Arbuthnot signals smaller loss and special dividend for 2020

Arbuthnot Banking Group updated the market on its trading in 2020 on Thursday, reporting that it began to see an increase in loan enquiries in its respective lending markets in the fourth quarter, as business activity continued to increase.

The AIM-traded firm said the return to pre-pandemic credit appetites enabled it to develop new lending pipelines in the final parts of the year ended 31 December, that it expected to draw in 2021.

As it said on 10 December 2020, Arbuthnot exchanged contracts to acquire commercial vehicle financing business Asset Alliance Group.

The board said the acquisition remained on track to complete in either March or early April, with the timing being primarily dependent on the receipt of regulatory approval.

The transaction costs, which had totalled about £1m including sales tax, would be included in the 2020 results for the group.

As a result of the uptick in business and the acquisition of Asset Alliance Group, Arbuthnot said it expected to announce a pre-tax loss better than current market expectations.

“Following recent indications from the Prudential Regulation Authority (PRA) that banks will be permitted to resume payment of dividends within certain parameters, the board today announces its intention to pay a special dividend of 21p per share,” the directors said in their statement.

“This is equal to and in lieu of the dividend that was declared in March 2020 based on the profits reported in 2019 and which was subsequently withdrawn following the guidance issued by the PRA at that time.”

The dividend would be due to shareholders on the register as at 26 February, and paid on 19 March.

“Given that the full year results of the group in 2020 will record a loss before tax, the board has decided that no dividend will be paid in respect of 2020.

“The directors will monitor the trading performance of the group for 2021, and taking note of the guidance from the PRA will decide on the appropriate distribution policy for further dividends in 2021, as the group's results improve after suffering the effects of the pandemic and the reduction in base rates during 2020.”

Arbuthnot said it would report its results for the year ended 31 December on 25 March.

At 1232 GMT, shares in Arbuthnot Banking Group were up 4.74% at 940p.