Arbuthnot Specialist Finance exits market due to uncertainty

In its results for the year ending 31 December 2022, the group said the specialist business “made progress” over the year and closed the period with balances of £15m, an annual rise of £5m. 

It added: “However, with the current economic climate, rising interest rates and a more uncertain property market, the decision was taken to exit this market and Arbuthnot Specialist Finance is now closed for new business.   

“All committed facilities will be honoured and the book is expected to be wound down over the next 12 to 24 months.” 

The business launched in 2019 and during its half-year results up to 30 June 2022 posted a loss of £600,000, flat on the same period a year before. At the time, it said the specialist business was reliant on deposit customers who depended on a “normal interest rate environment”. 

It said deposit growth in 2022 was lower than in recent years despite exceeding £3bn for the first time in the bank’s history. It closed the year with a deposit balance of £3.1bn up from £2.8bn the year before. 

Wider group performance 

The group otherwise benefitted from higher rates as it saw its profit before tax rise from £4.6m to £20m. It said multiple successive increases in the Bank of England base rate led to a rise in the income generated from interest and its assets. 

Its net interest income rose from £6.4bn to £9.9bn, while its revenue increased from £7.4bn to £9.9bn. 

Chairman Henry Angest, said: “During 2022, the increase in the Bank of England base rate clearly provided a significant and positive impact on the performance of the group. There has already been further rate increases in 2023 which will have a further beneficial impact on revenues. 

“However, the prospects for the UK economy are less clear; the increase in the cost of living will almost certainly have an impact on the group’s cost base and could also affect the ability of our borrowers to maintain payments on loan facilities.  

“We remain alert to these headwinds, but remain optimistic as we continue to focus on developing and diversifying the group.”