This year, Arbuthnot Banking (ARBB) had something to shout about other than the increasing flow of profits from its 52 per cent stake in Secure Trust Bank (STB). Investing in new staff at its own offices across the UK helped to more than double the pre-tax profit of its private banking division to £3.7m, while its Dubai office is expected to break even this month, two years after opening.
That is not all for this side of the business, which has a three-pronged transformation plan in play. It is upgrading its operations, including going paperless and instituting a new banking platform. It is also securing 10,000 sq ft of additional City office space and, most crucially, expanding into commercial banking. The idea is to provide its entrepreneur clients with banking services for their businesses, including advising on - rather than providing - commercial finance. This is so as not to eat the lunch of Secure Trust, which broke through the £1bn asset barrier in the reported period, helping first-half profits up 40 per cent year on year to £16.1m.
Management argues that the results of these linked entities justify last year's fundraising. "Both banks have prospered over the last six to 12 months and that fundraising has allowed organic growth to get going," says group chief operating officer Andrew Salmon. Broker Numis Securities did not expect to change its full-year pre-tax profit forecast of £36.6m, which gives EPS of 95.4p (from £22.5m and £56.5p in 2014).
| ARBUTHNOT BANKING (ARBB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,500p | MARKET VALUE: | £224m | |
| TOUCH: | 1,451-1,530p | 12-MONTH HIGH: | 1,599p | LOW: 1,000p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 790p | |||
| Half-year to 30 Jun | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) | |
|---|---|---|---|---|
| 2014 | 9.5 | 25.3 | 11 | |
| 2015 | 15.7 | 42.6 | 12 | |
| % change | +65 | +68 | +9 | |
Ex-div: 3 Sep Payment: 2 Oct | ||||
