Arbuthnot Banking (ARBB) plans to expand its stable of specialist lending products further, launching a short-term secured lending business during the fourth quarter. Loans will be provided to small-scale property developers, with a duration of between six and 18 months. The business is expected to turn profitable in 2020. That launch is in addition to the asset finance business, which was acquired in April and had outstanding balances of £78m by the end of June.
Overall lending was up almost a quarter to £1.1bn, driven primarily by the commercial banking business. Management revealed that the loan book here stood at just over £400m at the period-end, impressive from a standing start in 2015. However, increasing competition also meant balances fell back slightly for the private banking business, where management says it has been focusing on appropriate levels of risk pricing. Both businesses also continued to build their deposit bases, which in aggregate were up a quarter to £1.55bn, benefiting the cost of funding. The commercial bank accounted for a third of the overall deposit base by the end of June.
Analysts at Numis expect adjusted net tangible assets of 1,502p a share at December 2018, down from 1,547p at the end of 2017.
| ARBUTHNOT BANKING (ARBB) | ||||
| ORD PRICE: | 1,610p | MARKET VALUE: | £ 240m | |
| TOUCH: | 1,580-1,640p | 12-MONTH HIGH: | 1,650p | LOW: 1,225p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 1,579p | LEVERAGE: | 9.3 | |
| Half-year to 30 June | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 25.1 | 2.54 | 16.5 | 14 |
| 2018 | 31.4 | 3.51 | 21.7 | 15 |
| % change | +25 | +38 | +32 | +7 |
| Ex-div: | 30 Aug | |||
| Payment: | 28 Sep |
