Arbuthnot Regulatory News (ARBB)

22 Oct 2008 07:00

Arbuthnot Banking Group PLC

Update on Third Quarter Trading

When issuing the interim results for the six months to June 2008, it was indicated that Arbuthnot Banking Group would give an update on third quarter performance in October, together with an outlook statement for the remaining months of 2008.

Despite the severe deterioration in financial markets over the third quarter our two banking businesses remain highly liquid and well-capitalised and are trading profitably. Against that, the extreme volatility in the equities market has had a particularly severe impact on the small and midcap segment of the market in which Arbuthnot Securities chiefly operates. Notwithstanding this impact, overall the Group made a profit in the third quarter. We have also responded to the current economic environment and have already reduced costs significantly. The outcome for the year, however, remains very much dependent on market developments.

Secure Trust Bank's third quarter performance showed an improvement over the same period last year, continuing the trend of year-on-year improvement which was achieved in the first half. We are pleased that the results are now benefiting from pro-active measures which have been taken to reduce costs and exit non-core activities, as reported in the interim announcement.

Arbuthnot Latham's balance sheet remains strong. Its lending activities are financed exclusively from customer deposits, which are significantly greater than the loan book. The business was profitable during the third quarter.

In very difficult market conditions Arbuthnot Securities has experienced a sharp decline in corporate transactions, and continued pressure on the value of trading book positions. As a result, Arbuthnot Securities was loss-making in the third quarter. The corporate pipeline reflects the depressed market conditions; nevertheless it contains transactions which, if they were to be completed before the year-end, would favourably affect the full-year result. In addition the trading book positions have been reduced significantly.