Arbuthnot Q3 2025: FUMA up 24% as deposits grow and lending stays disciplined
Arbuthnot Banking Group’s third quarter update is a tale of two engines: Wealth Management humming along nicely, and lending staying cautious in a choppy market. Funds under Management and Administration (FUMA) rose to £2.5bn, up 24% year-on-year, while customer deposits climbed 17% to £4.4bn. On the flip side, customer loans and leased assets slipped 9% to £2.3bn as the Bank resisted a race to the bottom on pricing.
The backdrop matters. With speculation over the Autumn Budget and a generally uncertain outlook, both households and businesses are wary. Arbuthnot’s stance is clear: protect margins, preserve capital, and wait for firmer markets rather than stretch for volume at unattractive rates.
Key numbers: growth in FUMA and deposits, softer lending
| Metric | 30 Sep 2025 | 30 Sep 2024 | YoY change |
|---|---|---|---|
| Funds under Management and Administration (FUMA) | £2.5bn | £2.0bn | +24% |
| Customer deposits | £4.4bn | £3.8bn | +17% |
| Customer loans and leased assets | £2.3bn | £2.5bn | -9% |
FUMA reflects assets managed and administered for clients. The 24% rise was driven by strong inflows and investment performance after a volatile start to the year. Deposits were flat quarter-on-quarter, but higher than both the year end (+7%) and last year’s Q3 (+17%). The mix also improved, with more lower-cost relationship-led deposits versus transactional balances.
Why lending is down and why that’s deliberate
In asset finance, some lenders have been quoting rates as low as 5% – more in line with residential mortgage pricing. Arbuthnot is refusing to follow. Group lending fell as the Bank prioritised returns and credit quality. The Banking division’s loan book ended the period at £1.4bn, down 3% in the quarter, 10% year to date and 12% year-on-year.
This restraint fits Arbuthnot’s counter-cyclical playbook: raise relationship deposits through the Private and Commercial bank, deploy capital into higher-margin specialist lending when pricing compensates for risk, and avoid competing on price alone. In plain English, they’re choosing long-term profitability over short-term volume.
Division-by-division: where momentum is building
Banking: stronger deposit mix, cautious on credit
Deposits closed the quarter at £4.4bn, flat on Q2 but up 17% year-on-year. The shift towards lower-priced relationship deposits should help funding costs. Lending was trimmed to £1.4bn as the bank focused on supporting existing clients and kept new business to high-quality credits only.
Given today’s pricing pressures, this is sensible. It may cap near-term loan growth, but it preserves margins and limits downside if the economy slows further.
Wealth Management: £2.5bn FUMA with healthy inflows
Wealth Management delivered the standout performance. FUMA rose 5% in the quarter, 13% year to date, and 24% over 12 months to £2.5bn. Inflows were solid: £88m in Q3, with year-to-date gross inflows of £362m and net inflows of £191m. Gross inflows are total new money in; net inflows are after outflows.
The team is preparing clients for the Autumn Budget and progressing an optimisation project to improve client experience and internal efficiency in 2026. That should support both service and scalability if inflows continue.
Renaissance Asset Finance (RAF): steady growth and low impairments
RAF’s loan book stood at £280m, steady over the quarter and up 13% year to date and 16% year-on-year. The Block Discounting portfolio – wholesale funding lines to finance companies – reached £59m, 21% of the book, with 35% growth year to date.
Importantly, problem debt provisions remain low and net margins are “favourable.” In a climate of fierce competition, that’s a positive signal on underwriting discipline and pricing power.
Arbuthnot Commercial Asset Based Lending (ACABL): softer book, improving watchlist
ACABL’s loan book finished at £211m, down 7% from the prior year end. The decline reflects a mix of macro uncertainty, clients exiting after business sales, competitive pricing, and managed exits of weaker credits. The business also had facilities reaching end of term.
On the bright side, watchlist cases – deals under closer monitoring – have reduced from their peak earlier in the year. Q4 is usually a busy period, but this year activity is slower for Private Equity-backed deals amid budget uncertainty and weak growth.
Asset Alliance Group (AAG): vehicle market still soft, but signs of life
The commercial vehicle market remained subdued, though the Bus and Coach division is gaining momentum. Assets available for lease and finance leases were £385.0m, up 5% since the year end. Competitive pressures have nudged AAG towards more brokered business, which retains clients but at lower margins.
Used vehicle disposals have been tough, though recent sales have mostly generated profits. Losses on certain models bought soon after COVID have been a drag, but that stock has been reduced and is expected to be cleared by year end.
Motor finance redress: Arbuthnot is out of scope
Following an August Supreme Court ruling and an FCA consultation on compensating customers for unfair motor finance practices, Arbuthnot confirmed it does not, and has not, provided regulated motor finance. It therefore expects to be out of scope for any FCA compensation schemes.
Why it matters: it reduces a potential tail-risk that is hanging over parts of the banking sector. No legacy motor finance exposure means fewer surprises.
My take: cautious now, optionality later
There’s plenty to like: double-digit growth in FUMA and deposits, a cheaper funding mix, low provisions at RAF, and early improvement in AAG’s used sales. The Wealth franchise looks like a bright spot with £191m of net inflows year to date and operational upgrades underway.
The trade-off is on lending: the Group is forgoing volume where pricing is thin (asset finance at circa 5%) and protecting returns. That will dampen near-term loan growth and revenue, but it conserves capital and credit quality for when risk-adjusted pricing improves. If and when markets firm up post-Budget or into 2026, Arbuthnot should have dry powder.
What to watch next
- Autumn Budget impact: client behaviour in Wealth, investment sentiment, and any fiscal measures affecting Private Equity and Residential Investment.
- Deposit mix and cost of funds: continued tilt towards relationship deposits supports margins.
- Lending discipline: signs that pricing improves enough to deploy more capital without sacrificing returns.
- RAF impairments and margins: currently low provisions and favourable margins are key positives.
- AAG disposals: clearing the remaining post-COVID stock and stabilising used vehicle profits.
- ACABL pipeline: whether Q4 seasonality reasserts or remains muted given macro uncertainty.
Bottom line
Arbuthnot delivered a resilient Q3 in tough markets. Wealth is doing the heavy lifting, deposits are growing in the right way, and the Group is staying out of uneconomic lending. That approach won’t maximise headline growth today, but it does protect the balance sheet and preserves flexibility. If pricing turns a corner, the Bank looks positioned to lean in.
