Arbuthnot Banking Group Reports Resilient 2025 Results Amid Economic Uncertainty

Capital and liquidity remain hallmark strengths. CET1 stands at 13.3% and the total capital ratio at 15.4%. Management reports a chunky £1.42bn surplus liquidity buffer above the regulatory minimum. Net assets rose to £276.4m and NAV per share to 1,694p.

For anyone new to the jargon: CET1 ratio is the core equity capital divided by risk‑weighted assets – the higher, the safer. Loan‑to‑deposit ratio shows how much of customer deposits are lent out – lower equals more conservative.

Dividends: progressive despite the softer year

The board proposes a 31p final dividend (up 2p). Together with the 22p interim, total dividends are 53p per share. The year‑on‑year drop reflects the absence of last year’s 20p special; on an ordinary basis, the dividend is up 4p. Dates to note: record date 17 April 2026, payment 29 May 2026.

Segment performance: where the money was made (and lost)

Banking – steady profits, disciplined lending

The core Private & Commercial bank delivered £28.5m profit before tax (2024: £28.1m). Deposits rose to £4.57bn, but lending shrank by £183m to £1.36bn as ABG refused to join a pricing war. Credit quality was sound with a modest £1.3m impairment charge and a 10bps loss rate. Client growth stayed strong with over 1,000 new banking clients and top‑quartile satisfaction (NPS 68).

Wealth Management – strong inflows, narrowing losses

FUMA jumped 21% to £2.68bn, driven by gross inflows of £501.4m and net inflows of £262.5m. The division cut its loss to £3.0m (2024: £4.9m). A new unitised fund range is due to launch early Q2 2026, with management targeting a profitable run‑rate towards the end of 2026. For clarity, FUMA means funds under management and administration – a core fee engine for future years.

Renaissance Asset Finance (RAF) – record profit

RAF posted a record £7.2m profit (2024: £5.6m). The loan book rose 16% to £285.8m, with the Block Discounting book up 36%. Average yield was 8.6% and bad debts remained low. Importantly, RAF is not within scope of the FCA’s motor finance redress proposals.

Arbuthnot Commercial ABL (ACABL) – profitable in a thin market

ACABL earned £8.9m (2024: £11.9m). Lower transaction volumes and balances were partially offset by fees and tight cost control. Expected credit losses stayed minimal at 7bps.

Asset Alliance Group (AAG) – tough used truck market

AAG recorded a £2.3m loss (2024: £28k profit). New HGV registrations fell 14% industry‑wide and the second‑hand market weakened, leading to losses on disposals for the first time. Stock of used vehicles was cut by around 60% by year‑end, and management reports trading in the first two months of 2026 has normalised with profits on sales back in line with expectations. Assets available for lease and finance leases rose to £382.8m.

Regulatory backdrop: preparing for Basel 3.1 the sensible way

The PRA has delayed Basel 3.1 to 2027. ABG plans to remain on the Basel rulebook rather than adopt the SDDT regime, even though both will remove the previous “refined approach”. The expected impact is an extra ~£20m capital requirement. That helps explain the bank’s decision to preserve capital and avoid low‑return lending in 2025. Sensible, if a touch unexciting in the short term.

Credit quality and risk

Group impairment charges were £2.5m (2024: £6.3m). Stage 3 ECLs total £12.3m and the table of scenarios shows material resilience even in severe downside cases. The bank’s property collateral remains substantial; average LTV on the banking book is 49.5%.

My take: what’s good, what’s not, and what to watch

• Positives: double‑digit deposit growth; falling cost of deposits; robust capital and £1.42bn surplus liquidity; strong client acquisition; wealth inflows powering future fee income; RAF and ACABL profitable with tight credit discipline.
• Negatives: group profit fell with base rate cuts; margin compression to 4.7%; AAG’s loss shows residual value risk in a weak used market; operating costs up.
• Watch‑items for 2026: timing and extent of any further rate moves; the Basel 3.1 capital ask and lending appetite as pricing improves; Wealth Management’s unitised funds launch and path to breakeven; sustained recovery in AAG used vehicle disposals.

Bottom line

ABG has delivered what I’d call a “capital first” year: fewer racy headlines, more ballast. Profit is down, but the franchise is bigger, safer and more valuable, with NAV per share up, clients up, FUMA up, and the ordinary dividend rising. If markets continue to normalise and pricing discipline returns across lending, ABG looks well placed to put its surplus liquidity and capital back to work on its own terms.

For income‑minded investors, the 31p proposed final dividend is a reassuring signal of confidence, even after a tougher operating year.