Arbuthnot Banking Group (ARBB) saw its investment in private banking start to come good last year, but its fast-growing subsidiary Secure Trust Bank (STB) continues to provide the lion's share of its profits.
The group took advantage of a placing at Secure Trust to reduce its stake in the consumer finance specialist to 52 per cent last year. The share sale raised £25m, part of which was ploughed into a new Manchester office for the private banking arm. Meanwhile, Secure Trust used the £50m proceeds of the placing to launch a new business line focusing on property-backed finance for small and medium-sized business.
But chief operating officer Andrew Salmon reassures us that "it is not all about jam tomorrow". Secure Trust posted an impressive 53 per cent increase in pre-tax profit to £26.3m, bolstered by strong demand for consumer loans as well as the new business-lending unit. Private banking more than doubled its pre-tax profits to £3.6m, excluding the prior-year gain on the sale and lease-back of the group's Wilson Street offices. The improvement was driven by a 26 per cent organic increase in its loan book as well as strong growth in assets under management within the wealth management business.
The Bloomberg consensus is for EPS of 90.1p this year.
| ARBUTHNOT BANKING (ARBB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,375p | MARKET VALUE: | £205m | |
| TOUCH: | 1,375-1,444p | 12-MONTH HIGH: | 1,599p | LOW: 1,000p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 762p | |||
| Year to 31 Dec | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2010 | 4.1 | 25.0 | 23 |
| 2011 | 5.1 | -33.0 | 24 |
| 2012 | 12.6 | 52.6 | 25 |
| 2013* | 15.7 | 51.9 | 26 |
| 2014 | 22.5 | 56.5 | 27 |
| % change | +43 | +9 | +4 |
Ex-div: 16 Apr Payment: 15 May *DPS excludes a special dividend for 2013 of 18p | |||
