TIDMARBB
RNS Number : 9011Z
Arbuthnot Banking Group PLC
26 May 2021
FOR IMMEDIATE RELEASE
26 May 2021
Arbuthnot Banking Group PLC
Annual General Meeting 2021
Trading Statement
The Board of Arbuthnot Banking Group PLC ("Arbuthnot", "the
Company" or the "Group") announces that the following statement
regarding the trading performance of the Group for the four months
to 30 April 2021 will be made at the Annual General Meeting to be
held later today Wednesday 26 May 2021.
Highlights
-- The Group has made a good start to the year. New loan
originations have totalled GBP247mn an increase of 57% compared to
the same period in the prior year.
-- Customer loan balances at the end of April stand at GBP1.795
bn (including the assets available for lease acquired with Asset
Alliance) which represents an increase of 9% on the position at 30
April 2020 and growth of 12% since 31 December 2020. If the impact
on loan balances were to be restated for the sale of the "Tay"
mortgage portfolio, the growth rates would be 12% on the prior year
and 15% since the year end.
-- The Bank continues to see strong inflows of customer deposits
with total balances at 30 April 2021 standing at GBP2.597 bn, an
increase of 24% over the prior year and 10% since 31 December
2021.
-- Deposit rates continue to fall as pre-pandemic pricing
matured to be replaced by lower rates. The cost of funds during
April 2021 has fallen to 40 bps.
-- Assets Under Management at 30 April 2021 totalled GBP1.207
bn, an increase of 16% on the prior year and 5% higher than 31
December 2020.
-- During April the Bank surpassed GBP3 bn in total assets for the first time.
-- Acquisition of Asset Alliance Group was successfully completed.
-- The number of facility letters issued, and loans drawn, in
March 2021 reached its highest level for twelve months
Banking
In the opening months of 2021 new client acquisitions were
recorded at their highest level since 2017. Growth has been
generated by both the Private and Commercial Banking businesses,
while at the same time the Bank has continued to support existing
clients by providing further banking and wealth planning
solutions.
The lending pipeline generated towards the end of 2020 has
resulted in good loan book growth in the first four months of 2021.
The lending pipeline remains strong with growth expected to
continue for the rest of the year. The Bank has continued its
strategy of conservative lending whilst ensuring focus remains on
the risk reward profile of potential opportunities. As a result,
the allocation of capital towards residential investment lending
versus commercial real estate has continued, as highlighted in the
"Future State" vision set out in the Group's 2020 Results
Presentation that is available on the Company's website.
The Dubai branch closure has proceeded as planned and the
existing relationships are being migrated to be serviced from our
London based banking teams. The Dubai office will officially close
on 31 May 2021.
The Bank was also in the first wave of institutions to be
accredited for the Recovery Loan Scheme with facilities now
available to be issued by both the Bank and its Asset Based Lending
Business to support the UK economy as it recovers from the
downturn.
Wealth Management
Wealth Management generated positive gross inflows recording a
55% increase on the prior year, which equates to a 19% annualised
gross inflow rate against opening assets under management.
The Wealth management pipeline continues to build positively,
with several larger value mandates in development.
The Sustainable Portfolio Service is expected to launch in the
second quarter, which will utilise the business's central risk
framework. The service will leverage the underlying research and
macro views of the Investment Committee, whilst seeking to maximise
exposure to themes that will deliver positive social and
environmental outcomes.
The Wealth Planning business enjoyed a good start to 2021, with
promising levels of lead generation and subsequent activity
resulting in a positive performance uptick.
Renaissance Asset Finance ("RAF")
The decline in loan balances seen in 2020 caused by a drop in
demand from SMEs for vehicles and capital equipment together with a
tightened approach to risk has now stabilised and RAF is
experiencing increased demand for asset finance facilities. Its
current pipeline of new business proposals and acceptances are at
good levels as confidence appears to be returning to the
economy.
Loans under forbearance measures have fallen significantly from
the peak in May 2020. The London taxi market now accounts for the
majority of loan balances under forbearance; this is taking longer
to recover due the lack of activity in central London and remains a
key area of focus. However, as restrictions ease taxi operators are
reporting an improvement in activity which it is hoped will return
to pre pandemic levels over the summer as social distancing
guidelines relax and business and leisure activity increases.
Arbuthnot Commercial Asset Based Lending ("ACABL")
The Groups asset-based lending business has made a strong start
to the year. The business has continued to grow its loan book and
build its pipeline with significant activity and demand for its
products experienced to date in 2021.
Revenue generated from servicing fees has grown in line with
client activity as businesses up-scale their revenues to make up
for the lows of the previous twelve months. Additionally, as
expected, with increased client activity, there have been signs
that amounts drawn against existing facilities are recovering to
pre-pandemic levels.
Asset Alliance Group ("AAG")
The Bank completed its acquisition of AAG on 31 March 21 and is
currently completing the fair value exercise required to include
the assets and liabilities of the business in the Group
results.
The value of second-hand trucks continues to increase due to a
global scarcity of the computer processor chips used in the
manufacture of new trucks, which has led to a shortage of new
trucks. This will have two impacts on the business. Firstly, the
fair value exercise will generate a materially higher bargain
purchase than initially indicated in the announcement made by the
Group on 10 December 2020 but will slow down the initial growth of
AAG in 2021, which should accelerate in 2022 as supply shortages
are expected to ease. In the meantime, to supplement its growth
plans, the business is concentrating on its distribution of bus and
coach products mainly into the larger urban bus markets.
Operations
The Bank continues to operate effectively since the move to
remote working, with all services being maintained and good
progress with the Bank's transformation agenda.
As reported at the year end the Bank introduced its extended
hours Faster Payments capability. During the first quarter of 2021,
19% of Faster Payments were processed outside of these core
business hours, improving the client experience and aligning the
Arbuthnot Latham proposition with that of the larger retail
banks.
Despite continuing to operate remotely, the Bank on-boarded
nearly 300 clients during the first quarter of 2021, a 33% increase
on the same period last year. Levels of client attrition remains
low.
Client payments in March 2021 were 6.8% higher than the prior
year. The number of facility letters issued, and loans drawn in
March 2021 reached its highest level for twelve months.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU No. 596/2014) which is part of UK law by virtue of
the European Union (withdrawal) Act 2018. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.
Enquiries:
Arbuthnot Banking Group
Sir Henry Angest, Chairman and Chief Executive
Andrew Salmon, Group Chief Operating Officer
James Cobb, Group Finance Director 0207 012 2400
Grant Thornton UK LLP (Nominated Adviser and AQSE Exchange
Corporate Adviser)
Colin Aaronson
Samantha Harrison
George Grainger 020 7383 5100
Numis Securities Ltd (Joint Broker)
Stephen Westgate 0207 260 1000
Shore Capital (Joint Broker)
Hugh Morgan
Daniel Bush 020 7408 4090
Maitland/AMO
Neil Bennett
Sam Cartwright 020 7379 5151
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END
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