Arbuthnot Banking Group: 1H’25 results: growing where it wants to
From ABG’s 1H’25 results, we note i) strong growth in low-capital-intensity businesses (deposits, wealth management) and high risk-adjusted-return specialist lending (most notably RAF and leasing businesses) ‒ ABG is not competing for business that does not meet its target returns and some loan books are shrinking (e.g. property lending), and ii) pre-tax profits halved on 1H’24 due to the well-flagged impact of the falling rate environment, less PE activity driving lower ACABL activity and low truck resale profits. Some of this is noise, and the effects will moderate. Despite cutting estimates, we forecast 2H’25 pre-tax profits above 1H’25 and FY’26 above the 2H’25 run rate.Arbuthnot Banking Group is primarily involved in banking and financial services. Co. is organized into three main operating segments: Retail banking (associate), which incorporates household cash management, personal lending and banking and insurance services; U.K. Private banking, which incorporates private banking, commercial banking and wealth management; and Group Centre, which is comprised in Co.'s Group Centre management. As of Dec 31 2016, Co.'s total assets were £1.27 billion.
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