Arbuthnot Banking Group reports solid third-quarter growth

Arbuthnot Banking Group reported solid third-quarter growth in an update on Thursday, with customer deposits rising to £3.8bn, up from £3.5bn a year earlier, and customer loans increasing to £2.5bn from £2.3bn.

The AIM-traded company said its wealth management division achieved a significant milestone, with funds under management and administration exceeding £2bn for the first time, reflecting 18% growth over the first nine months of 2024.

Despite ongoing economic headwinds, Arbuthnot said its lending portfolio remained robust.

It said it continued to diversify its loan book, with new fixed-rate lending helping to mitigate potential future interest rate cuts.

The Bank of England's 25-basis point rate cut in August had started to impact interest income, the board noted.

Arbuthnot said its overall loan book was expected to contract slightly by the end of the year as it focussed on more capital-efficient lending, particularly in its specialist lending businesses.

The wealth management division saw gross inflows of £81m in the third quarter, with net inflows of £43m.

That growth was partly driven by clients moving funds from cash deposits into investment products, as well as the success of the new Direct Gilt Service, which had attracted nearly £100m in assets since its launch in February.

The number of new wealth management clients increased by almost 50% compared to the prior year.

In other business divisions, Renaissance Asset Finance grew its loan book by 38% year-on-year, reaching £242m, and Arbuthnot Commercial Asset Based Lending reported 22% growth for the year, with a loan book of £293m at the end of the quarter.

Asset Alliance Group, which manages a leasing portfolio, reported assets available for lease at £362m, maintaining strong yields despite challenging market conditions for used vehicle sales.

Looking ahead, Arbuthnot said it was closely monitoring upcoming regulatory changes from Basel 3.1 and the UK's Autumn Budget, as it evaluated potential strategic shifts to optimise its capital returns and continue supporting clients amid evolving economic and fiscal conditions.

At 1004 BST, shares in Arbuthnot Banking Group were up 0.02% at 935.2p.

Reporting by Josh White for Sharecast.com.