Arbuthnot Banking Group 2025 results: resilient, liquid, and still growing clients
Arbuthnot Banking Group (ABG) has posted audited results for the year to 31 December 2025. Headline profit is down year-on-year, but the underlying story is one of healthy deposit growth, a thick capital cushion, and selective lending while markets were offering sub‑par returns.
Below I break down the numbers, explain the moving parts, and share what I think matters most for retail investors.
Quick takeaways from the RNS
| Metric | 2025 | 2024 | Comment |
|---|---|---|---|
| Profit before tax | £24.2m | £35.1m | Lower mainly due to base rate cuts and used truck market weakness |
| Operating income | £169.5m | £179.5m | Banking steady; leasing income softer |
| Average net margin (on client lending) | 4.7% | 5.1% | Compression as rates fell |
| Earnings per share | 109.1p | 152.3p | Tracks the lower PBT |
| Final dividend | 31p | 29p | Proposed; payable 29 May 2026 (record 17 April 2026) |
| Total dividend per share | 53p | 69p | 2024 included a 20p special; ordinary dividend up 4p |
| Net asset value per share | 1,694p | 1,636p | Up 3.5% |
| CET1 ratio | 13.3% | 13.2% | Strong capital position |
| Customer deposits | £4.57bn | £4.13bn | Up 11% |
| Customer loans + assets for lease | £2.25bn | £2.38bn | Down 6% by design |
| FUMA (wealth) | £2.68bn | £2.21bn | Up 21% on strong net inflows |
Why profit fell – and why that’s not the whole story
2025 was a year of four Bank of England base rate cuts, ending at 3.75%. ABG carries substantial surplus liquidity (cash and gilts), so lower base rates bite straight into interest income. Management cushioned the blow by shifting more liquidity into short‑dated gilts, which delays the hit to earnings by 3–12 months. Even so, net interest income dipped to £118.1m (2024: £125.9m) and the average lending margin eased to 4.7%.
Costs rose to £147.2m (2024: £139.8m), largely inflation in staff costs and running the new London HQ. One offset: other income benefited from a £3.25m settlement on a historic property valuation issue.
My read: this is classic “through‑the‑cycle” banking. When rates fall and lending spreads get skinny, ABG pockets deposits, protects capital, and bides its time for better risk‑adjusted returns.
Balance sheet: conservative and liquid
Deposits climbed 11% to £4.57bn, with the average cost of deposits actually falling to 2.65% (2024: 3.15%). Loans and assets for lease reduced 6% to £2.25bn as the bank avoided suboptimal pricing. That pushed the loan‑to‑deposit ratio down to a very prudent 49.1% (2024: 57.6%).
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.
