Arbuthnot Banking Group 2024 results: Franchise growing through the noise

Hardman & Co
[shareaholic app="share_buttons" id_name="post_below_content"]

The core of any successful, long-term business lies in offering clients the products they want so that they give you more business and, in turn, you attract new customers. The 2024 results show how Arbuthnot Banking Group (LON:ARBB) has achieved this, with growth in i) specialist lending (now £828m, 35% of loans up 33% in 2023, 27% in 2022 and 21% in 2021), ii) deposit volumes (+10%), and iii) wealth management (FUMA +30%). 1,200 new banking clients were onboarded in 2024. Short-term profits reflected that ABG had optimised returns in a rising rate environment (2023 PBT £47.1m vs. £4.6m in 2021) but faced the predicted margin pressures when they started to fall (2024 PBT £35m).

  • Financial highlights: PBT £35.1m (2023: £47.1m). Op income £179.5m (2023: £178.9m). Average net margin 5.1% (2023: 5.7%). EPS 152.3p (2023: 222.8p). Final dividend p/sh 29p (2023: 27p), total dividend p/sh 69p (2023: 46p), up 50%. Net assets £267m (2023: £252m). CET1 ratio 13.2% (2023: 13.0%).
  • Operating highlights: Customer deposits +10% to £4.1bn (2023: £3.8bn) and loans +2% to £2.4bn (2023: £2.3bn). ABG maintained tighter credit appetite during the year. Each specialist lending division saw growth in operating income. FUMA +30% to £2.2bn (2023: £1.7bn), with inflows 28% of opening FUMA.
  • Valuation: Our multiple approaches see a broad range of valuations: £12.73 DDM, £20.95 SOTP and £24.29 GGM. The average is £19.32, nearly double the current share price. Trading at 52% of NAV is anomalous, in our view, with above the cost of capital returns (target: mid-teens pre-tax ROCE), and given ABG’s growth potential.
  • Risks: Margins have fallen from peak, with the trend, and level, of interest rates a key driver to future earnings. A higher-for-longer outlook would be beneficial. Credit is a risk, but Arbuthnot Banking Group is conservative in lending, taking good security; so, its loss, given default, is low. Other risks: reputation, regulation and compliance.
  • Investment summary: Arbuthnot Banking Group offers strong-franchise and continuing-business (normalised) profit growth. Its balance sheet strength gives it a number of wide-ranging options to develop organic and inorganic opportunities. The latter are likely to increase in uncertain times. Management has been innovative, but also very conservative, in managing risk. Having a profitable, well-funded, well-capitalised and strongly growing bank priced below book value is an anomaly, in our view.
Share on:
Find more news, interviews, share price & company profile here for:

Lending Bridge builds fresh momentum with new institutional backing

Lending Bridge has secured institutional backing to expand its loan book, signalling the next phase for the property-focused lender.

Balancing family support at university with long term wealth strategy

Supporting children through university can strengthen family ties and future wealth if structured with foresight and discipline.

Arbuthnot Banking Group: Growing in targeted areas (LON:ARBB)

Analyst Mark Thomas from Hardman & Co highlights the bank’s focus on low capital intensity and high risk-adjusted return businesses, disciplined credit practices, and plans to expand in underserved market segments.

Arbuthnot Banking Group PLC: Betting on Deposits and Specialist Lending for Profitable Growth (Video)

Mark Thomas of Hardman & Co explains why Arbuthnot’s profit drop isn’t the full story — and where the real value creation is happening across its wealth, deposits, and specialist lending arms.

Arbuthnot Banking Group 1H’25 results: Growing where it wants to

Arbuthnot Banking delivered 1H’25 results reflecting strong growth in specialist lending and deposit-gathering businesses, despite a halving of pre-tax profits due to interest rate pressures and subdued market activity.

Arbuthnot Banking Group Demonstrates Capital Discipline and Strategic Progress, Shore Capital Notes

Arbuthnot Banking Group's H1 FY25 results highlight strong capital discipline and strategic growth in Wealth and Asset Finance. Despite a tough comparative, deposits grew by 7% and the interim dividend increased by 10%, demonstrating resilience and a clear path for future performance.

Search

Search