Arbuthnot profits rise as it targets growth after capital raising
Arbuthnot Banking Group reported an uptick in profits during the first half of 2019, following a major capital-raising plan to achieve future growth.
The historic private and commercial bank, which is listed on London’s Alternative Investment Market (Aim), reported pre-tax profits of £2.9m in the six months to 30 June, rising from £1.2m in the same period a year earlier.
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Arbuthnot Latham, a subsidiary of the banking group, has been selling down its holding in Secure Trust Bank in recent years amid plans to focus on future growth in its own lending business and reduce extra regulatory capital that a stake in another bank requires.
Shares in the group have risen three per cent this afternoon.
Sir Henry Angest, chairman and chief executive of Arbuthnot, said: “The group has had a good start to the year. We have raised new capital, grown our existing businesses and continued to deliver on our plans to diversify. We have also agreed to buy a mortgage portfolio which should help to improve the returns of the group.”
In the firm’s private bank new private client numbers were up 13 per cent year-on-year.
“These results encapsulate how a bank should properly come together to grow its profits and its balance sheet,” Andrew Salmon, Arbuthnot Latham’s chief executive, told City PM.
He added: “Clearly it would be nice to have fewer uncertainties, but actually, at this moment, our business is growing well…These uncertainties seem to be more talked about than hitting the economy”.
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Assets under management (AUM) tumbled four per cent from last year to £1.03bn.
Kim Bergoe, director of research at finnCap, said that despite the good start, “expectations for the full year 2019 needs to improve”.
Bergoe added: “Arbuthnot has built a strong position in the UK corporate banking market but expectations are high and the valuation is demanding. The current valuation indicates an ROE of closer to 10 per cent than the expected 3.9 per cent. A key to Arbuthnot’s longer term share performance will be how they are going to improve ROE in our view.”