeMontfort University study. H1 2016 market

• riginations assumed to be half of full year 2015 originations (latest available data)

Asset Finance Residential Mortgages Invoice Finance SME Commercial Mortgages

 Grew customer numbers by 9% to c17,000  Took advantage of the expected spike in demand

ahead of introduction of 3% additional stamp duty

 Grew customer numbers by 9% to 46,000  Organic origination growth of 20% mainly driven

by Wholesale

 Customer numbers marginally reduced to 1,100  Continue to reorient away from smaller clients  Customer numbers grew by 15% to c1,800  Leveraged broker relationships, representing 84%

• rigination, supported by strong growth in direct

distribution, up 29% £1.5bn £0.2bn £0.9bn £1.5bn Net loans (£bn), as at 30 June 2016 Intermediated Direct / Sales

Business segment H1 2016 performance Market size(1) and current market share(2)

3.5% £15bn 0.8% £19bn 0.8% £27bn (3) 2.3% £95bn 20

Loan origination (£m)

Buy-to-Let £2.7bn

£24bn

 Customer numbers grew by 8% to c11,000  Continue to support Help to Buy  Direct broadly stable at 7%

99% 1% Online Phone 75% 3% 22% Online Phone Post

Dynamic, online deposit franchise forms core of funding base

21

Retail SME

Balance Product suite Distribution and

• perations

(1) Deposit balances breakdown by initial contract term as at 30 June 2016 (2) Based on accounts opened in H1 2016

1.0 1.4 1.5 2014 2015 H1 2016 SME deposits (£bn) 13% 13% 16% 23% 19% 9% 1% 6% Notice (incl. ISA Notice) <1 year ISA 1 year 2 year 3 year 4 year 5 year 2% 58% 40% Notice <1 year 1 year

(2) (2) (2)

£4.8bn(1)

Customer deposits as at 30 June 2016 3.4 4.2 4.8 2014 2015 H1 2016 Retail deposits (£bn)

£1.5bn(1)

(2) (2)

6% 22% 16% 12% 13% 10% 8% 13% Greater London South East Midlands East Anglia North West South West Yorkshire Other 35% 20% 8% 9% 8% 8% 4% 8% Greater London South East Midlands East Anglia North West South West Yorkshire Other

Diversified and prudently underwritten mortgage portfolios

22

Geographic split (%) Indexed Loan to Value (%)(1)

SME Commercial Mortgages Buy-to-Let Residential Mortgages

£2.7bn

Net loans as at 30 June 2016 0% 1% 3% 24% 24% 48% 80+ 75-80% 70-75% 60-70% 50-60% 0-50% 1% 3% 9% 14% 30% 22% 21% 85%+ 80-85% 75-80% 70-75% 60-70% 50-60% 0-50% 24% 12% 11% 11% 16% 11% 15% 85%+ 80-85% 75-80% 70-75% 60-70% 50-60% 0-50%

£1.5bn

19% 18% 11% 8% 12% 13% 7% 12% Greater London South East Midlands East Anglia North West South West Yorkshire Other

£0.9bn (1) SME Commercial Mortgages excludes Property Development of £211m

Average Owner Occupied (non-HTB) LTV = 62% Average Help to Buy ‘HTB’ LTV = 88% 95% HTB and family guarantee

Benefit from a granular portfolio with low concentration risk

23

Asset Finance(1) SME Commercial Mortgages(1)(2) Buy-to-Let(1) Residential Mortgages(1)

0% 15% 30% 45% 0 - 50k 50k - 100k 100k - 150k 150k - 200k 200k - 300k 300k - 400k 400k - 500k 500k - 1m 1m - 2m 2m+ 0% 5% 10% 15% 20% 25% 0 - 50k 50k - 100k 100k - 150k 150k - 200k 200k - 300k 300k - 400k 400k - 500k 500k - 1m 1m - 2m 2m+ 0% 10% 20% 30% 40% 0 - 50k 50k - 100k 100k - 150k 150k - 200k 200k - 300k 300k - 400k 400k - 500k 500k - 1m 1m - 2m 2m+ 0% 10% 20% 30% 0 - 50k 50k - 100k 100k - 150k 150k - 200k 200k - 300k 300k - 400k 400k - 500k 500k - 1m 1m - 2m 2m+

(1) Credit concentration by asset size (£) (2) Excludes Property Development of £211m

Average

• utstanding =

c£32k Average

• utstanding =

c£468k Average

• utstanding =

c£163k Average

• utstanding =

c£139k

Average loan balance (as at 30 June 2016)

24

Disclaimer

This document contains certain forward-looking statements with respect to the business, strategy and plans of Aldermore Group PLC (“Aldermore”) and its current goals and expectations relating to its future financial condition and performance. Such forward-looking statements include, without limitation, those preceded by, followed by or that include the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "may", "anticipates", "projects", "plans", "forecasts", "would", "could", "should" or similar expressions

• r negatives thereof. Statements that are not historical facts, including statements about Aldermore’s, its directors’ and/or management’s beliefs and expectations, are forward-

looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future. Factors that could cause actual business, strategy, plans and/or results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements made by Aldermore or on its behalf include, but are not limited to: general economic and business conditions in the UK and internationally; market related trends and developments; fluctuations in exchange rates, stock markets, inflation, deflation, interest rates and currencies; policies of the Bank of England, the European Central Bank and other G8 central banks; the ability to access sufficient sources of capital, liquidity and funding when required; changes to Aldermore’s credit ratings; the ability to derive cost savings; changing demographic developments, and changing customer behaviour, including consumer spending, saving and borrowing habits; changes in customer preferences; changes to borrower or counterparty credit quality; instability in the global financial markets, including Eurozone instability, the potential for countries to exit the European Union (the “EU”) or the Eurozone, and the impact of any sovereign credit rating downgrade or other sovereign financial issues; technological changes and risks to cyber security; natural and other disasters, adverse weather and similar contingencies outside Aldermore’s control; inadequate or failed internal or external processes, people and systems; terrorist acts and other acts of war or hostility and responses to those acts; geopolitical, pandemic or other such events; changes in laws, regulations, taxation, accounting standards or practices, including as a result of an exit by the UK from the EU; regulatory capital or liquidity requirements and similar contingencies outside Aldermore’s control; the policies and actions of governmental or regulatory authorities in the UK, the EU or elsewhere including the implementation and interpretation of key legislation and regulation; the ability to attract and retain senior management and other employees; the extent of any future impairment charges or write- downs caused by, but not limited to, depressed asset valuations, market disruptions and illiquid markets; market relating trends and developments; exposure to regulatory scrutiny, legal proceedings, regulatory investigations or complaints; changes in competition and pricing environments; the inability to hedge certain risks economically; the adequacy of loss reserves; the actions of competitors, including non-bank financial services and lending companies; and the success of Aldermore in managing the risks of the foregoing. Any forward-looking statements made in this document speak only as of the date they are made and it should not be assumed that they have been revised or updated in the light

• f new information of future events. Except as required by the Prudential Regulation Authority, the Financial Conduct Authority, the London Stock Exchange PLC or applicable

law, Aldermore expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document to reflect any change in Aldermore’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The information, statements and opinions contained in this document and subsequent discussion do not constitute a public offer under any applicable law or an offer to sell any securities or financial instruments or any advice or recommendation with respect to such securities or financial instruments.