Aldermore's stock rose as much 6 percent to its highest level since April 15 on the London Stock Exchange, outperforming the FTSE 350 Banks Index <.FTNMX8350> which was in the red.

The bank, founded in 2009 by a former Barclays executive with backing from AnaCap, said net loans to customers rose to 6.5 billion pounds ($9.38 billion) at the end of March from 6.1 billion pounds on Dec. 31.

Total customer deposits in the period grew by 7 percent to 6.2 billion pounds.

Aldermore said growth was driven by an increase in demand for residential and buy-to-let mortgages, adding that it expects mortgage demand to continue despite forecasts for a slowdown in Britain's buy-to-let market.

The number of new approvals dipped for the first time in six months in March, shortly before new tax changes aimed at cooling the booming buy-to-let market.

Aldermore does not expect similar strong buy-to-let mortgage growth in the second quarter compared to the first quarter, due to the impact of the additional stamp duty but was confident of future prospects.

"The peak of demand prior to April 1 shows investors are still confident about the long-term nature of the buy-to-let mortgage market," Chief Executive Phillip Monks told Reuters.

As of April 1, buy-to-let investors and second homeowners must pay an additional 3 percent stamp duty on new purchases compared with first-time buyers.

Shares in the SME-focussed bank were up 5.4 percent at 194.8 pence as of 0758 GMT.

(Reporting by Aastha Agnihotri in Bengaluru; Editing by Sunil Nair)

By Aastha Agnihotri