Arbuthnot Banking Group has reported steady loan and deposit growth in 2024 as it continues to benefit from higher interest rates.
In a trading update on Wednesday, the London-listed historic private and commercial bank posted a six per cent year-on-year increase in loan balances, including leased assets, for the first four months of 2024 at £2.37bn.
Its specialist divisions saw a 34 per cent surge in loans compared to the same period last year at £817m.
Meanwhile, Arbuthnot reported deposits of £2.65bn. This figure was up 12 per cent year-on-year but down three per cent from the end of 2023, which the bank pinned on “seasonal client tax payments along with non-relationship deposits maturing and not being renewed as these are the most expensive to maintain”.
The bank’s funds under management and administration came in at £1.87bn, up 26 per cent from a year prior as it enjoyed “strong” net flows of £112m.
UK lenders have enjoyed bumper profits since last year on the back of interest rate hikes from the Bank of England, allowing them to charge more on loans.
Arbuthnot posted a pretax profit of £47.1m in 2023, more than double its 2022 figure of £20.0m. It said on Wednesday that it was continuing to benefit from higher borrowing costs, with its “business model of lending funded by low cost deposits”.
Nevertheless, as the central bank is tipped to cut rates multiple times this year, lenders face squeezed margins as they come under pressure to offer customers better deals.
Arbuthnot said it planned to mitigate the impact of cuts by investing into high-quality fixed income assets and continuing to grow its specialist lending, which is mostly at fixed interest rates.
The trading update comes ahead of Arbuthnot’s annual meeting later today.