20th Mar 2014 10:52
LONDON (Alliance News) - Arbuthnot Banking Group PLC and its majority-owned challenger bank Secure Trust Bank PLC Thursday reported strong annual results, boosted by strong growth in the closely-watched net interest income and increasingly diversified sources of revenue after a series of acquisitions in recent years.
Arbuthnot, which spun off Secure Trust Bank in 2011 but retains 67% of its equity, reported a GBP15.7 million pretax profit for 2013, compared with GBP12.6 million in 2012, as net interest income rose by almost two-thirds to GBP73.1 million and net fee and commission income rose by 30% to GBP27.0 million.
Operating expenses increased by 39% to GBP73.6 million.
Arbuthnot increased its full-year dividend to 44 pence, from 25 pence, including an 18 pence special dividend.
The banking group said private banking arm Arbuthnot Latham and retail banking arm Secure Trust Bank each made good progress in 2013.
Arbuthnot Latham, which opened for business in Dubai and celebrated its 180-year anniversary in 2013, said customer loans increased by 18% to GBP341.0 million, while assets under management increased to GBP528 million from GBP377 million.
Meanwhile, Secure Trust Bank, which has in the past two years acquired Everyday Loans, V12 Retail Finance, and Debt Managers, reported a GBP17.2 million pretax profit, down from GBP17.3 million in 2012. Secure Trust Chief Executive Paul Lynam said the 2012 figures were inflated by a GBP9.8 million one-off profit relating to the 2012 acquisition of Everyday Loan. Much of that sum is to be amortised over time.
Secure Trust Bank increased its full-year dividend to 62 pence from 57 pence in 2012.
Henry Angest, the Chairman of both the group and the retail bank, as well as Chief Executive of the group, said the retail bank's impairment losses on loans were lower than expected because of careful control of its lending portfolio. Angest said Secure Trust is expanding its lending to small and medium enterprises as the economic recovery looks "more assured."
He also called on the UK government to do more to help challenger banks to be more competitive against the main high street banks.
Angest said the government should set up a 'Challenger Bank Growth Fund' to combat the disadvantage smaller banks face against larger competitors, adding that big banks benefit from an implicit subsidy from the UK government in the form of an implicit guarantee that they will not be allowed to fail.
"This should be available to all banks with balance sheet assets of less than GBP5 billion and allow these banks to borrow term funding from HM Treasury at the same price as the big banks fund themselves as a result of the implicit government guarantee," Angest said.
Arbuthnot shares were Thursday quoted at 1,141.60 pence, up 3.1%, while Secure Trust Bank's shares were quoted at 2,828.10 pence, up 1.9%.
By Samuel Agini; [email protected]; @samuelagini
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