Arbuthnot annual profit down; notes uncertainty due to Middle East war

(Alliance News) - Arbuthnot Banking Group PLC on Thursday announced lower net interest income for 2025, as it noted that the war in the Middle East has added to uncertainty regarding the trajectory of interest rates.

The London-based merchant bank said pretax profit fell 31% to GBP24.2 million in 2025 from GBP35.1 million.

Net interest income fell 6.2% to GBP118.1 million from GBP125.9 million.

Chair & Chief Executive Henry Angest said: "We had anticipated that we were nearing the end of the cycle of interest rate reductions, and the base rate would come to the normal neutral resting rate in 2026. However, the Middle East conflict has created much uncertainty around the near term interest rate policy. Expectations are now that the base rate may not fall this year as expected and may increase if further inflation becomes embedded in the economy."

He added: "The return to a more normal interest rate environment after the historic lows that followed the global financial crisis and continued into the Covid pandemic, has meant that banks can once again develop a balanced business with deposits also providing a good contribution to the revenue stream. Thus, we have in recent years focussed on building out our deposit raising franchise within the Private and Commercial bank."

Operating expenses increased 5.3% to GBP147.2 million in 2025 from GBP139.8 million in 2024.

Arbuthnot declared a final dividend of 31 pence per share for 2025, up 6.9% from 29p a year ago. That brings the total dividend to 53p, down 23% from 69p in 2024 which had included a special dividend of 20p.

Looking ahead, the firm said: "It is clear that, despite the manifesto promises of the current government, rather than seeing economic growth, which was the way the country could afford to pay for the increased spending in public services, the economy has in fact ground to halt. In addition, the future direction of the economy has become more uncertain given recent events in the Middle East."

It added: "Despite this, our balance sheet remains robust and conservatively managed, and our business still sees good client growth opportunities. We remain positive that we can find ways to develop our business in the new regulatory environment. This is founded on our belief that we can continue to differentiate ourselves, due to the personal service we offer to our clients."

Arbuthnot shares were 0.3% lower at 865.00 pence each on Thursday afternoon in London.

By Tom Budszus, Alliance News slot editor

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