Arbuthnot Banking Share Discussion Threads

[jimbo123elf] 04/8/2023 06:49

It's my top pick among the UK banks

[rolo7] 27/7/2023 11:01

Holding up well, take some coutts customers would be nice ?

[1tx] 19/7/2023 08:34

Remarkable that ARBB managed to produce accounts in 18 days from period end.True that interim figures do not need an audit;but I have not seen interim figures produced so quickly.....Is this a record?

[rolo7] 18/7/2023 14:51

Thanks well happy with results a few more shares in issue with placing to get real EPs figure though. Expecting special dividend next year!? I did email company on Friday but no reply as yet.

[km18] 18/7/2023 13:14

Arbuthnot Banking Group plc posted unaudited Interims for the HY ended 30th June this morning. Customer loans increased by 7% yoy to £2.3b., customer deposits were up 16% yoy to £3.3b. while AUM were up 6% to £1.4b. PBT increased to £26.4m for the six months to 30 June 2023 (30 June 2022: £3.4m), EPS surged to 129.4p (30 June 2022: 17.8p). Both were boosted by widening Net interest margins which have benefitted due to the rising BoE bank rate. Even higher interest rates are likely through the remainder of 2023 and 2024 suggesting that profits should remain well supported in the near term. A return to the ultra-low interest rate environment of the past decade is also unlikely suggesting that the medium-term outlook is increasingly favourable for banks. Valuation is very attractive with forward PE ratio at 4.5x comfortably top quartile for the Banking Services sector. The bank is `strengthening with CET1 capital ratio up to 12.2% from 11.4% a year earlier. Share price has spiked up 16% today and is developing some solid momentum. BUY...

...from WealthOracle

[makinbuks] 18/7/2023 09:54

Well, they announced some time back that they made £4m in a month. Sir Henry put in half the £12m fundraise in February which was clearly aimed at profitable growth. That was a real sign of confidence which he didn't need to do. I've only read through the announcement once but my initial takeaways were:

Very conservative lending, levels either static or down
Obviously increased margins as base rates increased
Increased deposits which will cost 1% more in future
Further opportunities to acquire books in the secondary market

Trading below asset value makes no sense, yet has persisted for as many years as I can remember. Perhaps with this interest rate cycle, and associated earnings for shareholders, we will see some value ascribed to the business itself.

[1tx] 18/7/2023 09:07

Amazed by profit increase;if second half is at the same level the shares are still very inexpensive.At least my profits here cover my present loss on my holding of former associate Secure Trust Bank!

[makinbuks] 18/7/2023 08:59

Looks like rolo7 was right with his conservative FY23 estimate of £48m PBT with unadjusted £26m in the first half.

[petewy] 18/7/2023 08:15

Good results. Share boost.

[rolo7] 28/6/2023 15:15

Buyers coming in for this forecast over 200p EPS this year, no idea who took the other shares at the recent placing!? Must want to stay below 3%. Big dividends on way here possibly?!

[rolo7] 23/6/2023 07:50

oh yes can see this being above expectations in results late july.

[retsius] 23/6/2023 07:47

BOE interest rise:good news for Arbuthnot?

[davebowler] 24/5/2023 08:09

Shore Capital

Summary. Arbuthnot has issued a positive trading update, covering four months to 30 April, ahead of an AGM later today. The statement conveys a good start to FY23F. The company continues to benefit from rising interest rates, whereby the increase in deposit costs lags the upward repricing of assets. Loan growth has moderated slightly following a tightening of credit criteria whilst deposit balances have continued to grow. A £12m fundraise in April has increased surplus capital and liquidity, providing the company with significant optionality to seize opportunities emerging from market disruption, particularly if uncertainty prevails in the non-bank space. Part of the proceeds have been used to purchase £42m of assets (at a discount to book value) for the Asset Alliance vehicle leasing business. With a prevailing fair value estimate of 1640p, we continue to see ARBB’s valuation as undemanding with trailing P/TNAV at 0.8x against a business able to sustain a low/mid-teens RoTE, with further support from dividends yielding c.5%. HOUSE STOCK. Forecasts. We will review our forecasts shortly to incorporate recent changes in the UK base rate, the April fundraise and Asset Alliance’s acquisition of operating lease assets. We continue to envisage positive momentum in forecasts even after publishing five material upgrades over the past year, the last of which followed FY22 results on 30 March: Resilient deposits & abundant liquidity. Detail. Loan balances including lease assets at 30 April were £2,234m, +1% compared to 31 Dec and +8% YoY. Deposits at 30 April were £3,255m, +4% YTD and +18% YoY. AuM in the wealth division was £1,376m, +4% YTD and +2% YoY. ARBB remains focused on client service and longterm relationship building to drive sustainable deposit and loan growth. The capture of spread through deposits (i.e. slower upward repricing vs. base rate increases) reflects the mix, which includes current and relationship accounts. ARBB continues to focus on balance sheet efficiency, allowing capital intensive lending to mature and roll off, to be replaced by more capital efficient lending. The challenging macroeconomic environment is resulting in some signs of loan book stress, however given low average LTVs across the overall book, defaults are not expected to entail meaningful incremental losses.

[makinbuks] 03/4/2023 17:10

Just read a piece from Shore saying STB are undervalued on a PE of 4.8 and yielding 5.2%. I detest brokers targets but for the record they say £10 from the current £6.80

[makinbuks] 03/4/2023 16:23

Special dividend I fully agree.

Longer and more persistent inflation I also agree but interest rates are not the answer to OPEC driven oil price increases. As the twin squeeze of higher rates and the liquidity crisis take effect we will move into recession or very low growth and the central banks will respond by loosening conditions again. About 2/3rds of the current fiscal tightening has yet to be felt but that will change in the coming twelve months

[rolo7] 03/4/2023 16:15

Makinbuks agree but with the surprise oil cut today the west are not going to stop inflation rising as they dont control opec? or have big energy producers. Opportunties for special dividend also here.

[makinbuks] 03/4/2023 15:53

Don't disagree with your analysis Rolo and certainly ARBB is looking value here but a PE of 4 - 6 is probably about right for the sector bearing in mind interest rates are likely to fall again in 2024 and the credit squeeze will increase bad debts

[rolo7] 03/4/2023 14:25

Arbb all about future Pe for this year 23. Looking back
H1 22 pbt 3.4m
5/10/22 ahead of expectations then 13mpbt and 4million pbt nearly for sept 22.
23/2/23 ahead of expectations again now 17.3mpbt interest rate benefits and business model set up for higher interest rates.
30/3/23 pbt 20million.
so h2 22 pbt was 16m say double for 32pbt for 2023 low estimate.
or septemeber 22 pbt =4million times 12 for 48mbpt for 2023.
pe range of 5.6, 3.68 using 20% tax rate interesting.

[pvb] 03/4/2023 10:30

...Yes. Interesting. Mind you, STB's share price has not so far proven particularly dynamic.

[makinbuks] 03/4/2023 09:36

Yes use "fiasco" was inappropriate but even at the time I thought it was an odd redeployment of capital. I never understood the indecent haste to exit Secure Trust when its growth prospects and fleet of foot seemed so much more dynamic than that of ARBB itself. All irrelevant now

[1tx] 03/4/2023 09:22

I don't think when ARBB bought the prime King St property they could have anticipated Lockdown & the effect this would have on office property values.In the circumstances they did well to get the price they did;in general office properties have declined by a far greater percentage in value and are difficult to sell.The quality/location of the property minimised the loss.

Although ARBB is valued at a big discount to book NAV;its PE is higher than some others in this sector.The illiquid nature of the share probably limits interest;but on the other hand our Chairman Sir Henry Angest with a 56% holding,around £90m, certainly has a lot more at stake than we have and has been here and built the company up since it was a very small operation in Birmingham over most of his working life.

[makinbuks] 31/3/2023 19:03

I agree the investment in the building, which was part of the use of funds in disposing of Secure Trust Bank, was a fiasco. However, old news and already factored into the NBV at £14 so lets look forward. Solid deposit base good margins on lending, can they keep defaults down?

[rolo7] 31/3/2023 16:43

No interest whatso every and the results including a 4million lost on commercial property sell.