22nd Jul 2025 15:31
(Alliance News) - Arbuthnot Banking Group PLC on Tuesday said lower interest rates hurt its half-year profits, while lending was mixed across the business.
Shares in the London-based merchant bank fell 1.5% to 941.10 pence each in London on Tuesday.
Arbuthnot said pretax profit dropped 48% to GBP10.9 million in the six months to June 30 from GBP20.8 million a year prior.
Net interest income fell 5.5% to GBP58.7 million from GBP62.1 million, while net fee and commission income grew 18% to GBP14.6 million from GBP12.4 million.
Diluted earnings per share more than halved to 42.5 pence from 94.6p.
"This reduction in reported profit was expected, as the Bank of England's base rate was lower than the prior period. However, the group continues to make good strategic progress," Arbuthnot said in a statement.
The company explained that its "profitability performance is somewhat linked to the level of the base rate as our surplus liquidity balances are held at the Bank of England or invested in short term fixed income products.
"The continued fall in the base rate during the first half, after the initial reductions that started in August 2024, is the most significant factor in the reduction in the reported profit."
Despite the reduced profitability, Arbuthnot hiked its interim dividend by 10% to 22p per share, from 20p a year ago.
This reflected "the continued progress of the group and the strength of the balance sheet," Arbuthnot explained.
The CET1 capital ratio improved to 12.7% from 11.6% a year ago, and the total capital ratio to 14.8% from 13.6%.
The company saw customer loans drop 3.3% to GBP2.32 billion from GBP2.40 billion a year ago, while deposits grew 15% to GBP4.42 billion from GBP3.86 billion.
Within lending, the firm continued to grow its asset finance and truck leasing balances. However, it said it had seen more subdued conditions elsewhere in the group, particularly in the real estate finance market and in its invoice finance business.
Looking ahead, Arbuthnot said the group remains focused on pursuing its long-term 'Future State 2' strategy and will continue to seek and pursue opportunities with caution and discipline.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.
Related Shares:
Arbuthnot