UK-focused banking group Arbuthnot believes it is well placed to capitalise on the struggles of bigger banks facing economic and political uncertainty.
Arbuthnot Banking Group today reported half-year pre-tax profits of £2.5m, up from a £2.4m loss during the same period last year. It also announced an interim dividend of 14p, up from 13p.
Numis analysts believe Arbuthnot’s bank, in the early stages of its development, “will be relatively immune” to an expected economic slowdown next year.
Andrew Salmon, the group’s chief operating officer, spies some opportunities for the business.
“I think we might benefit from the fact that other banks will have some direct impact from some of the things going on in the world economically,” he told City A.M. “And actually that will probably make them rein back their lending, which creates more opportunities for us.”
He added, though, that Arbuthnot would be acting with caution.
“Clearly every business is affected [by macroeconomics], and I think in particular we look at the fact that the consumer is coming under pressure,” he said.
“Inflation is higher than wage inflation, that is likely to bring down consumer spending, and although we’re not directly impacted, the UK economy is so dependent on consumer spending that there is a reason for being cautious.”
He added: “We have told our relationship managers: we’re out there doing business, but we’re going to take a more cautious approach.”
In the next year, Salmon said Arbuthnot would aim to “continue to diversify” into different areas.
In this vain, the group acquired Renaissance Asset Finance, a lender of specialist assets including vintage cars, in April this year.
He added: “These… are diversification steps and we would expect to be able to demonstrate going forward that there are lots more of these opportunities.”
The share price of Arbuthnot, which owns an 18.6 per cent stake in challenger bank Secure Trust, closed down 0.6 per cent today at 1,245p.