In its latest set of results, Arbuthnot posted a £7.7m pre-tax profit figure, a significant increase on the previous year’s £2.1m. Private banking made up £4.9m of this, compared with £3.5m in 2012.
Group finance officer James Cobb said he was optimistic about the recovery but caveated that politics could get in the way.
“The outlook is bright, the economy is improving and business is prospering. This will last as long as politics does not interfere with it,” he said.
New client prospects
The wealth management business reported a 40% increase in AUM, finishing the year at £527.9m, up from £376.6m.
With growing confidence in the business, the group declared a special dividend of 18p to mark the 180th anniversary of Arbuthnot Latham.
The board had proposed a final dividend of 15p, an increase of 1p together with the interim dividend of 11p and the special dividend of 18p, making a total for the year of 44p, more than doubling last year’s payout of 25p. If approved, it will be paid out to shareholders on 16 May to shareholders listed at 18 April.
Cobb added: “With the economic recovery underway, both banks have worked hard to be in a position to prosper as the economy grows. We are therefore optimistic that we can continue to make good steady progress, while remaining focussed on the needs and aspirations of our customers.”
In private banking, operating income grew from £18.9m to £21.7m while total assets were up from £568.6m to £619.7m.
A deliberate push behind the growth of wealth management through the recruitment of several experienced bankers and the overall strengthening of the client proposition began to produce positive results during the year, the group said.
"With the recent upheaval across the financial services industry caused by the financial crisis, there is a significant opportunity for a client focused bank such as Arbuthnot Latham to benefit from clients looking to establish a new financial relationship.”
Business review at Gilliat
Client deposits had increased 5% from £495.7m to £521.2m, with a more prudent loan-to-deposit ratio, up from 59% to 66%. The bank also took advantage of the Funding for Lending initiative, drawing £40m from the scheme.
Structured product distribution business, Gilliat Financial Solutions, suffered a “challenging” year, with weaker income margins across the business resulting in a loss of £400,000, compared with a £600,000 profit the prior year.
Overtrading was blamed for the decline. While sales volumes were up by more than 20%, over-purchase of stock meant it had to discounting heavily, eating into its margins. The business unit has committed to now only purchasing in line with adviser demand rather than in advance, which it says should return see a return to profitability.
