Not content with just diversifying its loan book, Arbuthnot (ARBB) plans to broaden its funding sources, too. A direct-to-market retail deposit product will be soft-launched in the middle of this year, supplementing the SME deposit base established by its commercial bank. This will allow the challenger bank to raise additional funds at short notice for special acquisitions, says chief operating officer Andrew Salmon, since accessing the securitisation market is more difficult for smaller lenders.
The commercial bank went from strength to strength last year, more than trebling the loan book to £305m. That was backed by a commensurate rise in deposits, up more than 500 per cent on the previous year. It also completed the acquisition of Renaissance Asset Finance, which specialises in financing high-value cars and other business assets. That business benefited from a broader funding base, growing its loan balances more than a fifth in the eight months since acquisition.
While the private bank wrote £201m in new business during the year, that was not enough to offset the amortisation of acquired loan portfolios, primarily from Duncan Lawrie and Dumferline Building Society, which meant the overall loan book declined 5 per cent to £578m.
Analysts at Numis expect adjusted net tangible assets of 1,490p a share at December 2018, down from 1,547p the same time the previous year.
| ARBUTHNOT BANKING GROUP (ARBB) | ||||
| ORD PRICE: | 1,320p | MARKET VALUE: | £197m | |
| TOUCH: | 1,320-1,329p | 12-MONTH HIGH: | 1,600p | LOW: 1,225p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 1586p | LEVERAGE: | 8.3 | |
| Year to 31 Dec | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
| 2013 | 100 | 15.7 | 51.9 | 26 |
| 2014 | 92.0 | 13.9 | 32.4 | 27 |
| 2015 | 34.6 | -2.6 | -16.9 | 29 |
| 2016 | 41.5 | 0.2 | -3.7 | 31 |
| 2017 | 54.6 | 7.0 | 43.9 | 33 |
| % change | +32 | +3794 | - | +6 |
| Ex-div: | 26 Apr | |||
| Payment: | 18 May | |||
| *Excludes special dividends of 300p and 25p a share paid in 2016 | ||||
