Arbuthnot Banking (ARBB) was criticised during the credit boom for adopting a prudent approach to lending, but this has clearly paid off. Bad debts from private banking remain below 1 per cent of the loan book, even as group profits last year more than doubled.
Pre-tax profits from private banking grew by 5 per cent to £2.1m, with customer loans up 21 per cent to £289m. At the same time, customer deposits rose by £74m to £422m, which means that the bank has no reliance on wholesale finance. However, it has signed up to participate in the Funding for Lending scheme, as borrowing rates here are less than the rates it has to pay on retail deposits.
The group has a 70.7 per cent stake in the Secure Trust Bank, a retail bank. This was the real motor of growth last year, with pre-tax profits up from £9.1m to £17.3m. Arbuthnot also continued to develop its structured products operation Gilliat Financial Solutions, from which profits last year trebled to £0.6m.
Analysts at Numis are forecasting 2013 pre-tax profits of £14.7m and EPS of 47.3p.
| ARBUTHNOT BANKING GROUP (ARBB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 925p | MARKET VALUE: | £137m | |
| TOUCH: | 915-935p | 12-MONTH HIGH: | 950p | LOW: 438p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 351p* | |||
| Year to 31 Dec | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 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 |
| 2012 | 12.6 | 52.6 | 25.0 |
| % change | +146 | - | +4 |
Ex-div: 17 Apr Payment: 17 May *Includes intangible assets of £8.3m, or 56p a share | |||
