Arbuthnot annual pre-tax profit jumps as lending reaches record high

LONDON (ShareCast) - A sharp increase in lending to customers saw Arbuthnot Banking Group's annual pre-tax profit jump 43% to £22.5m. The group, which includes private banking business Arbuthnot Latham & Co Limited and retail banking arm Secure Trust Bank, said its lending to customers rose to a record high of £1.1bn, while net interest income rose 34.2% to £98m.

The growth in pre-tax profit was 4% higher than expected by Numis prompting the brokerage to describe the full year results as a "strong" performance sure to warrant an increase in forecast and target price.

"Credit conditions remain benign with clearing bank competition being weak," analysts at Numis said in a note.

"Consequently, we expect good growth in loans and advances to customers and funds under management." Along with other smaller lenders, Arbuthnot is among the banks trying to break the dominance of the "Big Five" of British banking - Royal Bank of Scotland (LSE: RBS.L - news) , Santander, Barclays (LSE: BARC.L - news) , HSBC and Lloyds.

Britain's banking regulator has vowed to introduce a series of changes to the industry this year, in a bid to help new banks gain market share from the five main lenders.

"Our focus is on identifying areas where we believe where we have strong core competencies and have key points of differentiation that enable us not to have to compete on head-to-head with the big banks," said Andrew Salmon, the group's chief operating officer.

Arbuthnot shares were up 0.21% to 1,427.00p at 15:15 on Thursday.