(Alliance News) - Arbuthnot Banking Group PLC on Thursday said Bank of England rate rises continued to drive revenue growth, and that its position remains "robust" as deposits increase.
The London-based banking group said that during the third quarter of 2023, fixed deposits increased by GBP179 million and at September 30 accounted for 40% of Arbuthnot's overall deposit book. The average cost of deposits increased to 291 basis points on the same date.
Arbuthnot also said rises in the base rate by the Bank of England contributed to higher revenue from its repricing assets. Clients "increasingly expect the interest rate cycle to have peaked," causing many to switch from call or current accounts into fixed products.
Overall, Arbuthnot said its client base continued to grow throughout the period, with deposits increasing by GBP218 million to GBP3.5 billion at September 30. Its loan book was unchanged compared with the second quarter at GBP1.4 billion and "continues to perform robustly".
In Arbuthnot's Wealth Management business, assets under management closed at GBP1.43 billion on September 30 compared to GBP1.38 billion at July 1 with continuing net inflows, although outflows were higher than expected. The bank's mortgage portfolio "remains well secured" despite increased arrears thanks to rising inflation and interest rates.
Arbuthnot said it expects deposit pricing increases to stabilise next year, as maturing deposits are renewed, with the average cost of deposits to reach just above 310 basis points during 2024.
The group also said it has completed on a 15-year lease for a new office space in London, with the fit-out planned for completion in the second quarter next year. Arbuthnot said this expansion reflected its "robust position" and "predicted future growth prospects".
Arbuthnot shares were down 2.4% at 905.00 pence each in London on Thursday afternoon.
By Emma Curzon, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Arbuthnot (ARBB)