After selling its investment banking unit, and following last year's successful flotation of 25 per cent of banking arm Secure Trust Bank, Arbuthnot Banking is now focused on its core strengths. The group is performing strongly as well, with robust loan growth and a healthy 16.7 per cent core tier-one capital ratio. Add in the chunky dividend yield and the shares look worth buying.
Pre-tax profits from continuing operations grew strongly in the year, even though impairments – mainly on customer loans – more than doubled to £6.81m. That charge, however, remains small compared to the £393m group loan book. But the group did take a £10.2m hit on selling its investment banking arm, Arbuthnot Securities – which explains the reported loss per share. Operationally, though, both of the group's divisions performed well. Private banking's pre-tax profits doubled to £2m and the division's loan book grew by £27m to £238m – easily funded by a £70m rise in client deposits to £420m. And discretionary funds under management grew 40 per cent, with fee income from wealth planning up by 10 per cent. Meanwhile, the retail banking arm – Secure Trust Bank – boosted profits 13 per cent to £9.6m, with customer numbers there up from 96,000 to 140,000.
| ARBUTHNOT BANKING (ARBB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 428p | MARKET VALUE: | £64m | |
| TOUCH: | 420-435p | 12-MONTH HIGH: | 435p | LOW: 280p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 275p | |||
| Year to 31 Dec | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2007 | 8.60 | 23.8 | 33.0 |
| 2008 | -2.20 | 3.50 | 21.0 |
| 2009 | 5.10 | 23.4 | 22.0 |
| 2010 | 4.07 | 25.0 | 23.0 |
| 2011 | 5.12 | -33.3* | 24.0 |
| % change | +26 | - | +4 |
Ex-div: 18 Apr Payment: 18 May *Includes discontinued operations | |||
