Arbuthnot Banking profits hit by BoE rate cut
Arbuthnot Banking reported a slump in first-half profit on Tuesday as it took a hit after the Bank of England cut interest rates to a record low in March.
In the six months to the end of June, pre-tax profit fell to £200,000 from £2.9m in the first half of last year. The company said BoE base rate reductions cost it £2.7m. Arbuthnot also said it had been impacted by investee company Secure Trust’s failure to pay a dividend of £1m.
The bank said customer loans pushed up 27% to £1.62bn, while customer deposits increased 21% to £2.21bn and assets under management were up 4% at £1.07bn.
Chairman Henry Angest said the base rate reduction "will remain an impediment to the medium-term performance of the group, until the lending portfolios can be fully repriced and lower rates are achieved across our customer deposits".
"Even then, the group does not expect to regain all of the lost revenue that was previously earned on the significant surplus of liquidity assets that are held at the Bank of England. To offset this lost revenue the group has prudently implemented cost control measures, which have included the cancellation of staff bonuses for 2020."