Annual
Report &
Accounts
2025
ARBUTHNOT BANKING GROUP PLC
1
Corporate Philosophy
2
Business Overview
5
Financial Highlights
6
Chairman’s Statement
10
Strategic Report – Business Review
16
Strategic Report – Financial Review
26
Strategic Report – Non-Financial
and Sustainability Statement
27
Strategic Report – Stakeholder Engagement
and s.172 Report
29
Strategic Report – Sustainability Report
42
Board of Directors
45
Group Directors’ Report
49
Corporate Governance
56
Remuneration Report
59
Independent Auditor’s Report
66
Consolidated Statement of Comprehensive Income
67
Consolidated Statement of Financial Position
68
Company Statement of Financial Position
69
Consolidated Statement of Changes in Equity
71
Company Statement of Changes in Equity
72
Consolidated Statement of Cash Flows
73
Company Statement of Cash Flows
74
Notes to the Consolidated Financial Statements
149 Five Year Summary (unaudited)
150 Notice of Annual General Meeting
153
Corporate Contacts and Advisers
Contents
The importance
of history and
Sun Tzu
The importance of previous experience cannot be
overstated. “Those who are not willing to learn from history
are doomed to repeat the mistakes of previous generations.”
A good place to start, therefore, is with the famous Chinese
General, Sun Tzu and his writings in “The Art of War” c. 2,500
years ago. He established some basic truths such as:
“He whose ranks are united in purpose will be victorious.”
“The commander will surely choose those who are most
fortunate.”
“The traits of a true commander are: courage, wisdom,
humanity and integrity.”
George Arbuthnot (1772 – 1843) was a son of the Edinburgh
banker Robert Arbuthnot. He started in 1803 as a partner
in Latour & Co. in Madras (today Chennai), Southern India.
Latour & Co. had been set up in 1780 by Count Francis Joseph
Louis Latour de Quercy, who died in 1808. In 1807 Latour & Co.
became Arbuthnot & Co. and George Arbuthnot became the
leading partner until he retired in 1824. In his farewell letter
to the partners he said:
“…not only give the constituent (client) the assurance that
his money is safe, but also give him the feeling that he is
benefitting himself by dealing with the House.”
In 1826 John Alves Arbuthnot started as a clerk at Arbuthnot
& Co. and in 1831 became a partner. He married the daughter
of George Arbuthnot. Upon his return to London he
established, together with Alfred Latham, the trading house
Arbuthnot & Latham on 13 March 1833.
(For more details, read the book: Arbuthnot Latham 1833 –
2023 by David Lascelles, 2nd edition)
Origins of
Arbuthnot
Latham
Arbuthnot Banking Group PLC
Report & Accounts 2025
The Seven Principles: Ever since George Arbuthnot first gave
guidance about corporate behaviour, it has been the culture of
Arbuthnot to follow his advice. The Seven Principles summarise
Arbuthnot’s corporate philosophy and ethics. During the 193
year history of serving its customers, Arbuthnot has proven
its ability to adapt and grow by applying such principles with
pragmatism and common sense.
Arbuthnot Banking Group PLC
The continued application of these principles will allow the business to pursue growth
in a controlled manner, providing a high quality service to its customers whilst delivering
good returns to shareholders and securing the well-being of its employees. To this
end an inclusive and balanced workplace will provide a rewarding as well as challenging
environment.
Sir Henry Angest
Chairman & CEO
25 March 2026
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Arbuthnot’s business is conducted in an innovative,
flexible and entrepreneurial manner, with an
opportunistic and counter-cyclical attitude.
4
Arbuthnot serves its shareholders, its customers
and its employees with integrity and high ethical
standards. This is demonstrated in a progressive
dividend policy, in fair pricing and in pay for
performance.
1
Arbuthnot’s approach is based on diversification to
spread the risk, a long-term view to further growth,
empowerment of management and a culture of
rewards for achievements to engender loyalty and
motivation.
5
Arbuthnot attaches great importance to good
relations with customers and business partners,
and treating them fairly and promptly. Arbuthnot
believes in reciprocity.
2
Arbuthnot does not sacrifice long term prospects
for short term gains – nor sacrifice stability for quick
profits, and it will never put the whole company at risk.
6
Arbuthnot is independent, and profit and growth
oriented while maintaining a controlled risk
profile.
3
Ultimately, the success of Arbuthnot depends on
the teamwork, commitment, and performance of its
employees, combined with the determination to win.
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Business
Overview
Our Group is organised around a small number of
complementary specialist businesses, designed to meet
distinct client needs within a disciplined and consistent
risk framework.
Arbuthnot Latham is our principal banking business and
provides private and commercial banking services. In private
banking, we provide an integrated proposition that combines
day to day banking with financial planning and discretionary
investment management. Our relationship led model ensures
clients are supported by dedicated bankers and specialist
advisers who take the time to understand their personal and
financial objectives.
Through our commercial banking proposition we support
owner managed businesses, entrepreneurs, corporates
and property investors with bespoke banking and lending
solutions. We provide transactional banking, property finance
and structured lending, focusing on building long term
partnerships and delivering flexible funding that supports
sustainable growth.
We complement our banking businesses with asset-based
lending provided through Renaissance Asset Finance
and Arbuthnot Commercial Asset Based Lending. These
businesses offer secured funding solutions to companies
across the UK, including finance linked to specialist assets,
vehicles and equipment, as well as lending secured against
invoices, stock or other business assets. This enables our
clients to manage cash flow effectively and invest with
confidence. Through Asset Alliance Group, we also provide
vehicle finance and related services, primarily serving the
UK truck and trailer, as well as the bus and coach market.
Across the Group, we maintain a conservative approach to
lending and capital management. Strong governance, robust
risk controls and prudent capital and liquidity positions
underpin our decision making. This disciplined approach
supports consistent service to clients while enabling us to
create sustainable, long-term value for our shareholders.
Arbuthnot has a history of 193 years
successfully serving its clients, with a long
track record of profitability that has seen it
adapt and grow in a continually changing
world.
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Arbuthnot Banking Group PLC
Report & Accounts 2025
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Arbuthnot Banking Group PLC
Report & Accounts 2025
‘Independent, Profit &
Growth Orientated with
a Controlled Risk Profile’
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Asset
Finance
Provides asset finance funding in particular for high value and
classic cars but also business assets.
Provides vehicle finance and related services, predominantly
in the truck & trailer and bus & coach markets.
Asset
Based
Lending
Provides finance secured on either invoices, assets or stock
of the borrower.
Deposits
Provides deposit products directly to the retail and commercial
market via aggregator platforms, with rates advertised on the
aggregator websites or the best buy tables.
Private
Banking
Comprises current accounts, deposit
accounts, loans, overdrafts and foreign
exchange. Each client deals with a
dedicated Private Banker who is key
to providing an individual service.
Financial
Planning
Built on long-term relationships
and bespoke financial strategies.
The service is independent and fee,
not commission based.
Investment
Management
Comprises asset management, developing
tailored investment strategies to ensure
that each client’s specific investment
objectives are met.
Banking
Comprising current accounts, deposits,
overdrafts, guarantees and charge cards.
Clients have a dedicated Banker who is
key to managing the relationship.
Property
Finance
Comprises tailored lending to enable
funding of both property investments
and developments.
Other
finance
Comprises individual secured lending
which is designed around the needs
of each commercial client.
Private Banking
Arbuthnot Latham provides a high quality private banking
and wealth management service, consisting of three
core elements:
Commercial Banking
Arbuthnot Latham provides a bespoke commercial banking
service which includes:
Business
Overview
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Financial
Highlights
£4.6bn
of deposit funding at
December 2025
£2.2bn
customer loans at
December 2025
£2.7bn
funds under management
and administration at
December 2025
Operating income
2023
£178.9m
2024
£179.5m
2025
£169.5m
Total ordinary dividend per share
2023
46.0p
2024
49.0p
2025
53.0p
Profit before tax
2023
£47.1m
2024
£35.1m
2025
£24.2m
Total assets
2023
£4.3bn
2024
£4.7bn
2025
£5.0bn
Funds under Management
and administration
2023
£1.7bn
2024
£2.2bn
2025
£2.7bn
Customer deposits
2023
£3.8bn
2024
£4.1bn
2025
£4.6bn
Financial
Highlights
Arbuthnot Banking Group PLC
Report & Accounts 2025
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Chairman’s
Statement
Arbuthnot Banking Group (“ABG” or “The Group” or “The Bank”)
is pleased to report a profit before tax of £24.2m for the year
ended 31 December 2025.
During 2025 the Bank of England reduced its base rate with
four separate cuts of 25 basis points each time, to end the year
at 3.75%. As we have previously indicated, the Group maintains
very high levels of surplus liquidity, which is deposited at the
Bank of England. This means that along with investments in
other treasury assets, any reduction in revenue from these
reserves will directly impact the Group’s profitability.
We had anticipated that we were nearing the end of the cycle
of interest rate reductions, and the base rate would come to
the normal neutral resting rate in 2026. However, the Middle
East conflict has created much uncertainty around the near
term interest rate policy. Expectations are now that the base
rate may not fall this year as expected and may increase if
further inflation becomes embedded in the economy.
The Bank continued to develop its strategic plan with the loan
portfolios growing in both our asset finance division (“RAF”)
and our commercial vehicle leasing business (“AAG”). However,
this growth was offset by reductions in the lending balances in
the core bank and our asset based lending division (“ACABL”).
These reductions were as a result of market conditions and
the decision taken not to invest at suboptimal rates and to
preserve capital ahead of the implementation of Basel 3.1.
The return to a more normal interest rate environment after
the historic lows that followed the global financial crisis and
continued into the covid pandemic, has meant that banks
can once again develop a balanced business with deposits
also providing a good contribution to the revenue stream.
Thus, we have in recent years focussed on building out our
deposit raising franchise within the Private and Commercial
bank. This deposit raising activity maintained its momentum
in 2025, with balances increasing by £437.9m at a growth rate
of 11%. This is despite deposits being transferred into our
Wealth Management division via the Direct Gilt service which
is proving popular with clients who provided further inflows of
£139.7m in the year.
In addition to the inflows into the Direct Gilt service, the
Wealth Management division continued its good progress
in 2025. Having achieved funds under management growth
rates of approximately 30% during the two previous years, the
business managed growth of 21% in 2025 to close at £2.7bn.
As previously indicated, the division has been focussing on an
optimisation project and much of the planned implementation
steps should be put in place during 2026. The most important
part of this is the launch of Arbuthnot unitised funds which will
provide an alternative to the discretionary management service
that invests directly into the market. These funds are expected
to be launched early in the second quarter of this year.
With all the actions complete, it is anticipated that the Wealth
Management division will reach a profitable run rate towards
the end of 2026. This would represent a very satisfactory
turnaround for a business that was finding it difficult to reach
scale and profitability given the industry’s ever increasing
compliance and regulatory burdens.
Our commercial vehicle leasing business has found the
current market extremely challenging. Many of the major
fleets that operate in the logistics market have delayed
investment which has led to a lack of demand, particularly
in the second hand truck market. As a result, the business
experienced an overall loss on the sale of trucks for the first
time in its history. This is despite its conservative policy in
terms of setting residual values.
The business responded well to the adverse market conditions
and has managed to reduce its stock of used vehicles to very
low levels. Whilst market conditions resulted in the business
posting a loss in 2025, subsequently, market conditions have
returned to a normalised state and the business has made
profits on the sale of assets in line with expectations in the
first two months of the year.
Market Conditions
One of the most important requirements, when making business
investment decisions, is some degree of certainty. During 2025,
the economy found increasing levels of uncertainty particularly
in the levels of taxation and in changes to legislation, such as
the new Employment Rights Act.
As a result, lower levels of investment have resulted in an
economy that is not growing and seeing increasing levels
of unemployment. These conditions have filtered into the
markets that the Group operates in, leading to increased
competition with lenders competing for lower volumes.
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Resilient
performance
in line with
expectations
7
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Chairman’s
Statement
As ever, this increased competition has led to lower prices
offered to customers. In some cases, we have seen asset
finance deals being offered at rates more akin to the
residential secured market. Market price dislocation will
inevitably lead to suboptimal returns on capital. This is
something that we remain vigilant to, as capital allocation and
maintaining acceptable returns is one of our most important
principles. These cycles usually reverse and we expect the
market will return in due course to allow us to increase our
volumes once again in all our lending businesses.
Capital Framework
Early in 2025, the PRA announced it was delaying the
introduction of the new Basel 3.1 capital rules until 2027, so
that it could see how the new administration in the United
States would develop its position in regard to bank regulation,
particularly the implementation of Basel 3.1.
The Group has made good progress to be ready to implement
the new rules. The Board is now minded to remain on the Basel
rule book rather than adopt the Small Domestic Deposit Takers
(“SDDT”) regime. Although the Bank would qualify for these new
simplified rules, they would result in a higher capital requirement.
Both of these new rule books will see the withdrawal of the
“Refined approach” which was designed to level the playing field
between the large Internal Ratings Based (“IRB”) banks and the
smaller banks such as ourselves. This withdrawal will result in an
increase in our capital requirement of approximately £20m,
for which we had been planning and which was also a factor
in our decision not to deploy capital at suboptimal rates.
As this is further developed, we will continue to adjust our
business models to ensure that we achieve acceptable returns
on capital after the adoption of the new regulations.
Board Changes and Personnel
In line with the Board’s commitment to maintaining appropriate
independence, Ian Dewar and Sir Alan Yarrow retired at the AGM
having served the recommended maximum tenure. I would like
to thank them for their significant contributions to both the
Board and the Group. In July we welcomed Charlotte Crosswell
to the Board, and I look forward to continue working with her.
As ever, the continued success of the Group reflects the
hard work and commitment of our members of staff. On
behalf of the Board, I extend our thanks to all of them for their
contribution in 2025. Finally, I would like to thank my fellow
Directors on both the Board of Arbuthnot Banking Group PLC
and Arbuthnot Latham and Co., Ltd for their valuable help and
advice during the year.
Dividend
The Board is recommending a final dividend in respect of 2025
of 31p per ordinary and ordinary non-voting share. This is an
increase of 2p compared to the final dividend of 2024.
The final dividend, if approved at the 2026 AGM, will be paid on
29th May 2026 to shareholders on the register at the close of
business on 17th April 2026.
Together with the interim dividend, this gives a total dividend
of 53p per ordinary share and ordinary non-voting share, which
compares to total dividend of 69p per share paid in 2024.
However, the prior year dividend included a special dividend of
20p per share which gave a normal dividend in 2024 of 49p per
share. Thus, in 2025 the total normal dividend has increased by
4p per share.
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Outlook
It is clear that, despite the manifesto promises of the current
Government, rather than seeing economic growth, which was
the way the Country could afford to pay for the increased
spending in public services, the economy has in fact ground
to halt. In addition, the future direction of the economy has
become more uncertain given recent events in the Middle East.
Despite this, our balance sheet remains robust and
conservatively managed, and our business still sees good
client growth opportunities. We remain positive that we can
find ways to develop our business in the new regulatory
environment. This is founded on our belief that we can
continue to differentiate ourselves, due to the personal service
we offer to our clients.
Sir Henry Angest
Chairman & CEO
25 March 2026
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Arbuthnot Banking Group PLC
Report & Accounts 2025
However, the Group continued to make good strategic
progress, allocating capital to the lending proposals that offer
the best returns on capital rather than using lending volumes
themselves as an indicator of success.
The Group has continued to pursue its long-term strategic
initiatives to attract profitable relationship-driven deposits
whilst maintaining and diversifying its lending proposition
throughout 2025. Despite a reduction in lending balances,
significant progress was made in the Group’s Deposit and
Wealth Management balances which saw strong growth in the
year. This was against a backdrop of continued geo-political
turmoil and low economic growth with only a gradual easing
of inflation in the UK economy.
The Group reported a profit of £24.2m
compared to £35.1m for the prior year.
The reduction in reported profit was expected,
partly due to a lower base rate than the prior
period resulting in reduced interest income
from the Bank’s liquidity balances held at
the Bank of England.
Deposits grew steadily throughout 2025 to finish the year
with balances of £4.6bn. The Wealth Management division
continued to perform strongly with growth of over 20% in
Funds under Management and Administration (“FUMA”),
finishing the year at £2.7bn. Lending balances reduced during
2025 with the Group continuing to operate to a tightened
credit appetite and reduced LTVs for new lending below the
Bank’s previous guidance of 60%.
In August 2025, after an uncertain period, the Supreme Court
judgment with regard to unfair motor finance commissions
was published. The Supreme Court overturned much of
the lower court ruling on car loan sale practices. The Group
noted the subsequent consultation by the Financial Conduct
Authority (“FCA”) with regard to compensation for customers
who were unfairly treated as part of their regulated motor
finance agreements. The Group however does not and has
not provided regulated motor finance and therefore will not
be within scope of any FCA compensation schemes.
Strategic Report
Business
Review
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Arbuthnot Banking Group PLC
Report & Accounts 2025
‘Focus on Good Relations,
Innovation, Flexibility
and Entrepreneurship’
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Arbuthnot Banking Group PLC
Report & Accounts 2025
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Strategic Report
Business Review
Banking
2025 saw continued growth in client numbers across private
and commercial banking. Over 1,000 new clients joined the Bank,
which given our entry criteria increased along with monthly
fee increases, proves client advocacy is high for our human-
scale relationship approach. These achievements reflect the
collective effort and hard work of our teams, and the value and
trust clients place in us to guide their financial journey.
Client satisfaction remained top quartile with an overall net
promoter score of 68%, and 94% of our clients are delighted
with the service from Arbuthnot Latham. This is as a result
of the Bank’s commitment to employing quality staff, and
providing accessibility to expert advice, combined with our
full service offering across Private and Commercial Banking.
Deposits grew in 2025 despite low growth in the deposit market
for households and SMEs which resulted in a more competitive
landscape. Total deposits grew by £437.9m, equating to growth
of 10.6% year on year to finish the year with balances of £4.57bn
and an average cost of deposits of 2.65% compared to 3.15% for
the prior year.
Lending reduced by £183.2m during the year to finish at £1.36bn.
Pricing pressure and increased competition resulted in limited
opportunities for achieving desirable returns aligned to our risk
appetite. We have always considered ourselves to be counter
cyclical lenders and therefore refuse to be drawn into competing
on price alone, so we remain content to preserve our capital for
the future (including the changes from Basel 3.1), when these
markets become firmer and the prices produce acceptable
returns on our capital deployed.
The number of watchlist cases materially reduced in the year
with a small number of legacy cases remaining, with a loss rate
of 10bps for the year.
The full service relationship
banking model continues to
be attractive to our clients
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Wealth Management
Market repercussions resulting from the threats of a global
trade war along with geo-political instability resulted in high
levels of market volatility throughout 2025. However, despite
the turbulence, FUMA increased by 21% during 2025, reaching
£2.68bn at the year end (2024: £2.21bn). The business
received gross inflows totalling £501.4m, representing 23%
of balances at the start of the year, offset by outflows of
£238.9m, resulting in net inflows of £262.5m. The majority
of inflows were allocated to our flagship Global Investment
Service and the recently launched Direct Gilt Service which
continues to perform strongly.
Wealth Planning issued advice on £324.3m of new assets,
compared to £321.4m the prior year, representing 65%
of discretionary asset inflows. A total of 218 clients were
onboarded compared to 210 clients in 2024. Advice income
of £566.1k was more than 67% higher than the prior year,
supported by a broadening of advice mix including protection.
The business is progressing well with its optimisation project
and will launch a new unitised fund range which is designed
to offer greater accessibility and flexibility aligned to clients’
needs whilst ensuring a platform for the sustainable growth
of the business.
*
This balance includes both customer loans and assets available for lease.
** Average net margin: Gross interest income yield less average interest rate on customer deposits.
*** Loan to deposit ratio: Customer loans (including both customer loans and assets available for lease) divided by customer deposits.
Operating income
Other income
Operating expenses
Profit before tax
Customer loans*
Customer deposits
Total assets
Funds under management
and administration
Average net margin**
Loan to deposit ratio***
2024
£4.1bn
2025
£4.6bn
2024
£4.7bn
2025
£5.0bn
2024
£2.2bn
2025
£2.7bn
2024
5.1%
2025
4.7%
2024
57.6%
2025
49.1%
2024
£179.5m
2025
£169.5m
2024
£1.7m
2025
£4.4m
2024
£139.8m
2025
£147.2m
2024
£35.1m
2025
£24.2m
2024
£2.4bn
2025
£2.2bn
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Report & Accounts 2025
Strategic Report
Business Review
Arbuthnot Commercial Asset Based Lending (“ACABL”)
ACABL reported a profit before tax for the year of £8.9m
(2024: £11.9m) with a loan book at the year-end of £219.4m,
a small reduction compared to the prior year-end balance of
£228.2m. Despite lower lending volumes, a higher percentage
of service based fees was generated from both current and
exited clients.
The challenging macro-economic environment led to a reduced
number of event-driven transactions and fewer Private Equity
backed buy-outs in 2025. The business continues to focus on
SME and lower mid-market transactional lending, secured on
invoices, assets or stock of the borrower. Accredited by the
British Business Bank, the business also provides loans under
the Growth Guarantee Scheme. The amount extended to clients
under this scheme represents a small proportion of overall
lending but allows the business to support existing clients and
to create innovative lending structures for new clients.
In the full year ACABL completed new lending facilities of £118m
across 36 transactions to both new and existing clients (2024:
£122m across 22 transactions)
In a challenging macro-economic environment the business
continued to lend against high quality realisable assets with
the expected credit provision on the book remaining low at
7bps.
Facility limits totalled £528m at the year end (2024: £542m)
across a client base of 106 (2024: 112) operating across a
broad range of sectors and the business processed £2.3 billion
of invoices in the year, a reduction of £200m compared to the
prior year.
The bank continues to
develop its highly focussed
Commercial offering
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Renaissance Asset Finance (“RAF”)
RAF reported a record profit before tax for the year of £7.2m
(2024: £5.6m) driven by an increase in margins on new business
coupled with improved operational efficiencies and a low bad
debt expense. The loan book finished the year at £285.8m
equating to an increase of 16% compared to the prior year
balance of £248.8m.
The now established Block Discounting business which
launched in late 2021 grew its loan book by 36% in 2025 and
is now making a significant contribution to the profitability
of the business.
RAF provides non-regulated asset finance facilities to SMEs
and high net worth individuals. RAF does not and has not
provided regulated facilities and so is out of scope of the
current FCA Regulated Motor Finance Redress Scheme
proposals which was confirmed in the FCA response to the
Supreme Court’s judgment.
Asset Alliance Group (“AAG”)
AAG reported a loss in the year of £2.3m compared to a profit
of £28k in the prior year.
The market for commercial vehicles was subdued throughout
2025, with registrations of new vehicles down 14% year on
year and lead times for the procurement of new assets
reduced significantly. Customers, facing the impact of tax
increases and low economic growth, showed hesitancy in
growing or renewing their fleets.
Conversely, the bus and coach market continued to perform
well with strong demand for both shorter term rentals and
longer-term operating leases. As nominated advisors to a
number of the key operators within the Transport for London
(“TfL”) network, AAG continue to support the transition from
diesel to electric buses.
At 31 December 2025, the business had assets available for
lease and finance leases totalling £382.8m (2024: £363.0m),
with growth in new lending equating to an increase of 5% over
the year.
The market for end of lease commercial vehicles was particularly
challenging, resulting in the company recording a loss on its
residual value portfolio for the first time. The company took a
strategic decision mid-year to accelerate the sale of assets
and reduce both the volume and value of units held. By the end
of the year this had been successfully accomplished, with the
volume of assets reduced by circa 60%. This reduction was
achieved, in part, by an increased use of trade and auction
disposal channels, impacting margins.
Owned Properties
The Bank retains four assets in its property portfolio of which
one is overseas. The Bank’s property portfolio has performed
in line with expectation, with limited movement in valuations
when compared with the prior year.
Operations
The Bank’s operations have continued to support growth in our
target markets. 1,220 new banking clients were onboarded in
2025, of which 56% were non-personal clients, and over 200
new investment management clients, with an associated 375
portfolios opened. Growth has been underpinned by increased
automation and process simplification delivered as part of the
ongoing digital transformation programme.
The Bank successfully implemented PSR3 & ISO 20022
across the core banking and payments landscape. This
milestone represents a major step forward in modernising and
standardising how payments are processed. With the migration
of CHAPS, SEPA and SWIFT transactions complete, the focus
is now on extending ISO 20022 to Faster Payments which will
further strengthen the Bank’s payments capabilities. The Bank
also installed a new financial crime platform for sanctions, AML,
and fraud transaction monitoring, a significant step to improve
resilience to financial crime risk.
Investment management has benefitted from the
implementation of an electronic transfer platform to reduce
onboarding times for the transfer of assets. Trading volumes
continued to rise, with a 6.85% increase in the number of
trades executed and a value of £2.64bn. Automation of trade
flow has supported the increased volumes and ensured
continued accurate, timely and efficient execution.
The Bank’s digital programme is expected to run through
2027 with continued incremental deliveries in 2026 including
client onboarding enhancements, operational and trading
process improvements and upgrades to online and mobile
banking and investment management services. These planned
enhancements will improve operational efficiency, enable
further operational scaling and provide enhanced client
functionality.
The Bank continues to consider and respond to changing
technologies, with specific focus on system stability and
resilience, cyber risk and artificial intelligence. Service provision
is subject to ongoing stress testing, with business and service
continuity plans central to relationships with cloud and other
technology partners. The use of artificial intelligence is being
progressively tested and integrated into operational and
servicing processes with benefits to service provision and
delivery along with operational efficiency.
16
Arbuthnot Banking Group PLC
Report & Accounts 2025
Strategic Report
Financial Review
Arbuthnot Banking Group adopts a pragmatic approach to risk
taking and seeks to maximise long term revenues and returns
on capital deployed. Given its relative size, it is nimble and able
to remain entrepreneurial and capable of taking advantage of
favourable market opportunities when they arise.
The Group provides a range of financial services to clients
and customers in its chosen markets of Banking, Wealth
Management, Asset Finance, Asset Based Lending, Specialist
Lending and Commercial Vehicle Finance. The Group’s
revenues are derived from a combination of net interest
income from lending, deposit taking and treasury activities,
fees for services provided and commission earned on the sale
of financial products. The Group also generates revenue from
the sale of commercial vehicles and earns rental income on its
properties and holds financial investments for income.
The Group has reported a profit before tax of £24.2m
(2024: £35.1m).
Highlights
Summarised Income Statement
2025
£000
2024
£000
Net interest income
118,126
125,867
Net fee and commission income
30,245
28,113
Operating income from banking activities
148,371
153,980
Revenue
118,569
110,832
Cost of goods sold
(97,466)
(85,301)
Operating income from leasing activities
21,103
25,531
Total group operating income
169,474
179,511
Other income
4,419
1,660
Operating expenses
(147,208)
(139,806)
Impairment losses - loans and advances to customers
(2,501)
(6,275)
Profit before tax
24,184
35,090
Income tax expense
(6,374)
(10,236)
Profit after tax
17,810
24,854
Basic earnings per share (pence)
109.1
152.3
Net interest income reduced by £7.7m from the prior year as
the Bank of England base rate was reduced by four separate
cuts of 25 bps each during the year. As a result of the reducing
interest rate environment, we continued to invest excess
liquidity into short dated treasury assets such as gilts.
By investing in these short-dated securities, the impact
from reducing interest rates is reduced and delayed by 3
to 12 months. Net fee and commission income increased
by £2.1m, as a result of an increase of £463m in FUMA in the
Wealth Management division. Operating income from AAG
leased assets decreased from £25.5m to £21.1m, mainly due
to the subdued market for second hand commercial trucks.
The average net margin on client lending was 4.7% (2024: 5.1%).
Other income increased as a result of a settlement of £3.25m
due to a property valuation issue on a property loan that was
previously impaired.
The Group’s operating expenses increased to £147.2m
compared to £139.8m for the prior year, mainly due to higher
inflationary staff costs.
17
Arbuthnot Banking Group PLC
Report & Accounts 2025
Total assets increased by £0.3bn to £5.0bn (2024: £4.7bn).
Loans and advances to customers together with assets
available for lease decreased by 6% from the prior year.
Customer deposits increased by 11% in the year and
contributed to the 19% increase in liquid assets.
The net assets of the Group now stand at £16.94 per share
(2024: £16.36).
Segmental Analysis
The segmental analysis is shown in more detail in Note 44.
The Group is organised into seven operating segments as
disclosed below:
1. Banking – Includes Private and Commercial Banking and
the acquired mortgage portfolio. Private Banking – Provides
traditional private banking services. Commercial Banking –
Provides bespoke commercial banking services and tailored
secured lending against property investments and other
assets.
2. Wealth Management – Financial planning and investment
management services.
Balance Sheet Strength
Summarised Balance Sheet
2025
£000
2024
£000
Assets
Loans and advances to customers
1,960,542
2,094,212
Assets available for lease
285,327
285,953
Liquid assets
2,588,203
2,178,705
Other assets
163,766
170,357
Total assets
4,997,838
4,729,227
Liabilities
Customer deposits
4,570,365
4,132,493
Other liabilities
151,075
329,778
Total liabilities
4,721,440
4,462,271
Equity
276,398
266,956
Total equity and liabilities
4,997,838
4,729,227
3. RAF – Specialist asset finance lender mainly in high value
cars but also business assets.
4. ACABL – Provides finance secured on either invoices, assets
or stock of the borrower.
5. AAG – Provides vehicle finance and related services,
predominantly in the truck & trailer and bus & coach
markets.
6. All Other Divisions – All other smaller divisions and central
costs in Arbuthnot Latham & Co., Ltd (Investment property,
Central costs and Arbuthnot Specialist Finance Ltd)
7. Group Centre – ABG Group management.
The analysis presented below, and in the business review, is
before any consolidation adjustments to reverse the impact
of the intergroup operating activities and also intergroup
recharges and is a fair reflection of the way the Directors
manage the Group.
18
Arbuthnot Banking Group PLC
Report & Accounts 2025
Strategic Report
Financial Review
Banking
Banking reported a profit before tax of £28.5m (2024: £28.1m).
Net interest income increased by £1.3m. The Bank refused
to be drawn into a pricing war, as the Bank of England base
rate reduced during the year and competition in the market
increased. Lending balances therefore reduced by 12% in
the year as capital was preserved for future deployment at
acceptable returns. The growth of deposits as a valuable
revenue source continued in the year as balances increased
by 11%, despite low growth in the deposit market for
households and SMEs and the transfer of funds into our
Wealth Management division.
There was a net impairment charge of £1.3m compared to
£5.6m for the prior year. The prior year included provisions
on a small number of exposures in Stage 3.
Direct costs increased by £2.5m mainly as a result of higher
staff costs. Indirectly allocated operating costs also increased
by £4.0m, largely as a result of inflationary increases in staff
costs in support departments and the higher costs relating
to the new office building.
Customer loan balances reduced by £183m to close the year
at £1.36bn and customer deposits increased to £4.57bn
(2024: £4.13bn). The strategic decision was taken to deploy
capital into the subsidiaries for higher returns and to further
conserve capital until the Basel 3.1 rules are finalised.
The average loan to value was 49.5% (2024: 48.9%).
Wealth Management
Wealth Management reported a loss of £3.0m (2024: loss of
£4.9m). Net fee and commission income increased by £2.8m.
Directly allocated costs increased by £0.4m, mainly due to
an increase in professional fees. The contribution from the
division before indirectly allocated costs increased from
£2.3m to £5.4m. However, indirectly allocated costs from the
support departments increased by £1.2m from the prior year.
Despite high levels of market volatility throughout 2025, FUMA
increased by £0.46bn to £2.68bn. The Direct Gilt Service
launched in the prior year continued to perform well. The full
year impact on income from the growth in FUMA will be seen
in future years.
Banking
Summarised Income Statement
2025
£000
2024
£000
Net interest income
98,673
97,410
Net fee and commission income
5,107
3,799
Operating income
103,780
101,209
Operating expenses - direct costs
(22,074)
(19,614)
Operating expenses - indirect costs
(51,905)
(47,901)
Impairment losses - loans and advances
to customers
(1,275)
(5,571)
Profit before tax
28,526
28,123
Wealth Management
Summarised Income Statement
2025
£000
2024
£000
Net interest income
674
-
Net fee and commission income
16,498
13,665
Operating income
17,172
13,665
Operating expenses - direct costs
(11,744)
(11,368)
Operating expenses - indirect costs
(8,441)
(7,190)
Loss before tax
(3,013)
(4,893)
19
Arbuthnot Banking Group PLC
Report & Accounts 2025
RAF
Renaissance Asset Finance returned a profit of £7.2m (2024:
£5.6m). Interest income increased by £4.0m from higher
balances, which was partly offset by higher funding costs of
£1.2m. Operating expenses were £0.6m higher than in 2024,
mainly due to higher inflationary staff costs.
Customer loan balances increased by 16% to £288.2m (2024:
£248.8m), with the Block Discounting business growing by 36%
in the year. The average yield for 2025 was 8.6% (2024: 8.7%).
ACABL
ACABL recorded a profit before tax of £8.9m (2024: £11.9m).
Lower originations together with expected client attrition
resulted in loan balances of £219.4m at the end of the year
(2024: £228.2m). The business had issued facilities of
£528m (2024: £542m). The challenging macro-economic
environment resulted in a reduced number of transactions and
lending volume. The lower balances resulted in lower interest
income of £6.2m that was partially offset by lower internal
funding costs of £5.1m, while fee and commission income also
decreased by £2.7m. Operating expenses decreased by £0.8m,
mainly due to a reduction in staff costs with lower variable
remuneration awards as a result of the reduced profits.
RAF
Summarised Income Statement
2025
£000
2024
£000
Net interest income
15,638
12,872
Net fee and commission income
92
239
Operating income
15,730
13,111
Operating expenses - direct costs
(7,612)
(6,981)
Impairment losses - loans and advances
to customers
(922)
(554)
Profit before tax
7,196
5,576
ACABL
Summarised Income Statement
2025
£000
2024
£000
Net interest income
8,920
10,043
Net fee and commission income
7,182
9,922
Operating income
16,102
19,965
Operating expenses - direct costs
(7,241)
(7,993)
Impairment losses - loans and advances
to customers
(3)
(32)
Profit before tax
8,858
11,940
20
Arbuthnot Banking Group PLC
Report & Accounts 2025
Strategic Report
Financial Review
AAG
The business made a loss of £2.3m (2024: profit of £28k).
Interest income increased by £1.2m, while funding costs
reduced by £1.9m as interest rates continued to fall. The
reduction in revenue less cost of goods sold, was mainly due
to the subdued market for second hand commercial trucks
resulting in a £4.5m reduction in profits on sale.
Operating expenses increased by £1.4m from the prior
year, mainly due to higher inflationary staff costs and the
replacement of the operating platform by modernised
technology. There was a write back on credit provisions of
£0.1m (2024: provision of £0.1m).
As at 31 December 2025 the business had a total of £382.8m
(2024: £363.0m) of assets available for lease and finance
leases, which is a 5% increase on the prior year.
Other Divisions
The aggregated loss before tax of other divisions was £3.2m
(2024: profit of £5.7m).
Operating income decreased by £14.0m to £2.3m (2024:
£16.3m). Reported within the other divisions in other income
was rental income on our property portfolio of £1.1m (2024:
£1.0m). Other income also included the settlement of £3.25m
due to a property valuation issue on a property loan that was
previously impaired.
Operating expenses reduced £2.5m.
AAG
Summarised Income Statement
2025
£000
2024
£000
Net interest expense
(7,108)
(10,208)
Net fee and commission income / (expense)
425
(15)
Revenue
118,569
110,832
Cost of goods sold
(97,466)
(85,301)
Operating income
14,420
15,308
Other income
-
88
Operating expenses - direct costs
(16,758)
(15,308)
Impairment losses - loans and advances
to customers
86
(60)
(Loss) / profit before tax
(2,252)
28
Other Divisions
Summarised Income Statement
2025
£000
2024
£000
Net interest income
1,325
15,755
Net fee and commission income
941
503
Operating income
2,266
16,258
Other income
5,536
2,473
Operating expenses - direct costs
(10,598)
(12,948)
Impairment losses - loans and advances
to customers
(387)
(58)
(Loss) / profit before tax
(3,183)
5,725
21
Arbuthnot Banking Group PLC
Report & Accounts 2025
Group Centre
The Group costs increased by £0.5m to £11.9m (2024: £11.4m).
Subordinated loan interest reduced by £0.4m due to interest
rates falling in the year.
The increase in operating expenses of £0.5m is mainly due to
higher staff costs.
Capital
The Group’s capital management policy is focused on
optimising shareholder value over the long term. There is a
clear focus on delivering organic growth and ensuring capital
resources are sufficient to support planned levels of growth.
The Board regularly reviews the capital position.
The Group and the individual banking operation are authorised
by the Prudential Regulation Authority (“PRA”) and regulated
by the Financial Conduct Authority and the Prudential
Regulation Authority. One of the requirements for the Group
and the individual banking operation is that capital resources
must be in excess of capital requirements at all times.
In accordance with the parameters set out in the PRA
Rulebook, the Internal Capital Adequacy Assessment Process
(“ICAAP”) is embedded in the risk management framework
of the Group. The ICAAP identifies and assesses the risks to
the Group, considers how these risks can be mitigated and
demonstrates that the Group has sufficient resources, after
mitigating actions, to withstand all reasonable scenarios.
Group Centre
Summarised Income Statement
2025
£000
2024
£000
Net interest income
3,755
4,174
Subordinated loan stock interest
(3,751)
(4,179)
Operating income
4
(5)
Other income
-
39
Operating expenses
(11,952)
(11,443)
Loss before tax
(11,948)
(11,409)
22
Arbuthnot Banking Group PLC
Report & Accounts 2025
Strategic Report
Financial Review
The Board determines the level of capital the Group needs
to hold. The Group holds Pillar 1 capital for credit, market
and operational risk as a starting point, and then considers
whether each of the calculations delivers a sufficient amount
of capital to cover risks to which the Group is, or could
be, exposed. Where the Board considers that the Pillar 1
calculations do not adequately cover the risks, an additional
Pillar 2A capital requirement is applied. The PRA will set a Pillar
2A capital requirement in light of the calculations included
within the ICAAP. The Group’s Total Capital Requirement, as
issued by the PRA, is the sum of the Pillar 1 and the Pillar 2A
capital requirements. The current Total Capital Requirement
of the Group is 8.05%.
The ICAAP document is updated at least annually, or more
frequently if changes in the business, strategy, nature or
scale of the Group’s activities or operational environment
suggest that the current level of capital resources is no
longer adequate. The ICAAP brings together the management
framework (i.e. the policies, procedures, strategies, and
systems that the Group has implemented to identify, manage
and mitigate its risks) and the financial disciplines of business
planning and capital management. The Group’s PRA regulated
entity is also the principal trading subsidiary as detailed in
Note 43.
The Group’s regulatory capital is divided into two tiers:
• Common equity Tier 1 (“CET1”), which comprises shareholder
funds less regulatory deductions for intangible assets,
including Goodwill and deferred tax assets that do not arise
from temporary differences.
• Tier 2 comprises qualifying subordinated loans.
Capital ratios are reviewed on a monthly basis to ensure that
external requirements are adhered to. All regulated entities
have complied with all of the externally imposed capital
requirements to which they are subject.
Capital Ratios
2025
£000
2024
£000
CET1 Capital Instruments*
276,398
267,027
Deductions
(34,800)
(32,550)
CET1 Capital after Deductions
241,598
234,477
Tier 2 Capital
38,672
37,982
Own Funds
280,270
272,459
CET1 Capital Ratio (CET1 Capital/Total Risk Exposure)
13.3%
13.2%
Total Capital Ratio (Own Funds/Total Risk Exposure)
15.4%
15.3%
* Includes year-end audited result.
23
Arbuthnot Banking Group PLC
Report & Accounts 2025
Risks and Uncertainties
The Group regards the monitoring and controlling of risks
and uncertainties as a fundamental part of the management
process. Consequently, senior management are involved
in the development of risk management policies and in
monitoring their application. A detailed description of the risk
management framework and associated policies is set out in
Note 6.
The principal risks inherent in the Group’s business are
reputational, macroeconomic and competitive environment,
strategic, credit, market, liquidity, operational, cyber, residual
value, conduct and, regulatory and capital.
Reputational risk
Reputational risk is the risk to the Group from a failure to meet
reasonable stakeholder expectations as a result of any event,
behaviour, action or inaction by ABG itself, its employees or
those with whom it is associated. This includes the associated
risk to earnings, capital or liquidity.
ABG seeks to ensure that all of its businesses act consistently
with the seven corporate principles as laid out on page 1 of
the Annual Report and Accounts. This is achieved through a
central Risk Management framework and supporting policies,
the application of a three-lines of defence model across the
Group and oversight by various committees. Employees are
supported in training, studies and other ways and encouraged
to live out the cultural values within the Group of integrity,
energy and drive, respect, collaboration and empowerment.
In applying the seven corporate principles, the risk of
reputational damage is minimised as the Group serves its
shareholders, customers and employees with integrity and
high ethical standards.
Macroeconomic and competitive environment
The Group is exposed to risks that may arise from the
macroeconomic and competitive environment.
In recent years there have been a number of global and
domestic events which have had significant implications for
the Group’s operating environment, namely: The US-Israeli war
with Iran, Russia’s war in the Ukraine, the Israel-Hamas war in
Gaza and Coronavirus. The culmination of these events has
led to significant turmoil in both global and domestic markets.
Geo-political volatility and uncertainty remains high with the
potential to adversely affect the UK economy, as well as the
Group’s customers and assets.
Strategic risk
Strategic risk is the risk that the Group’s ability to achieve its
corporate and strategic objectives may be compromised.
This risk is particularly important to the Group as it continues
its growth strategy. However, the Group seeks to mitigate
strategic risk by focusing on a sustainable business model
which is aligned to the Group’s business strategy. Also, the
Directors normally meet once a year to ensure that the Group’s
strategy is appropriate for the market and economy.
Credit risk
Credit risk is the risk that a counterparty (borrower) will be
unable to pay amounts in full when due. This risk exists in
Arbuthnot Latham, which currently has a loan book of £2.0bn
(2024: £2.1bn). The lending portfolio in Arbuthnot Latham is
extended to clients, the majority of which is secured against
cash, property or other high-quality assets. Credit risk is
managed through the Credit Committee of Arbuthnot Latham.
Market risk
Market risk arises in relation to movements in interest rates,
currencies, property and equity markets.
24
Arbuthnot Banking Group PLC
Report & Accounts 2025
Strategic Report
Financial Review
Interest rate and currency risk
The Group’s treasury function operates mainly to provide a
service to clients and does not take significant unmatched
positions in any market for its own account. As a result, the
Group’s exposure to adverse movements in interest rates
and currencies is limited to interest earnings on its free cash
and interest rate re-pricing mismatches. The Group actively
monitors its exposure to future changes in interest rates.
However, at the current time the Group does not hedge the
earnings from the free cash which currently totals £437m
(2024: £912m). The cost of hedging is prohibitive. Normally
the majority of cash is held at the Bank of England, but during
2025 with the general consensus in the market that rates
were expected to fall, the Group shifted its focus to invest
some of the excess liquidity into high quality short dated fixed
income assets, such as gilts. As a result, these treasury assets
increased by £920m in the year. By investing in these short-
dated securities, the impact from reducing interest rates is
delayed by 3 to 12 months.
Property and equity market risk
The Group is exposed to changes in the market value of its
properties. The current carrying value of Investment Property
is £5.3m (2024: £5.3m) and properties classified as inventory
is £16m (2024: £17.4m). Any changes in the market value of
the property will be accounted for in the Income Statement for
the Investment Property and could also impact the carrying
value of inventory, which is at the lower of cost and net
realisable value. As a result, it could have a significant impact
on the profit or loss of the Group. The Group is also exposed
to changes in the value of equity investments. The current
carrying value of financial investments is £2.1m (2024: £4.9m).
Any changes in the value of financial investments will be
accounted for in Other Comprehensive Income.
Liquidity risk
Liquidity risk is the risk that the Group, although solvent, either
does not have sufficient financial resources to enable it to
meet its obligations as they fall due, or can only secure such
resources at an excessive cost. The Group takes a conservative
approach to managing its liquidity profile. The Bank is funded
by retail deposits and capital. Additionally, Arbuthnot Latham
maintains access to the Bank of England’s Sterling Monetary
Framework, including reserves account. The loan to deposit
ratio is maintained at a prudent level, and consequently the
Group maintains a high level of liquidity. The Arbuthnot Latham
Board Risk Committee annually approves the Internal Liquidity
Adequacy Assessment Process (“ILAAP”). The Directors model
various stress scenarios and assess the resultant cash flows
in order to evaluate the Group’s potential liquidity requirements.
The Directors firmly believe that sufficient liquid assets are
held to enable the Group to meet its liabilities in a stressed
environment.
Operational risk
Operational risk is the risk that the Group may be exposed to
financial losses from conducting its business. The Group’s
exposure to operational risk include its Information Technology
(“IT”) and Operating platforms. There are additional internal
controls in these processes that are designed to protect
the Group from these risks. The Group’s overall approach to
managing internal control and financial reporting is described
in the Corporate Governance section of the Annual Report.
In line with guidance issued by the Regulator, the Bank has
continued to focus on ensuring that the design of systems and
operational plans are robust to maintain operational resilience
in the face of unexpected incidents.
Cyber risk
Cyber risk is an increasing risk for the Group within its
operational processes. It is the risk that the Group is subject
to some form of disruption arising from an interruption to
its IT and data infrastructure. The Group regularly tests the
infrastructure to ensure that it remains robust to a range of
threats and has continuity of business plans in place including
a disaster recovery plan.
25
Arbuthnot Banking Group PLC
Report & Accounts 2025
Residual value risk
Residual value risk equals the difference in the residual value
of a leased asset set at lease inception and the lower salvage
value realised upon its disposal or release at the end of the
lease term. The Group is exposed to residual value risk in its
AAG business. Normal residual value risk is managed through
the process set out below, and it should be noted that the
transition to greener technology may further impact residual
values in two ways. Firstly, residual values could decrease due
to assets becoming obsolete; climate related regulations
might change, which could result in legal restrictions on
the use of assets or technological advances could lead to
preferred environmental technologies. Secondly, the lack
of historical information on green vehicles could lead to
inaccurate measurement of residual values at inception of
leases.
The AAG business manages Residual Value setting through
its Residual Value Committee that comprises representatives
from its Asset Management, Procurement, Sales and Leasing
divisions and is chaired by the Residual Value Manager. Assets
are valued using either an approved Residual Value matrix
or individually, dependent upon the nature of the asset and
current market conditions. The strategy for Residual Value
setting and oversight of the Residual Value Committee is
conducted by the AAG Residual Risk Committee, which in
turn reports into the Asset Alliance Group Holdings Limited
board. The Residual Risk Committee, chaired by the AAG Group
Risk Director, includes AAG CEO, AL Group Risk Director, AAG
Managing Director, AAG Finance Director and heads of Asset
Management, Sales and Leasing divisions in AAG.
Conduct risk
As a financial services provider the Group faces conduct risk,
including selling products to customers which do not meet
their needs, failing to deal with clients’ complaints effectively,
not meeting clients’ expectations, and exhibiting behaviours
which do not meet market or regulatory standards.
The Group adopts a low risk appetite for any unfair customer
outcomes. It maintains clear compliance guidelines and
provides ongoing training to all employees. Periodic spot
checks, compliance monitoring and internal audits are
performed to ensure these guidelines are followed. The Group
also has insurance policies in place to provide some cover for
any claims that may arise.
Financial Crime
The Group is exposed to risk due to financial crime including
money laundering, sanctions evasion, bribery and corruption,
market abuse, tax evasion and fraud. The Group operates
policies and controls which are designed to ensure that
financial crime risks are identified, appropriately mitigated
and managed.
Regulatory and capital risk
Regulatory and capital risk includes the risk that the Group will
have insufficient capital resources to support the business and/
or does not comply with regulatory requirements. The Group
adopts a conservative approach to managing its capital.
The Board Risk Committee of Arbuthnot Latham approves an
ICAAP annually, which includes the performance of stringent
stress tests to ensure that capital resources are adequate
over a three year horizon. Capital and liquidity ratios are
regularly monitored against the Board’s approved risk appetite
as part of the risk management framework.
Regulatory change also exists as a risk to the Group’s
business. Notwithstanding the assessments carried out by
the Group to manage regulatory risk, it is not possible to
predict how regulatory and legislative changes may alter and
impact the business. Significant and unforeseen regulatory
changes may reduce the Group’s competitive situation and
lower its profitability.
26
Arbuthnot Banking Group PLC
Report & Accounts 2025
Strategic Report
Non-Financial and Sustainability Statement
The table below sets out where stakeholders can find information on non-financial matters, as required by Sections 414CA and
414CB of the Companies Act 2006, enabling them to understand the impact of the Group’s key policies and activities.
Reporting Requirement
Policies and Standards
Information Necessary to Understand Impact
of Activities and Outcome of Policies
Environmental Matters
• Credit Policy
• Managing Financial Risks of Climate Change
Framework
• Environmental Management Policy
• Stakeholder Engagement and S. 172 (1)
Statement, pages 27 and 28
• Sustainability Report, pages 29 to 41
• Corporate Governance Report page 52
Employees
• Agile Working Policy
• Board Suitability & Diversity Policy
• Flexible Working Policy
• Health and Safety Policy
• Inclusivity and Respect Policy
• Long Service Awards Policy
• Parental Leave Policy
• Personal Appearance Policy
• Remuneration Policy
• Training & Development Policy
• Whistleblowing Policy
• Stakeholder Engagement and S. 172 (1),
pages 27 and 28
• Sustainability Report, pages 29 to 41
• Directors Report, page 47
• Corporate Governance Report, page 50
Social Matters
• Complaints Handling Policy
• Fraud Policy
• Tax Strategy
• Vulnerable Clients Policy
• Arbuthnot Principles, page 1
• Stakeholder Engagement and S. 172 (1)
Statement, pages 27 and 28
• Sustainability Report, pages 29, 32 and 33
Respect for
Human Rights
• Anti-Modern Slavery Policy
• Dignity at Work Policy
• Inclusivity and Respect Policy
• Personal Data Protection Policy
• Stakeholder Engagement and s.172 (1)
Statement, pages 27 and 28
• Sustainability Report, pages 29, 30, 31, 32
and 34
Anti-Corruption
and Anti-Bribery
• Anti-Bribery and Corruption Policy
• Anti-Money Laundering Policy
• Client Acceptance policy
• Cyber Strategy
• Group Market Abuse and Insider Dealing
Policy
• Physical Security Policy
• Sustainability Report, pages 29 and 32
Description of Principal
Risks and Impact of
Business Activity
• Strategic Report, pages 23 to 25
Description of the
Business Model
• Business Overview
Non-Financial Key
Performance Indicators
• Sustainability Report, page 29
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Strategic Report
Stakeholder Engagement and s.172 Report
Stakeholder Engagement and S. 172 (1) Statement
This section of the Strategic Report describes how the
Directors have had regard to the matters set out in section
172 (1) (a) to (f) of the Companies Act 2006 when making
decisions. It forms the Directors’ statement required by ABG
as a large-sized company under section 414CZA of the Act.
The Directors have acted in a way that they considered, in
good faith, to be most likely to promote the success of the
Company for the benefit of its members as a whole, and in
doing so had regard, amongst other matters, to:
• the likely consequences of any decision in the long term;
• the interests of the Company’s employees;
• the need to foster the Company’s business relationships
with suppliers, customers and others;
• the impact of the Company’s operations on the community
and the environment;
• the desirability of the Company maintaining a reputation for
high standards of business conduct; and
• the need to act fairly as between members of the Company.
The Arbuthnot Principles and Values set out on page 1 explain
the Board’s approach to its stakeholders. Details of how the
Directors had regard to the interests of its key stakeholders
during the year are set out below, in the Group Directors
Report on page 47 and in the Corporate Governance Report
on page 50.
The Board has regard to the interests of all its key stakeholders
in its decision making since the Directors are conscious that their
decisions and actions have an impact on them. The stakeholders
we consider in this regard are our shareholders, employees,
customers, suppliers, regulators and the environment in which
we operate.
Likely consequences of any decision in the long term
The Directors make their decisions to ensure that long-term
prospects are not sacrificed for short term gain, reflecting
the values and support of Sir Henry Angest, Chairman
and Chief Executive and majority shareholder, which have
proved successful in creating and maintaining value for all
shareholders for over 40 years. This was demonstrated in
the year by a number of Board decisions including investment
in a number of major projects.
In February 2025, the Board reviewed the concept of
Commitment to Clients and Colleague Promises, i.e. what the
business aims to deliver to clients and to employees, built on
Arbuthnot’s Seven Principles and five cultural values, which
was launched to the business. These Principles are central
to the way the Company works, summarising its corporate
philosophy and ethics, and it seeks to ensure that all of its
businesses act consistently with them.
During the year, the Board appointed Charlotte Crosswell
as a new non-executive Director, subject to completion
of regulatory and compliance requirements which were
subsequently met. The Board was also kept fully informed
of a number of senior management retirements with the
respective roles of the MD Specialist Finance and Head of
HR being transferred to two existing AL executive directors.
This approach will help to empower existing employees as
well as reducing costs.
Interests of the Company’s employees
Overall the Board’s intention is to hire the best people and to
provide the right environment for them to perform to the best
of their ability.
The Board receives an update on human resource matters
at each of its meetings. It is also kept informed of the results
of employee surveys. In November 2025 it considered the
results of the engagement survey, launched in October 2025
to assess how engaged employees felt with the business,
obtaining feedback on key areas that affect engagement.
The engagement survey received an 87% response rate from
employees, with an 83% engagement score including 92%
agreeing with the statement of being proud to work for the
Group and 85% would recommend the Group as a great place
to work. There were also increases in scores for external client
and employee experience, as well as inclusive culture and
wellbeing. The Board agreed that this was a good overall result
considering the prevailing economic climate and employment
market. It regards the maintenance of a high level of employee
engagement as key to the Company’s future success as an
organisation on every level and each business will be analysing
its results and establishing action plans to address key issues
raised.
Executive Directors and senior management are fully engaged
with the workforce, most of whom interact on a daily basis.
Employees are also able to raise concerns in confidence
with the AL HR Team, with grievances followed up in line with
a specified process which satisfies all legal requirements.
As explained in the section 172 (1) Statement of Arbuthnot
Latham, the Company’s banking subsidiary, Jayne Almond one
of its non-executive directors, has been designated by its
board as the director to engage with Arbuthnot Latham group’s
workforce whereas the Company itself has fewer than 20
employees, all of whom have direct access to Board members.
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As set out in the Whistleblowing Policy, Richard Gabbertas
is the Company’s Whistleblowing Champion is available at
all times in this role. There is an anonymous whistleblowing
service via an external provider. There is also protection for
employees deriving from the Public Interest Disclosure Act
1998. Any material whistleblowing events are notified to the
Board and to the applicable regulator.
Company’s business relationships with suppliers, customers
and others
The Directors attach great importance to good relations with
customers and business partners. In particular, our clients are
integral to our business and forging and maintaining client
relationships are core to AL’s business and crucial for client
retention. As regards customers, the Directors considered
the formal submission of a Consumer Duty annual assurance
report from the Chief Compliance Officer.
The Company is committed to following agreed supplier
payment terms. There is a Supplier Management Framework
in place covering governance around the Company’s
procurement and supplier management activities. For due
diligence and compliance purposes, suppliers are assessed
through an external registration system. The Modern Slavery
Statement, approved by the Board in March as part of its
annual review of the Company’s stance and approach to the
Modern Slavery Act, explains the risk-based approach that the
Company has taken to give assurance that slavery and human
trafficking are not taking place in its supply chains or any part
of its business. The Board requires that AL implements an Anti-
Modern Slavery Policy, procedures and processes in relation to
the AL Group, which reflects the commitment to act ethically
and with integrity, in all their respective business relationships
and additionally, to ensure that slavery and human trafficking
are not taking place anywhere in the AL Group or in the AL
Group’s supply chain.
Balancing stakeholder interests
An illustration of the balancing of the interests of our
stakeholders in their long-term interest was the Board’s decision
in July 2025 to continue its progressive dividend policy, resolving
to pay an interim dividend of 22p per Ordinary share and Ordinary
Non-Voting share to shareholders. This was an increase of 2p
per share from the interim dividend paid in 2024. The Board has
decided to recommend a final dividend of 31p per share; this is
an increase of 2p per Ordinary share and Ordinary Non-Voting
share compared to the final dividend of 2024. This represents
total dividends for the year of 53p per Ordinary share and
Ordinary Non-Voting share. It compares with 69p per Ordinary
share and Ordinary Non-Voting share which also included a
special dividend of 20p per Ordinary share and Ordinary Non-
Voting share.
Impact of the Company’s operations on the community
and the environment
As part of the management information reviewed at its regular
meetings, the Board receives a Risk Management report,
containing a report on Sustainability / Environmental, Social and
Governance (“ESG”) matters which includes a Climate Change
Dashboard, monitoring climate change measures in place
including Scope 1, 2 and 3 GHG emissions. This dashboard sets
out climate-change measures and actions.
The Board is updated on the steps the Group is taking to
become more sustainable, given its exposure to climate
change transition risk as the UK evolves to a low carbon
economy. It is also kept informed of the formal approach to
ESG established to develop over time, which will underpin the
Arbuthnot Principles and Values within the workplace under
five ‘pillars of sustainability’ – governance, clients, employees,
community and environment (ESG Pillars). The ESG actions
taken are in recognition of the Group’s responsibility to make a
positive societal impact and the political, regulatory and legal
pressure with clients and investors interested in the Group’s
ESG stance.
In September 2025 the Board approved the enterprise-wide
climate change risk appetite, risk assessments, and stress
test scenarios and results. It has also approved an energy and
carbon report meeting the requirements of the Streamlined
Energy and Carbon Reporting standards, as set out in the
Sustainability Report on pages 40 to 41.
Desirability of the Company maintaining a reputation for
high standards of business conduct
The Directors believe that the Arbuthnot culture set out in the
Arbuthnot Principles and Values manifests itself at Board level
and in the external view of the Group as a whole. The importance
of the Group’s reputation is considered at each Board meeting.
These Principles are encapsulated in five Group cultural values,
embedded into day-to-day activities. These values are integrity,
respect, empowerment, energy and drive, and collaboration.
Acting fairly as between members of the Company
The majority shareholder, Sir Henry Angest, is the Company’s
Chairman and Chief Executive. There is continuing
engagement with other major shareholders and the Directors
make their decisions on behalf of all shareholders. The Board
welcomes engagement with them and will continue to maintain
communications via one-to-one meetings as appropriate.
The Directors treat all shareholders equally, albeit that
holders of non-voting shares do not have the right to vote
in shareholder meetings.
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Introduction
The Group has continued to embed sustainable practices
across its business and remains committed to ensuring that
its activities have a positive impact on clients, shareholders,
employees, society and the environment. Two of our
key business principles, reciprocity and stability, rely on
recognising our responsibility to make a positive societal
impact.
Climate change is an important topic for consumers and
investors alike. In parallel, inclusive growth and the impact
organisations have on society are increasingly a focus.
Organisations are being held accountable for their impact.
We focus on how we can improve to build a future that delivers
growth, sustainability and inclusion.
Our responsible business initiatives enable us to monitor and
measure our social impact by considering the impact of our
practices and outputs across five pillars: governance, clients,
community, environment and employees as explained on
pages 32 to 34 below.
Governance
The Group has a solid system of governance in place, endorsing
the principles of openness, integrity, and accountability that
underpin good corporate governance. The Group operates to
high standards of corporate accountability with an effective
Board and Board committees. This, together with the role
and overall holding of Sir Henry Angest, the ultimate majority
shareholder, and compliance with PRA and FCA regulations
and with those of the London Stock Exchange Alternative
Investment Market and the Aquis Exchange, is fundamental
to our success as a business.
Policies
The Group has adopted a wide range of policies that straddle
the five pillars to ensure that employees and management are
aware of their responsibilities towards our clients and comply
with all regulatory requirements. Some of the key policies
are set out below and in the Non-Financial and Sustainability
Statement on page 26.
Human Rights commitments
The Group is committed to operating in an ethical manner and
ensuring the relationships we have with all our stakeholders
adhere to high standards. These are reflected in both our
Anti-Modern Slavery Policy and in our Supplier Code of Conduct.
The Group is committed to finding and reducing the risk of
slavery or human trafficking in every part of our supply chain.
Clients
Relationships with our clients are at the heart of what we do.
In June 2025, 625 clients across private and commercial
banking shared their views through our internal client
feedback survey. With 13% of invited clients responding, this
encouraging level of engagement reflects both the dedication
of our frontline teams and the benefit of a more streamlined
survey. Overall, client sentiment remains strong with 94% of
respondents saying they are satisfied or very satisfied with
Arbuthnot Latham. Our new Net Promoter Score stands at
68, similar to that in the last survey in 2024.
Client support
As a relationship-led bank, our purpose is to help our clients
go further. This means ensuring that they receive a bespoke
service, tailored to their needs, helping them achieve their
financial goals. As part of our focus on excellent service, we
increased the minimum banking criteria and account tariff
charges from February 2025. Higher minimum levels allow us
to limit the number of relationships each banker manages,
ensuring that the level of advice and access that every client
receives is not diluted as we grow. This decision has enabled
us to maintain our high quality of service, leading to better
long-term outcomes for our clients.
Vulnerable clients
The term ‘vulnerability’ captures a range of circumstances our
clients can face. To ensure we are treating vulnerable clients
fairly, we have implemented vulnerable client guidance focused
on identifying and supporting vulnerable clients.
We have a Vulnerable Client Committee to support our staff
with vulnerable clients. In 2025, we welcomed the British
Dyslexia Association and hosted a session on the legal and
financial implications of divorce.
Employees
We continue to focus on maintaining an outstanding culture
and workplace for all our employees. Once again our high
engagement scores are a testament to this. We achieved
an 87% response rate in our latest employee engagement
survey (Non-Financial Key Performance Indicator), conducted
by WorkBuzz in October 2025, and an overall engagement
score of 83. These strong scores remain well above external
benchmarks. Standout results include: 92% of employees are
proud to work here and 85% would recommend Arbuthnot
Latham as a great place to work. We also saw increases in
scores for external client and colleague experience, inclusive
culture and wellbeing: “I would feel proud to recommend our
products and services to clients (+2%), I feel comfortable to
be my true self at work (+3%), and Speak up and challenge
processes (+3%)”.
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Employees were recently informed of a change in the Group’s
agile working policy whereby all full time staff will be required
five years on from the pandemic to work a minimum of four
days a week in the office, up from three days. Working together
in the office enables the Group to fulfil its objective of being a
service and relationship-led business. Having the advantage
of human scale and concentrating on building relationships is
enhanced by interacting regularly and frequently.
Wellbeing
Our wellbeing strategy focuses on mental, physical, social
and financial pillars. Through these pillars, we provide our
employees with a range of resources and tools to support their
wellbeing, including resources provided by BUPA, Hargreaves
Lansdown, ActiveHub, and our Employee Assistance
Programme.
Initiatives include the AL Run Club to encourage staff to meet
up and become active, weekly fruit baskets, free mortgage
services for employees, Macmillan Coffee Morning, and the 721
programme culminating in 20 Arbuthnot Latham employees
conquering the Brecon Beacons as part of the Atlantic Team
Challenge inspired by world-renowned adventurer Nick Hollis.
Early Careers and Young Professionals
During 2025 47 young adults participated in work experience
events, 70 A-level students attended our annual female
student event, ten summer interns and 29 more young adults
joined across our 2025 1-year placements and graduate and
apprentice programmes. Additionally, in partnership with Young
Professionals, we provided a six-week mentoring programme
for 13 A-level students. Throughout 2025 we delivered 105
training sessions attended by 2,253 individuals. Our Learning
at Work weeks saw us travelling across the country to Exeter,
Basildon, Manchester and Wolverhampton, as well as hosting
sessions in London linked to our 2025 theme of communication
and collaboration.
The Group offers five different Early Careers Programmes,
including work experience, summer internships, one-year
placements, graduate placements, and apprenticeships.
We partner with Young Professionals, an organisation which
works with schools across the UK from different socio-
economic backgrounds to provide an insight and introduction
to different industries, in order to grow the quality and diversity
of our Early Careers talent pool.
Employee development
As a business with growth ambition, we encourage career
progression and seek to develop our people’s skills to help
them grow within the organisation.
Mentoring
We support our employees’ continued development through
our internal mentoring programme. We partner with Pushfar,
an internal mentoring platform to ensure mentees can find a
suitable mentor to assist them in their careers.
Benefits
We offer eligible employees an annual opportunity to enhance
an array of benefits at favourable rates including life assurance.
In 2025, we introduced Salary Extras, our benefits platform
designed to give access to a wide range of benefits and
options.
Workplace pension scheme
The Group offers all eligible employees membership of a
contributory defined contribution plan, which is operated by
Hargreaves Lansdown who present annually to the Pension
Scheme Governance Committee. The matters discussed at
this Committee’s meetings are communicated to employees,
continuing the focus on their financial wellbeing.
Employee networking forum: Connect
Our colleague network, Connect, launched a new strategy
with agency Flying Iguana. We introduced the Listening Lounge
podcast series, hearing from employees on topics like mental
health, retirement, cancer, and domestic abuse. We also
hosted lunch and learn events and panels on discovering your
superstrength and finding balance.
The purpose of Connect is to:
• To promote an environment which enables everyone to
perform to the best of their potential.
• Encourage behaviours aligned with our values, particularly
our value of respect. To create a long-term sustainable
approach to ensure Connect remains at the heart of our
organisation.
Inclusivity
In 2025, we continued to strengthen our commitment to
inclusivity by embedding our cultural values of respect
and collaboration into everyday behaviour and leadership
practices. Throughout the year we enhanced integration
of our cultural values into our performance management
processes and conversations to drive accountability and
reinforce a culture of respect. A new Inclusivity and Respect
Policy came into effect in November 2025, aligning our former
Equity, Diversity & Inclusion and Dignity at Work policies into a
single framework to simplify our approach and expectations
for all employees. We also introduced Tell Jane, a confidential
external platform for raising concerns about inappropriate
behaviour in the workplace, providing employees with a safe
and anonymous way to seek support. In Q4 2025 we began
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interactive workshops for senior leaders and team briefings
for all employees, ensuring that respect and inclusivity remain
at the heart of our culture and are translated into everyday
actions and behaviour. We will continue to provide workplace
demographic data to support transparency and inclusive
workforce planning and host Connect events to deepen
understanding and mutual respect across the organisation.
Community
The Group recognises that we need to commit to driving
positive community impact within the communities in which
we exist and operate, and connecting the dots between the
charities we support and the social initiatives we run.
In 2025, we continued to support communities and charities
through our expanded corporate responsibility strategy. Through
our CSR Steering Committee we ensured that our activities
remained aligned with the Group’s goals. Our strategy continued
to focus on quality education and eradicating poverty, reinforcing
our commitment to making a positive societal impact.
Volunteering and Philanthropy
Over 250 volunteers engaged across teams, supporting
Hackney City Farm, Hackney Foodbank, Bow Food Bank,
The Switch, Trees for Cities, and Hospiscare. This represents
approximately 30% of all employees.
To assist with our skills-based volunteering and to ensure we
support education and financial education, The Switch, offers
our employees the opportunity to volunteer in schools in Tower
Hamlets. Sessions here included CV-writing workshops, Money
Matter workshops and interview preparation.
We donated 60 laptops to Halley Primary School, which will
enhance students’ learning and technology access.
Pound for Pound and Payroll giving
In 2025, we supported 46 colleague fundraising activities
through pound-for-pound matching and payroll giving,
including £3,500 raised for the Chief Operating Office Trio
Masters Challenge.
We also offer our employees the opportunity to donate
regularly from their gross pay to charities of their choice.
Environment
We have made a commitment to reduce our environmental
impact and to improve our environmental performance as an
integral part of our business strategy. We are committed to
achieving net-zero by 2050 and effective management of
our carbon footprint is an important part of our strategy.
As a consequence, we have in place an Environmental
Management policy which sets out our high-level approach to
managing environmental issues and provides requirements
to help the Bank to achieve its commitments. Enhancing
transparency within our own supply chains is part of our
mission to work closely with our third-party relationships.
In doing so, working together will help us establish how we
can better engage and be held accountable.
Due to the nature of the Group’s business, we are primarily
a consumer of services rather than goods and materials.
However, we are still committed to reducing the impact of our
supply chain. As a minimum, we expect our suppliers to provide
evidence towards their environmental status, where relevant
and appropriate.
The Bank’s Credit Policy sets out the Group’s limited appetite
for financial and reputational risk emanating from climate
change, which includes physical risk (extreme weather,
flooding etc.) and transitional risk (changes to law, policy,
regulation and culture). The Bank adopts a favourable stance
towards a low carbon economy and lending propositions that
have a neutral or positive impact on the environment/climate.
The Bank will also consider the impact on public perception
and potential impact on continuing demand for clients’
products and services, as well as any impact on its underlying
security. These factors are assessed as part of the credit
application and on-going review processes.
In December 2025, we submitted an action plan under the
Energy Savings Opportunity Scheme (ESOS), a Government-
mandated requirement to identify tailored and cost-effective
measures to save energy and achieve carbon and cost savings.
We continue to build employee awareness on environmental
matters and energy efficiencies.
20 Finsbury Circus
At 20 Finsbury Circus, our BREEAM-rated Excellent office
into which we moved in the summer of 2024, we continue to
focus on sustainability and operational efficiency, sourcing
renewable energy and implementing recycling initiatives to
reduce our carbon footprint.
By investing in technologies like building management systems
and LED lighting, we significantly reduce energy consumption
and improve our Energy Performance Certificate (EPC) ratings.
At 20 Finsbury Circus, we source renewable energy to power
our operations, which further reduces our carbon footprint and
supports sustainable energy practices. Additionally, we have
implemented efficient air conditioning systems to optimise
energy use and enhance the comfort of our building occupants.
Using onsite shredders and compactors to compress waste
reduces transport costs and further reduces our carbon
footprint.
We are continuously working to reduce our Scope 1 and Scope
2 emissions by decarbonising our buildings and increasing
their energy efficiency. These efforts are essential steps
towards our sustainability goals.
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Summary across our five pillars
We are taking steps, guided by our five pillars of governance, clients, community, environment and employees, to help us become
more sustainable.
Pillar
Current Status
Ensure
responsible and
transparent
corporate
governance
which aligns to
business goals
while making a
positive societal
impact.
• We have been embedding sustainability into our business practices by recording, monitoring, and publishing
performance.
• We have policies in place, such as our:
– Anti-Money Laundering Policy
– Board Suitability & Diversity Policy
– Anti-Bribery and Corruption Policy
– Client Acceptance Policy
– Group Market Abuse and Insider Dealing Policy
– Whistleblowing Policy
– Anti-Modern Slavery Policy
• We have a published Tax Strategy, which sets out the Group’s commitment to compliance with tax law and
practice in the UK, which includes paying the correct amount of tax at the right place and right time and
having a transparent and constructive relationship with the tax authority.
• We have effective risk management which underpins our strong risk culture supporting the Group’s vision.
• We have a Supplier Code of Conduct that promotes equal opportunities and diversity, acting with integrity,
endorsement of sustainable procurement within the supply chain, safe working practices, and data, cyber
and privacy protection.
Ensuring best
outcomes for our
clients.
• We seek regular feedback from our clients to reinforce our proposition and service.
• We also have a new complaints team and take dissatisfaction seriously, remediating issues promptly.
• We take the protection of our client data seriously and have robust measures in place to protect client data
in line with our legal and regulatory requirements.
• We make regular anti-fraud communications to clients, alerting them to the different techniques used by
criminals to unlawfully obtain people’s data and money.
• We have continued to invest in the Bank’s core banking system, demonstrating that operational resilience
and the ability to make services available to our clients is of the utmost importance.
• We continue to invest in our risk management capabilities across Credit, Compliance, Operational Risk and
Financial Crime with a view to ensuring good client outcomes through the continuing stability of the Bank.
• We continue to embed the FCA’s Consumer Duty requirements for all relevant products and services.
We continue to consider ways that we can improve outcomes for our customers.
• We have initiated a Digital Transformation Project to further enhance the Bank’s services to clients.
• We have policies in place, such as our:
– Complaints Handling Policy
– Fraud Policy
– Personal Data Protection Policy
– Physical Security Policy
– Vulnerable Clients Policy
• We seek regular feedback from our clients to reinforce our proposition and service.
• We also have a new complaints team and take dissatisfaction seriously, remediating issues promptly.
• We take the protection of our client data seriously and have robust measures in place to protect client data
in line with our legal and regulatory requirements.
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Pillar
Current Status
Having a positive
impact on the
community in
which we
operate.
• We support philanthropy through matching charity donations, payroll giving, and volunteer days. In 2025 we
supported The Felix Project, The Switch, Bow Foodbank, Hackney Foodbank and Surrey Docks Farm.
• We will continue to encourage skills-based and team-based volunteering, increasing our focus on education
and financial literacy.
• We continue to encourage employees fundraising and challenges.
• We donated 157 laptops to schools in Tower Hamlets through Business2Schools.
• Our regional offices supported charities. Our Exeter office supported YMCA and our Manchester office
supported The Seashell Trust and The Christie.
Ensuring that our
business
practices have a
positive impact
on the
environment.
• We will set goals and progress against these with a view to reaching net-zero carbon emissions as a
business by 2050.
• We have reported in line with the requirements of the Companies (Strategic Report) (Climate-related
Financial Disclosure) Regulations 2022.
• We assess both direct and indirect climate-related risks and opportunities.
• We incorporate annual sustainability reporting into our annual report and accounts.
• We have an Environmental Management Policy to help us achieve our commitments.
• We have established a Sustainable investment Service (SPS).
Energy and Waste
– We have moved the London head office to 20 Finsbury which is a BREEAM-rated excellent office
– Invested in building management systems and LED lighting to reduce energy consumption and improve
EPC ratings.
– Implemented efficient air conditioning systems to optimize energy use and enhance occupant comfort.
– Sourced renewable energy at 20 Finsbury Circus to power operations, reducing carbon footprint and
supporting sustainable energy practices.
– Shredded waste materials onsite to cut down on emissions from transportation.
– Introduced new recycling bins and signage.
– Used compactors onsite to compress waste, reducing the number of collections needed and saving on
transport costs.
• We have a Supplier Management Framework which reflects the Environmental Management Policy.
• We ensure the responsible disposal of computer equipment and have a waste recycling programme in place.
Transport
• Our benefits include a cycle to work scheme and season ticket loan.
• We continue to finance and lease electric vehicles through our RAF and AAG subsidiaries.
• We will set goals and progress against these with a view to reaching net-zero carbon emissions as a
business by 2050.
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Pillar
Current Status
Creating a
supportive and
diverse
workplace in
which employees
can thrive.
• We promote a working environment that seeks to develop employee skills, and ensures employees are
treated fairly and supports their wellbeing. Policies to support this include:
– Agile Working Policy
– Flexible Working Policy
– Health and Safety Policy
– Parental Leave Policy
– Remuneration Policy
– Training & Development Policy
– Dignity at Work Policy
– Inclusivity & Respect Policy
• We have invested in new offices and working environments in Bristol and in our London headquarters.
• We operate an internal recognition scheme: Arbuthnot Achievers.
• We conduct annual employee surveys (conducted anonymously) with 91% response rate and employee
engagement scores of 85%.
• We have adopted agile and flexible working policies.
• We pay all employees a living wage and have market aligned job families.
• All eligible employees may receive a bonus, in addition to pension contribution, absence pay and other core
and flex benefits. We also offered eligible employees the opportunity to enhance at favourable rates their
cover for life assurance and related cover.
• We publish details of our gender pay gap annually.
• We have an internal staff networking forum: Connect.
• We have an internal colleague wellbeing programme and wellbeing support resources.
• We provide all our staff access to our extensive Learning and Development Programme. We also have a
Leadership Development Academy and Early Careers Programme.
• We have a Pension Governance Committee to manage and communicate our workplace pension scheme.
Metrics
Disclosures around metrics are given in the section on
Climate-related Financial Disclosures below.
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Climate-related Financial Disclosures
This section of the Strategic Report describes how the
Directors have implemented the requirements of the
Companies (Strategic Report) (Climate-related Financial
Disclosure) Regulations 2022 which amended the Companies
Act 2006 to introduce Task Force on Climate-related Financial
Disclosures’ (“TCFD”) aligned disclosure requirements into
the existing non-financial information requirements.
This report covers how climate related risks and opportunities
are managed; and on the performance measures and targets
applied in managing these issues.
The Board considers the Group’s business model to be resilient
to the financial risks from climate-related risks based on the
risk assessments and stress test scenario results.
Area
Our Response
Governance
Describe the board’s
oversight of climate-
related risks and
opportunities.
Describe
management’s role
in assessing and
managing climate-
related risks and
opportunities.
The Board Risk Committee annually review and approve the enterprise-wide climate change
• Risk appetite,
• Risk assessments, and
• Stress test scenarios and results.
The Executive Risk Committee review the ESG dashboard (that includes Climate Change) at each
meeting. This dashboard details climate-change measures and actions. The tolerances are partly based
on the climate change stress test scenarios outputs.
Climate change risk is considered as falling within two categories:
• Physical Risk: Arising from longer-term changes in the climate and weather-related events,
rising average temperatures, heatwaves, droughts, floods, storms, sea-level rise, coastal erosion and
subsidence.
• Transition Risk: Arising from the adjustment towards a low-carbon economy and could lead to changes
in risk appetite, strategy, policy, technology and sentiment.
The Board also consider climate change risk in major change decisions, most recently in the case of the
2024 London premises relocation.
The Senior Management Function (“SMF”) accountability for the financial risks of climate change sits
with Stephen Kelly, the AL CRO.
Climate change is managed within the Group’s governance and risk management frameworks which
includes the consideration of both current and emerging risks.
36
Arbuthnot Banking Group PLC
Report & Accounts 2025
Area
Our Response
Strategy
Describe the climate-
related risks and
opportunities the
organisation has
identified over the
short, medium, and
long term.
Describe the impact of
climate-related risks
and opportunities
on the organisation’s
businesses, strategy,
and financial planning.
Describe the resilience
of the organisation’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario.
The Board considers the Group’s business model to be resilient to the financial risks from climate-related
risks based on the risk assessments and stress test scenario results.
The existing income streams are not materially impacted by either transitional or physical risks.
The business strategy is also positioned to capture opportunities and support the transition to a low
carbon economy.
The key risks and opportunities are:
Short and medium term (0-5 years)
• Growing investor, client, and employee preference to work with, or for companies promoting a low-
carbon economy
• AL Core transition risk and opportunity on the rising EPC expectations for buy to let residential
property
• RAF transition risk and opportunity from the demise of combustion engines and switch to electric
engines.
• AAG transition risk and opportunity from the demise of combustion engines and switch to alternatives.
Long term (5-30 years)
• AL Core physical risk (flood risk) on residential property.
These risks are mitigated and the financial impact is not considered significant in relation to AL’s revenue
• Residential property loan risks are mitigated by the loan durations (typically less than 5 years) and
strong loan to values.
• RAF combustion engine risks are mitigated by the short loan durations (typically less than five years).
• AAG heavy goods vehicles combustion engine risks are mitigated by the short leasing durations
(typically less than five years), lack of viable alternate technologies and by the strategic objective to
keep the fleet focused on latest Euro 6 models and as young as possible. Asset residual values and
lifespans are monitored considering possible technology changes.
• The Group exposure to the Energy or Utility sectors is less than 1% of the portfolio.
The Group is positively minded toward supporting the transition to a low carbon economy and seeks to
capitalise on opportunities as follows:
• For new lending, AL requires considerations on how properties can get to EPC C (unless exempt/RMC).
For existing client portfolios, AL finance EPCs improvements.
• RAF is supporting clients by financing leases on electric and hybrid vehicles. It has had success in
financing hybrid London taxis and smaller electric vehicles.
• AAG finances electric buses and is working with the industry on transition pathways to cleaner
technology alternatives for heavy goods vehicles.
• AL has offered clients the option to invest funds in a Sustainable Investment Service since 2021.
This service seeks to incorporate environmental, social and governance (“ESG”) factors to achieve a
positive impact without sacrificing long-term financial returns.
Strategic Report
Sustainability Report
37
Arbuthnot Banking Group PLC
Report & Accounts 2025
Area
Our Response
Risk Management
Describe the
organisation’s
processes for
identifying and
assessing climate-
related risks.
Describe the
organisation’s
processes for
managing climate-
related risks.
Describe how
processes for
identifying, assessing,
and managing
climate-related risks
are integrated into the
organisation’s overall
risk management.
The Board Risk Committee annually review and approve the enterprise-wide climate change
• Risk appetite,
• Risk assessments, and
• Stress test scenarios and results.
The Board Risk Committee consider climate change within the Enterprise and Strategic risk category of
the approved Risk Appetite Framework.
The risk assessments identify and assesses the transition and physicals risk to the business model
and lending book. They consider the existing and emerging regulatory requirements and other relevant
factors, as well as the potential size and scope of climate-related risks.
The stress test scenarios are refreshed annually and inform the risk assessments. The scenarios are
tailored versions of the 2021 Climate Biennial Exploratory Scenario (“CBES”) as outlined in the BOE “Key
elements of the 2021 Biennial Exploratory Scenario: Financial risks from climate change”.
Three scenarios are considered which are plausible representations of what might happen based on
different future paths of governments’ climate policies. They cover the period to 2050 and assume either
early action (in current year), late action (ten years’ time) or no additional action.
Two scenarios consider routes to net-zero carbon dioxide emissions globally by 2050: an Early Action
scenario and a Late Action scenario. These scenarios primarily explore transition risks from climate
change:
• Early Action: Under this scenario, climate policy is ambitious from the beginning, with a gradual
intensification of carbon taxes and other policies over time. Global carbon dioxide emissions
are reduced to net-zero by around 2050 and global warming (relative to pre-industrial levels) is
successfully limited to 1.8°C by the end of the scenario, falling to around 1.5°C by the end of century.
The required adjustment in the economy creates a temporary headwind to growth but this dissipates
in the latter half of the scenario once a significant portion of the required transition has occurred, and
the productivity benefits of green technology investments begin to be realised.
• Late Action: The implementation of policy to drive the transition to a net-zero economy is assumed
to be delayed by a decade under this scenario. Policy measures are then more sudden and disorderly
because of the delay. Global warming is limited to 1.8°C by the end of the scenario (2050) relative
to pre-industrial levels, but then remains around this level at the end of the century. The more
compressed nature of the reduction in emissions also results in material short-term macroeconomic
and financial markets disruption. UK unemployment rises to 8.5% and the economy goes into
recession for a short period. Falls in output are particularly concentrated in emissions-intensive
sectors.
38
Arbuthnot Banking Group PLC
Report & Accounts 2025
Area
Our Response
Risk Management
continued
Describe the
organisation’s
processes for
identifying and
assessing climate-
related risks.
Describe the
organisation’s
processes for
managing climate-
related risks.
Describe how
processes for
identifying, assessing,
and managing
climate-related risks
are integrated into the
organisation’s overall
risk management.
The third scenario is based on the physical risks that would begin to materialise if governments around
the world fail to enact policy responses to global warming and no additional action is taken to address
climate change. This is considered a severe scenario, being based on climate outcomes that would
only occur later this century under the assumption that no additional action is taken to address climate
change, and represents a worse than expected outcome even under such conditions. The absence
of transition policies in this scenario leads to a growing concentration of greenhouse gas emissions in
the atmosphere and, as a result, global temperature levels continue to increase, reaching 3.3°C higher
relative to pre-industrial levels by the end of the scenario. This leads to chronic changes in precipitation,
ecosystems and sea-levels, which are unevenly distributed globally, and in some cases irreversible.
There is also a rise in the frequency and severity of extreme weather events. There are permanent
impacts on living and working conditions, buildings and infrastructure. As a result, UK and global GDP
growth is permanently lower and macroeconomic uncertainty increases.
Reflecting the fact that the future looks materially worse at the end of the scenario, with the adverse
effects of climate change set to worsen further, UK and US equity prices are respectively just under 20
and 25% lower than they might otherwise be.
Climate change is managed within the Group’s governance and risk management frameworks.
Specifically, the
• AL Board Risk Committee oversees ESG and the financial risks of climate change.
• AL Credit Committee considers implications of climate change on new and existing lending.
• AL Investment Committee considers implications of climate change on investment decisions.
• AL Product Governance Committee considers climate change on propositions.
Reference to Climate Change is made in key documents including the:
• ICAAP,
• Risk Appetite Framework,
• AL Risk Hierarchy,
• Credit policy.
Strategic Report
Sustainability Report
39
Arbuthnot Banking Group PLC
Report & Accounts 2025
Metrics and Targets
Aspirations
Metrics
Describe the
targets used by
the organisation to
manage climate-
related risks and
opportunities and
performance against
targets.
Disclose the
metrics used by the
organisation to assess
climate-related risks
and opportunities in
line with its strategy
and risk management
process.
Disclose Scope
1, Scope 2 and, if
appropriate, Scope
3 greenhouse gas
(“GHG”) emissions and
the related risks.
All Buy to Let lending properties to be either
EPC C or have valid exemption by 2035.
AL lend against high quality residential collateral.
Typically these properties are EPC C. AL also
support Landlords to improve the quality of their
collateral, including EPC gradings, where they are
currently beneath C.
• Buy to Let Lending EPC C (as % BTL Lending).
All leases to be for electric, or clean alternative,
vehicles by 2050 with exception of classic and
high value cars.
AL want to support clients as they transition
to the low carbon economy and recognise the
transition will occur at different speeds. However,
AL will cease providing financing on petrol and
diesel cars and vans from 2030/2025, and non-
zero emission heavy goods vehicles from 2040.
• RAF electric/hybrid vehicle financing as % of
RAF vehicle financing (excluding classic and
supercars).
Energy & utility exposure to be maintained
at less than 1% of AL lending portfolio
(0.51%, December 2025).
Be operationally Net Zero by 2050
By reducing carbon emissions and minimising
waste
• AL switched to a new London building in 2024.
The building is Breeam rated “Excellent”
• Company car fleet to be fully electric or hybrid
by 2035
• Company heavy goods fleet (AAG) to be
powered by zero emission engines by 2040
Improve recycling rates to 60%.
• Energy and Utility Exposure (% of future state AL
lending portfolio).
• Scope 1 and 2 intensity ratios
• % General waste recycled
• % Electric / hybrid company cars (as % of total
company cars)
Scope 1,2 and 3 emissions are reported on page 40 below.
(Scope 3 emissions will remain as per 2024. We have investigated and decided against extending Scope
3 emissions reporting to the lending and investment portfolios. The Scope 3 emissions methodology and
data would not be reliable and would give an illusion of accuracy that would not help decision making.)
40
Arbuthnot Banking Group PLC
Report & Accounts 2025
Strategic Report
Sustainability Report
Streamlined Energy & Carbon Reporting (SECR)
The Group continues to work with a specialist energy
management consultancy, Carbon Decoded, to gather
the information required to be reported by large unquoted
companies under the Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018, which includes:
• All energy in line with Greenhouse Gas Reporting (GHG)
Scope One - gas and owned transport, Scope Two -
electricity and Scope Three - non-owned transport.
• Intensity metrics to enable year on year improvements to be
tracked.
The report covers data from 1 January to 31 December 2025.
The Group has reported all sources of environmental impact,
as required in SECR, over which it has financial control, being
the Company and its subsidiaries.
Base Year
The Base Year for the organisation is a rolling annual comparison.
Reporting Methodology
• Data has been collected for electricity, gas and transport.
Data was collected specifically for the purpose of SECR.
• GHG Protocol Corporate Accounting and Reporting Standard
has been followed where relevant.
• Data was collected specifically for the purpose of SECR.
• The 2024 and 2025 UK Government Conversion Factors for
Company Reporting were used for all calculations of Carbon
emissions.
• Data was estimated where necessary, as set out below.
Methodology changes in 2025
Transport calculations for the AAG HGV fleet have historically
been based on vehicle mileage. In 2025 more accurate litre
data was collected for the majority of the fleet, this change
has impacted on the tCO2e and the intensity metric.
This improvement to the methodology will now be applied
moving forward.
Portfolio changes in 2025
The figures for 2025 show improvement on the previous year
in natural gas and electricity. This is because in 2024 there
were three offices in the City of London operating concurrently
up until September 2024 after operations moved over from
7 Wilson Street and 10 Dominion Street to the new head office
at 20 Finsbury Circus from July 2024.
Estimated Data
The following data was estimated in 2025:
• HGV Fleet
The change in the source data from mileage to litres could
not be applied to all vehicles. Where mileage has been used
this has been considered an estimate.
• Bristol and Gatwick
Energy is included in the rent and sub-metering for the office
is not available, calculated estimates are therefore based on
floor area using industry recognised benchmarks.
Operational Scopes
The report contains all Scope One and Two energy use and
Scope Three Grey Fleet for the whole Group as required by
SECR.
Reporting Summary
2025
2024
Measure
kWh
Carbon
Tonnes
tCO2e
Intensity
Ratio tCO2e
Measure
kWh
Carbon
Tonnes
tCO2e
Intensity
Ratio tCO2e
% Change on
Previous Year
Scope One
Natural Gas - Intensity Ratio tCO2e/m2
8,612
66,373
12
0.0014
14,391
340,896
62
0.0040
(81%)
Kerosene - Intensity Ratio tCO2e/m2
1,545
54,772
14
0.0088
1,545
31,910
8
0.0050
75%
Diesel - Mixed Onsite Use No Metric Available
265,345
65
230,379
55
18%
Company HGVs Intensity Ratio tCO2e/miles
69,450
430,521
105
0.0015
69,926
294,331
70
0.0010
50%
Company Cars Intensity Ratio tCO2e/miles
347,512
203,504
47
0.0001
348,117
254,935
59
0.0002
(20%)
Total Scope One
1,020,515
243
1,152,451
254
(4%)
Scope Two
Electricity - Intensity Ratio tCO2e/m2
15,886
1,733,302
307
0.0193
19,422
2,235,188
463
0.0240
(34%)
Company Cars Intensity Ratio tCO2e/miles
167,935
59,127
11
0.0001
93,508
31,778
7
0.0001
57%
Total Scope Two
1,792,429
318
2,266,966
470
(32%)
Scope Three
Grey Fleet Vehicles Intensity Ratio tCO2e/miles
223,371
226,413
52
0.0002
247,558
277,450
64
0.0003
(19%)
Total Scope Three
223,371
226,413
52
0.0002 247,558
277,450
64
0.0003
(19%)
Total of all Scopes
3,039,357
613
3,696,867
788
Estimated Data
3%
6%
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Corrective Actions
There are no corrective actions for 2025.
Intensity Ratios
Intensity ratios are used to enable year on year comparison.
As Arbuthnot is an office-based business the recognised
standard measure is kilowatt-hour per square metre (kWh/
m2). This enables the energy use to be compared to industry
standard benchmarks. Similarly for transport, the metric is
kilowatt-hour per mile (kWh/mile). The metrics have been
reported as required by the Regulations.
Energy Efficiency Actions
To summarise the energy efficiency actions for 2025:
• The AAG fleet has increased in numbers with the growth in
the sales force. AAG remain committed to investing in plug-in
hybrid vehicles. 2025 saw higher fleet mileage but vehicle
changes have seen Scope One tCO2e emissions fall by 11.5
tCO2e compared to 2024, this is balanced with an increase
in Scope Two emissions of 4 tCO2e.
• Optimisation work has been undertaken at Finsbury Circus
and ESOS audits undertaken to ensure further efficiencies
can be identified and planned for the building.
James Cobb
Group Finance Director
25 March 2026
42
Arbuthnot Banking Group PLC
Report & Accounts 2025
Board of
Directors
Arbuthnot Banking Group PLC
Report & Accounts 2025
42
Andrew
Salmon
Jayne
Almond
The Hon Sir
Nigel Boardman
Frederick
Angest
Charlotte
Crosswell OBE
Richard
Gabbertas
Angela
Knight CBE
Lord
Sassoon
Nicholas
Jennings
James
Cobb
Sir Henry
Angest
Arbuthnot Banking Group PLC
Report & Accounts 2025
43
Arbuthnot Banking Group PLC
Report & Accounts 2025
Sir Henry Angest
Chairman and Chief Executive
Appointed to the Board in December 1985, Sir Henry is
Chairman and Chief Executive. He is also President and a
director of Arbuthnot Latham & Co., Limited of which he was
Chairman from 1994 to 2022. He gained extensive national and
international experience as an executive of The Dow Chemical
Company and Dow Banking Corporation. He was previously
chairman and a director of Secure Trust Bank PLC, chairman
of the Banking Committee of the London Investment Banking
Association and a director of the Institute of Directors. He is
a Past Master of the Worshipful Company of International
Bankers and is now Master Emeritus.
James Cobb FCA
Group Finance Director
Appointed to the Board in November 2008 as Group Finance
Director, Mr. Cobb is also Finance Director and Deputy Chief
Executive of Arbuthnot Latham & Co., Limited. He was
previously a director of Secure Trust Bank PLC and Deputy
Chief Financial Officer and Controller of Citigroup’s Global
Consumer Group in Europe, Middle East and Africa and
qualified as a Chartered Accountant with Price Waterhouse.
Andrew Salmon FCA
Chief Operating Officer
Appointed to the Board in March 2004, Mr. Salmon is Group
Chief Operating Officer and Head of Business Development,
having joined the Company in 1997. He is also Chief Executive
of Arbuthnot Latham & Co., Limited. He was previously a
director of Secure Trust Bank PLC and of Hambros Bank Limited
and qualified as a Chartered Accountant with KPMG.
Jayne Almond
Independent Non-Executive Director
Appointed a Director in September 2023, Ms Almond is also
a director of Arbuthnot Latham & Co., Limited. She is a highly
experienced professional in the banking, mortgages and
financial services arenas and is Chairman of Enity Bank Group
AB. She was previously Chairman, Chief Executive or NED in a
wide range of organisations including Butterfield Mortgages
Limited and Kensington Mortgages, a subsidiary of Barclays
Bank UK plc.
Charlotte Crosswell OBE
Independent Non-Executive Director
Appointed a Director in July 2025, Ms Crosswell is also
a director of Arbuthnot Latham & Co., Limited. She is an
experienced executive and non-executive director with a
breadth of experience from roles in high growth sectors
including financial technology and technology as well as
financial services. She has been involved in capital markets,
fintech and technology throughout her career.
She is currently Executive Chair, Raidiam Services Limited
and a Non-Executive Director of London Stock Exchange
plc. of Centre for Policy Studies and of Freemarketfx
Limited where she is Chair of its Risk Committee. Prior to
her current roles, she was Chair of the Centre for Finance,
Innovation and Technology, Chair and Trustee of Open
Banking and CEO of the fintech industry body, Innovate
Finance.
Frederick Angest
Non-Executive Director
Appointed a Director in September 2022, Mr. Angest is also a
director of Arbuthnot Latham & Co., Limited, where he works
currently as a Senior Banker, having previously worked within
Wealth Management and Credit Risk.
The Hon Sir Nigel Boardman
Independent Non-Executive Director
Appointed a Director in June 2019, Sir Nigel is also chairman
and a director of Arbuthnot Latham & Co., Limited. He was a
partner at the law firm, Slaughter and May from 1982 to 2019.
He is also senior independent director of Aston Martin Lagonda
Global Holdings plc and a director of Mile Group Unlimited and
of Glyde Group Unlimited, the holding companies for ABP Foods
Jersey, and of the Blackrock group of hospitals.
Sir Nigel is Chair of the charity Help for Heroes, chair of The
Medical College of Saint Bartholomew’s Hospital Trust, a
charity funding medical research and Vice-Chair of the London
Philharmonic Orchestra. Sir Nigel was previously a non-
executive director of the Department for Business, Energy and
Industrial Strategy and chaired its audit, risk and assurance
committee.
44
Arbuthnot Banking Group PLC
Report & Accounts 2025
Richard Gabbertas FCA
Independent Non-Executive Director
Appointed a Director in July 2024. He is also a director of
Arbuthnot Latham & Co., Limited and Chairman of its Board
Risk Committee. Mr. Gabbertas was a Partner for 23 years in the
Financial Services Practice of KPMG where he led the regional
practice. He retired in 2018 after 38 years with the firm. He is
also a non-executive director of Newcastle Building Society
and previously of Recognise Bank Limited.
Angela Knight CBE
Independent Non-Executive Director
Appointed a Director in September 2023, Ms Knight is also a
director of Arbuthnot Latham & Co., Limited. She is Chair of
the Board of Pool Reinsurance Company Limited, a director of
Encore Capital Group, Inc and a non-executive independent
member of the board of the Astana Financial Services Authority
of Kazakhstan. She is a Past Master of the Worshipful Company
of International Bankers.
She has a wealth of commercial and financial experience from
her time in government as a Treasury Minister and as Chief
Executive of the British Bankers’ Association (now UK Finance)
and of Energy UK. She was Member of Parliament for Erewash
from 1992 to 1997. Her previous non-executive roles include
Lloyds TSB plc, Scottish Widows, LogicaCMG plc, Transport for
London, Port of London Authority, Brewin Dolphin Holdings PLC,
TP ICAP plc, Taylor Wimpey PLC and Vanquis Banking Group
plc. She was also Chair of the Office of Tax Simplification, an
independent body of HM Treasury.
Lord Sassoon FCA
Independent Non-Executive Director
Appointed a Director in September 2023, Lord Sassoon is also
a director of Arbuthnot Latham & Co., Limited. He is Chairman
of the Audit Committee. He began his career at KPMG, before
joining SG Warburg (latterly UBS Warburg) where he led the
firm’s global privatisation business, ending as Vice-Chairman,
Investment Banking. From 2002 to 2013 he served in HM
Treasury as Managing Director, Finance, Regulation and
Industry before acting as President of the Financial Action Task
Force and was then Commercial Secretary to the Treasury.
He is currently a non-executive director of Barco NV, a listed
Belgian visualisation technology company, and of China
Construction Bank Corporation. He is President of the China-
Britain Business Council, Member of the International Advisory
Council of the China Investment Corporation, Chair of Sir
John Soane’s Museum and Chair of the Pilgrim Trust. He was
previously an executive director of Jardine Matheson Holdings
Limited and a non-executive director of The Merchants Trust
plc and of Jardine Lloyd Thompson Group plc.
Nicholas Jennings FCA
Company Secretary
Appointed Group Company Secretary in July 2018, Mr. Jennings
was previously company secretary of Daily Mail and General
Trust plc and of Close Brothers Group plc. He is a Chartered
Accountant.
Board of
Directors
45
Arbuthnot Banking Group PLC
Report & Accounts 2025
The Directors present their report for the year ended
31 December 2025.
Business Activities
The principal activities of the Group are banking and financial
services. The business review and information about future
developments, key performance indicators and principal risks
are contained in the Strategic Report on pages 10 to 41.
Corporate Governance
The Corporate Governance report on pages 49 to 55 contains
information about the Group’s corporate governance
arrangements, including in relation to the Board’s application
of the UK Corporate Governance Code.
Results and Dividends
The results for the year are shown on page 66 of the financial
statements. The profit after tax for the year of £17.8m (2024:
£24.9m) is included in reserves. The Directors recommend the
payment of a final dividend of 31p (2024: 29p) per Ordinary
share and Ordinary Non-Voting share which, together with the
interim dividend of 22p (2024: 20p) per Ordinary share and
Ordinary Non-Voting share paid on 30 May 2025 represents
total dividends for the year of 53p (2024: 69p which also
included a special dividend of 20p) per Ordinary share and
Ordinary Non-Voting share. The final dividend, if approved by
Ordinary shareholders at the 2026 Annual General Meeting
(“AGM”), will be paid on 29 May 2026 to shareholders on the
register at close of business on 17 April 2026.
Directors
The names of the Directors of the Company at the date of
this report, together with biographical details, are given on
pages 42 to 44 of this Annual Report. Ms C.L.B Crosswell
was appointed to the Board on 16 July 2025. All the other
Directors listed on those pages were directors of the Company
throughout the year. Mr. I.A. Dewar and Sir Alan Yarrow were
also Directors during the year prior to their retirement from the
Board on 21 May 2025.
Ms Crosswell offers herself for election under Article 75 of
the Articles of Association. Sir Nigel Boardman, Mr. F.A. H.
Angest and Ms A.A. Knight being eligible, offer themselves
for re-election under Article 78 of the Articles of Association.
Sir Nigel, Ms Almond and Mr. Angest each has a letter of
appointment terminable on three months’ notice. Mr. Angest
also has a service agreement as an employee terminable on
three months’ notice.
Articles of Association
The Company’s articles of association may only be amended
by a special resolution of the Ordinary shareholders. They
were last amended at the AGM in May 2017 and can be viewed
at www.arbuthnotlatham.co.uk/group/investor-relations/
announcements.
Viability Statement
In accordance with the UK Corporate Governance Code, the
Directors confirm that there is a reasonable expectation that
the Group will continue to operate and meet its liabilities, as
they fall due, for the three-year period up to 31 December 2028.
A period of three years has been chosen because it is the
period covered by the Group’s strategic planning cycle and also
incorporated in the Individual Capital Adequacy Assessment
Process (“ICAAP”), which forecasts key capital requirements,
expected changes in capital resources and applies stress
testing over that period.
The Directors’ assessment has been made with reference to:
• the Group’s current position and prospects – please see the
Financial Review on pages 16 to 25;
• the Group’s key principles – please see Corporate Philosophy
on page 1; and
• the Group’s risk management framework and associated
policies, as explained in Note 6 to the financial statements.
The Group’s strategy and three-year plan are evaluated and
approved by the Directors annually. The plan considers the
Group’s future projections of profitability, cash flows, capital
requirements and resources, and other key financial and
regulatory ratios over the period. The ICAAP is embedded in
the risk management framework of the Group and is subject to
continuing updates and revisions when necessary. The ICAAP
process is used to stress the capital position of the Group over
the three-year planning period. It is updated at least annually
as part of the business planning process.
Going Concern
In assessing the Company’s and the Group’s Going Concern
position, the Directors have made appropriate enquiries which
assessed the following factors:
• the Group’s strategy, profitability and funding;
• the Group’s risk management (see Note 6 to the financial
statements) and capital resources (see Note 7);
• the results of the Group’s capital and liquidity stress testing;
• the results of the Group’s reverse stress testing and the
stress levels that have the potential to cause its business
plan failure; and
• the Group’s recovery plan and potential management
actions to mitigate stress impacts on capital and liquidity.
The key Macro-Economic Risks for the stress testing included:
• Property market falls of up to 35% in property values;
• Stock market falls of up to 28% in UK equity prices;
• Interest rate rise/fall; and
• Regulation change.
Group
Directors’ Report
46
Arbuthnot Banking Group PLC
Report & Accounts 2025
Group
Directors’ Report
The key Idiosyncratic Risks for the stress testing included:
• Credit losses;
• Operational events (i.e. fraud, cyber event, etc.);
• Decline in profitability; and
• Liquidity event (i.e. significant deposit outflow).
As a result of the assessment, the Directors are satisfied that
the Company and the Group have adequate resources to
continue in operation for a period of at least twelve months
from when the financial statements are authorised for issue.
The financial statements are therefore prepared on the going
concern basis.
Share Capital
The Company has in issue two classes of shares, Ordinary
shares and Ordinary Non-Voting shares, each with a nominal
value of 1p. The Non-Voting shares rank pari passu with the
Ordinary shares, including the right to receive the same
dividends as the Ordinary shares, except that they do not have
the right to vote in shareholder meetings.
Authority to Purchase Shares
Shareholders will be asked to approve a Special Resolution
renewing the authority of the Directors to make market
purchases of shares not exceeding 10% of the issued Ordinary
and Ordinary Non-Voting share capital. The Directors will keep
the position under review in order to maximise the Company’s
resources in the best interests of shareholders. Details of the
resolutions renewing this authority are included in the Notice
of Meeting on pages 150 to 152. No shares were purchased
during the year. The maximum number of Treasury shares held
at any time during the year was 390,274 Ordinary shares and
19,040 Ordinary Non-Voting shares of 1p each.
Financial Risk Management
Details of how the Group manages risk are set out in in the
Strategic Report and in Note 6 to the financial statements.
Directors’ Interests
The interests of current Directors and their families in the
shares of the Company at the dates shown, together with the
percentage of the current issued share capital held (excluding
treasury shares), were as follows:
Beneficial Interests - Ordinary shares
1 January 2025
31 December 2025
3 March 2026
%
Sir Henry Angest
9,392,185
9,392,185
9,392,185
58.0
Sir Nigel Boardman
26,062
26,062
26,062
0.2
JD Almond
11,617
11,617
11,617
0.1
JR Cobb
6,000
6,000
6,000
-
AA Salmon
51,699
51,699
51,699
0.3
Beneficial Interests - Ordinary Non-Voting shares
1 January 2025
31 December 2025
3 March 2026
%
Sir Henry Angest
86,674
86,674
86,674
64.9
JR Cobb
60
60
60
-
AA Salmon
516
516
516
0.4
Substantial Shareholders
The Company was aware at 3 March 2026 of the following
substantial holdings in the Ordinary shares of the Company,
other than those held by one director shown above:
Holder
Ordinary Shares
%
Liontrust Asset Management
1,375,156
8.5
Slater Investments
825,919
5.1
Significant Contracts
No Director, either during or at the end of the financial year,
was materially interested in any contract with the Company or
any of its subsidiaries, which was significant in relation to the
Group’s business. At 31 December 2025, one director had loans
from Arbuthnot Latham & Co., Limited amounting to £0.9m
(2024: £2.8m) and four directors had deposits amounting
to £5.6m (2024: £3.9m), all on normal commercial terms as
disclosed in Note 42 of the financial statements.
Directors’ Indemnities
The Company’s Articles of Association provide that, subject to
the provisions of the Companies Act 2006, the Company may
indemnify any Director or former Director in respect of liabilities
(and associated costs and expenses) incurred in connection
with the performance of their duties as a Director of the
Company or any subsidiary and may purchase and maintain
insurance against any such liability. The Company maintained
directors and officers liability insurance throughout the year.
47
Arbuthnot Banking Group PLC
Report & Accounts 2025
Employee Engagement
The Company gives due consideration to the employment
of disabled persons and is an equal opportunities employer.
It also regularly provides employees with information on matters
of concern to them, consults on decisions likely to affect their
interests and encourages their involvement in the performance
of the Company through regular communications and in other
ways. Further information on employee engagement is given in
the Strategic Report on pages 29 and 30.
The Company has a policy in place to ensure that it applies
the Equality Act 2010 which makes it unlawful to discriminate
inter alia on the grounds of disability. At the recruitment
stage, reasonable adjustments are made to ensure that no
candidate is put at a disadvantage because of their disability.
Should existing employees become disabled, every effort is
made to retain them within the workforce wherever reasonable
and practicable. The Group also endeavours to provide equal
opportunities in the training, promotion and general career
development of disabled employees.
Engagement with Suppliers, Customers and Others
Information on engagement with suppliers, customers and
other stakeholders is given in the Strategic Report on page 28.
Streamlined Energy & Carbon Reporting
The information required by the Companies (Directors’ Report)
and Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018 is set out in the Sustainability Report on
page 40. These Regulations implement the Government’s
policy on Streamlined Energy and Carbon Reporting (SECR) to
support business in understanding its responsibility for carbon
emissions and to help establish plans to become Net Zero by
2050.
Political Donations
The Company made political donations of £23,000 during the
year (2024: £16,000), being principally payment for attendance
at political functions, as permitted by the Ordinary Resolution
of Ordinary shareholders passed on 22 May 2024.
Events after the Balance Sheet Date
There were no material post balance sheet events.
AGM
The Company’s AGM will be held on Tuesday 19 May 2026 at
which Ordinary Shareholders will be asked to vote on a number
of resolutions. Shareholders are encouraged to submit their
votes in respect of the business to be discussed via proxy,
appointing the Chairman of the meeting as their proxy. This will
ensure that votes will be counted if shareholders are unable to
attend the meeting in person. The resolutions, together with
explanatory notes about voting arrangements, are set out on
pages 150 to 152.
Auditor
A resolution for the re-appointment of Forvis Mazars LLP as
auditor will be proposed at the forthcoming AGM in accordance
with section 489 of the Companies Act 2006.
Disclosure of Information to the Auditor
Each of the persons who are Directors at the date of approval
of this Annual Report confirm that:
• so far as each director is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
• they have taken all the steps they ought to have taken as a
director to make themselves aware of any relevant audit
• information and to establish that the Company’s auditor is
aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the
Companies Act 2006.
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Group
Directors’ Report
Statement of Directors’ Responsibilities in Respect
of the Strategic Report and the Directors’ Report
and the Financial Statements
The Directors are responsible for preparing the Strategic
Report, the Directors’ Report and the Financial Statements in
accordance with applicable law and regulations. Company Law
requires the Directors to prepare Group and Parent Company
Financial Statements for each financial year. As required by
the AIM Rules for Companies and in accordance with the Rules
of the AQSE Growth Market, they are required to prepare the
Group Financial Statements in accordance with UK-adopted
international accounting standards in conformity with the
requirements of the Companies Act 2006 and have elected
to prepare the Parent Company Financial Statements on the
same basis.
Financial Statements
Under Company Law the Directors must not approve the
Financial Statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
the Company and of the Group profit or loss for that period.
In preparing each of the Group and Parent Company Financial
Statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable,
relevant and reliable;
• state whether they have been prepared in accordance
with UK-adopted International Accounting Standards in
conformity with the requirements of the Companies Act
2006;
• assess the Group and Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern; and
• use the going concern basis of accounting unless they
intend either to liquidate the Group or the Parent Company
or to cease operations, or have no realistic alternative but to
do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group and Parent Company’s transactions and disclose
with reasonable accuracy at any time the financial position of
the Group and Parent Company and enable them to ensure
that its Financial Statements comply with the Companies Act
2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error, and have general responsibility for taking
such steps as are reasonably open to them to safeguard the
assets of the Group and Parent Company and to prevent and
detect fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the UK governing the
preparation and dissemination of Financial Statements may
differ from legislation in other jurisdictions.
The Directors confirm that the Annual Report and financial
statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for
shareholders to assess the Group and Parent Company’s
position, performance, business model and strategy.
By order of the Board
N D Jennings
Secretary
25 March 2026
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Introduction and Overview
The Company has a strong and effective corporate
governance framework. The Board endorses the principles of
openness, integrity and accountability which underlie good
governance and applies the principles of the UK Corporate
Governance Code, published by the Financial Reporting
Council (“the FRC Code”), and complies with its provisions in
so far as they are considered appropriate for the Company,
given its size and circumstances, and the role and overall
shareholding of its majority shareholder. The Group operates
to the high standards of corporate accountability and
regulatory compliance. The Company has been approved by
the Prudential Regulation Authority (PRA) as a parent financial
holding company of its banking subsidiary, Arbuthnot Latham
& Co., Limited. Arbuthnot Latham is authorised by the PRA and
regulated by the Financial Conduct Authority (FCA) and by the
PRA. One of its subsidiaries, Asset Alliance Leasing Limited, is
authorised and regulated by the FCA.
The Board decided in 2018 to report against the FRC Code.
This decision was made in light of the requirement in the AIM
Rules for Companies that AIM listed companies state which
corporate governance code they have decided to apply, how
the company complies with that code, and where it departs
from its chosen code an explanation of the reasons for doing
so. The Rules of the AQSE Growth Market also require the
Company to adopt, as far as possible, the principles and
standards set down in a recognised UK corporate governance
code. This information is published on the Company’s website
and the Company reviews it each year as part of its annual
reporting cycle.
In January 2024 the FRC made limited revisions to its 2018 Code,
publishing a UK Corporate Governance Code 2024 (“the 2024
Code”). The 2024 Code has been applicable to the Company
throughout its year ended 31 December 2025 other than for one
provision, number 29. This provision amends that concerning
the monitoring of the risk management and internal control
framework, which is not applicable until its year beginning
1 January 2026 with the provision from the 2018 Code continuing
to apply until then. This section of the Annual Report summarises
how the Company applies the FRC Code and in broad terms how
it has complied with its provisions throughout the 2025 financial
year, giving explanations where it has chosen not to do so.
Leadership and Purpose
The Company is led by the Board which comprises ten
members: Sir Henry Angest, the Chairman and Chief
Executive; two other executive directors, Andrew Salmon
and James Cobb; six independent non-executive directors,
Jayne Almond, Sir Nigel Boardman, Charlotte Crosswell,
Angela Knight, Richard Gabbertas and Lord Sassoon; and one
non-independent non-executive Director, Frederick Angest.
This means that more than half of the Board, excluding the
Chairman, comprises independent non-executive directors.
The Board sets the long-term focus and customer-oriented
culture of the Group. The responsibilities of Sir Henry Angest as
Chairman include leading the Board, ensuring its effectiveness
in all aspects of its role, ensuring effective communication with
shareholders, setting the Board’s agenda and ensuring that all
Directors are encouraged to participate fully in the activities and
decision-making process of the Board.
The Board has for many years led a company which focuses
on sustainable growth over the longer-term with a culture
to match. Investment in resources has been strong and has
continued where and as appropriate, with the focus on the
benefit this will bring to bear for stakeholders over time.
The aim continues to be for a culture of openness among
the workforce which combines with the prudent and effective
technological and individual controls in place across the
business to ensure strong risk management in the Company’s
continued long-term success.
The Group’s cultural values are reflected in a brand values
document linking the Arbuthnot Principles to the Group’s
culture as a way of communicating culture across the
business. These cultural Principles are encapsulated in
five Group values which are fully embedded into day-to-
day activities. These are integrity, respect, empowerment,
energy and drive, and collaboration. A formal approach to
Environmental, Social and Governance (ESG) is in place
to develop over time under five ‘pillars of sustainability’ –
governance, employees, community, environment and clients.
The Board
The Board held seven scheduled meetings during the year, six
of which were held jointly with the Board of Arbuthnot Latham
with the other one being held to approve the Interim Report.
The Directors also held a separate strategy meeting, together
with the AL Directors, in September. Substantive agenda items
have briefing papers, which are circulated in a timely manner
before each meeting. The Board ensures that it is supplied
with all the information that it requires and requests in a form
and of a quality to fulfil its duties.
In addition to overseeing the management of the Group,
the Board has determined certain items which are reserved
for decision by itself, as set out in the Schedule of Matters
Reserved to the Board which is reviewed annually and
is published on the Company’s website at https://www.
arbuthnotlatham.co.uk/group/about/corporate-governance.
These matters include approval of the Group’s long-term
objectives and commercial strategy, ensuring a sound system
of internal control, risk management strategy, approval of major
investments, acquisitions and disposals, any changes to the
capital structure and the overall review of corporate governance.
The Company Secretary is responsible for ensuring that the
Board processes and procedures are appropriately followed
and support effective decision making. All directors have
Corporate
Governance
50
Arbuthnot Banking Group PLC
Report & Accounts 2025
Corporate
Governance
access to the Company Secretary’s advice and services.
There is an agreed procedure for directors to obtain
independent professional advice in the course of their
duties, if necessary, at the Company’s expense.
New directors receive induction training upon joining the
Board, with individual listed company training provided by
the Company’s AIM Nominated Adviser and AQSE Corporate
Adviser. Regulatory and compliance training is provided by
the AL Chief Compliance Officer or by an external firm of
lawyers, accountants and other subject matter experts. Risk
management training is provided, including that in relation
to the ICAAP and ILAAP, by the AL Chief Risk Officer with an
overview of credit and its associated risks and mitigation by
the AL Chief Credit Officer and a session with the MLRO and
Enterprise Risk covering Financial Crime Prevention.
Review of Board Effectiveness
The annual Board Effectiveness Review was conducted
internally. In March 2025, the Board considered an action
plan, arising from the review conducted in November 2024
and agreed to implement a number of changes in terms
of management information and business presentations,
arising from the various comments and observations received
from Directors. The 2025 evaluation took the form of a
communication, seeking any comments Directors might have
on the Effectiveness of the Board and its Committees and
any ways in which they thought the Board process could be
improved further. A summary was discussed by the Board
in November 2025 with responses positive, confirming that
the Board was of the view that it receives the correct level of
insight into and oversight of the Company, both directly to it
and in terms of management information and oral updates
provided during meetings. Directors also agreed that the
Arbuthnot culture set out in the Arbuthnot Principles and
Values manifests itself at Board level and in the external view
of the Group as a whole.
Overview of Compliance with the FRC Code, together
with Exceptions
The Board focuses not only on the provisions of the Code but
on its principles, ensuring as follows:
• The Company’s purpose, values and strategy as a prudently
managed organisation align with its culture, with a focus on
fairness and long-term shareholder returns.
• The Board has an appropriate combination of executive and
non-executive directors, who have both requisite knowledge
and understanding of the business and the time to commit
to their specific roles.
• The Board comprises directors with the necessary
combination of skills to ensure the effective discharge of
its obligations, with an annual evaluation of the capability
and effectiveness of each director as well as the Board as a
whole; appropriate succession plans are also in place and
reviewed annually, or more frequently if appropriate.
• The Board and Audit Committee monitor the procedures
in place to ensure the independence and effectiveness of
both external and internal auditors, and the risk governance
framework of the Company, with all material matters
highlighted to the relevant forum (Board/Committee).
• Remuneration policies and practices are designed to
support strategy and promote long-term sustainable
success, with a Remuneration Committee in place to
oversee director and senior management pay.
In respect of the Code’s specific provisions, an annual
review is carried out, comparing the Company’s governance
arrangements and practices against them. Any divergences
are noted, with relevant rationale considered carefully to
determine whether it is appropriate. Consideration is also
given to guidance issued. In line with the FRC’s Guidance on
Board Effectiveness, the Board additionally takes into account
its suggestions of good practice when applying the Code
focusing on the five key principles specified in the Code.
Where the Company’s governance does not align completely
with the Code, it is generally as a result of the role of its overall
majority shareholder, itself adding a level of protection to long-
term shareholder interests, which has had a positive impact on
the Company.
All divergences from the Code, with an explanation of the
reasons for doing so are set out below:
Provision 5 – The Board has regard to the interests of all its
key stakeholders in its decision making. Executive Directors
and senior management are fully engaged with the workforce,
all of whom interact on a daily basis. Mr. Gabbertas is the
Company’s Whistleblowing Champion and is available at all
times in this role. It has not been deemed necessary to appoint
an employee representative to the Board since the Company
has fewer than 20 employees, each of whom has direct access
to the Board including its Non-Executive Directors. Given
its size, as stated in the s.172 Statement on page 27, Jayne
Almond, a non-executive director of Arbuthnot Latham,
has been designated by its board as the director to engage
with the Arbuthnot Latham Group’s workforce.
Provision 9 – The Chairman was not independent on
appointment, though he was appointed prior to the
introduction of the provision. Sir Henry Angest carries out
the role of Chairman and Chief Executive, given his long-
term interest as majority shareholder, itself aligning with the
interests of other shareholders. The Company follows the US
model that is successful in ensuring commercial success with
51
Arbuthnot Banking Group PLC
Report & Accounts 2025
strong corporate governance and stakeholder awareness,
having a shared Chairman and CEO, with a separate,
empowered, Chief Operating Officer. In his role as CEO,
Sir Henry Angest is responsible for the effective operation
and delivery of the business and ensures that he is surrounded
by an exceptional management team which ensures the
strong leadership required. In particular, ABG has a strong
Group Chief Operating Officer and Group Finance Director
ensuring challenge and independence from a business
perspective, against the stakeholder focus of the Chairman
carrying out his Chairman’s role.
Provision 10 – The Board considers Ms Knight, who joined the
Board in September 2023, to be independent, notwithstanding
the fact that she has served on the Board of Arbuthnot Latham
for more than nine years since October 2016, since her views
and any challenge to executive management remain firmly
independent.
Provision 12 – The Board has not appointed a Senior
Independent Director, as the main shareholder is the Chairman
and other large independent shareholders communicate
frequently with the Chairman, the Group Chief Operating
Officer and the Group Finance Director and with the Company’s
stockbroker, Shore Capital.
Provision 14 – Attendance at meetings is not reported.
In the event that a Director is unable to attend a meeting,
that Director receives relevant papers in the normal manner
and relays any comments in advance of the meeting to the
Chairman. The same process applies in respect of the Board
Committees.
Provision 18 – Directors retire by rotation every three years in
accordance with the Company’s Articles of Association and
company law. The Directors seeking re-election at the 2026
AGM are Sir Nigel Boardman, Frederick Angest and Angela
Knight who have served on the Board for almost seven, 3½
and 2½ years respectively. The contribution of each of them
has been invaluable in the successful development of the
Company. Charlotte Crosswell, appointed to the Board by the
Directors on 16 July 2025, will be seeking election by Ordinary
shareholders. The Board fully supports the resolutions for the
respective reappointment and appointment of these Directors.
Provision 19 – Sir Henry Angest’s role as Chairman is critical
to and reflective of the overall group structure. It is through
the responsibilities that derive from this role that he is able
to consider and protect not only the interests of other
shareholders, but also his own interests as a majority
shareholder as their interests are aligned. It is for this reason
that he surrounds himself with notably strong directors who
individually, and as a group, ensure the protection of not only his
investments, but also those of other shareholders. As such, he
remains as Chairman notwithstanding the length of his tenure.
Provision 23 – The Nomination Committee takes into account
the provisions of the Board Suitability & Diversity Policy and,
in terms of succession planning, the Inclusivity & Respect
Policy which promotes equality of opportunity for all staff.
Further information on diversity and inclusion is given in the
Sustainability Report on pages 30, 31 and 34, though the
gender balance of senior management and their direct reports
has not been given.
Provision 32 – Sir Henry Angest is Chairman of the
Remuneration Committee, as is appropriate in the context of
his majority shareholding.
Provisions 37 and 38 – Directors’ contracts do not include
malus and clawback provisions which would enable the
Company to recover and/or withhold sums or share awards.
This is because, as explained in the Remuneration Report
on page 56, the Company’s Remuneration Policy reflects
the proportionality thresholds set by the FCA and PRA in
their joint policy statement on remuneration and enhancing
proportionality for level 3 firms (small firms), published in
December 2023. These changes exempted firms that meet
these thresholds from requirements relating inter alia to malus
and clawback.
Internal Control and Financial Reporting
The Board of directors has overall responsibility for the Group’s
system of internal control and for reviewing its effectiveness.
Such a system is designed to manage rather than eliminate risk
of failure to achieve business objectives and can only provide
reasonable, but not absolute, assurance against the risk of
material misstatement or loss.
The Directors and senior management of the Group review
and approve the Group’s Risk Management Policy and Risk
Appetite framework. The Risk Management Policy describes
and articulates the risk management and risk governance
framework, methodologies, processes and infrastructure
required to ensure due attention to all material risks for
the Group, including compliance with relevant regulatory
requirements.
The Risk Appetite framework sets out the Board’s risk
attitude for the principal risks through a series of qualitative
statements and quantitative risk tolerance metrics. These
guide decision-making at all levels of the organisation and form
the basis of risk reporting. The key business risks and emerging
risks are continuously identified, evaluated and managed
by means of limits and controls at an operational level by
management, and are governed through AL committees.
There are well-established budgeting procedures in place
and reports are presented regularly to the Board detailing
the results, results of each principal business unit, variances
against budget and prior year, and other performance data.
52
Arbuthnot Banking Group PLC
Report & Accounts 2025
Corporate
Governance
Any risk matters are reported to the Board by the Chair of the
AL Board Risk Committee, Mr. Gabbertas, at each of its regular
meetings, held jointly with the board of AL since the AL Board
Risk Committee is responsible for monitoring the status of
the AL group against its principal risks. Furthermore, each
of the Directors either attends or, in the case of each of the
independent Non-Executive Directors, is a member of the AL
Board Risk Committee, in their role as a Non-Executive Director
or in the case of Sir Nigel Boardman Chair of AL, which meets
five times a year. Material items are presented to the AL Board
Risk Committee in the Risk Report, which includes
a risk dashboard, from the AL Chief Risk Officer. Significant
risks identified in connection with the development of new
activities are subject to consideration by the Directors.
The risk dashboard covers key management actions which
have included the climate change agenda and its potential
longer-term impact on property and other asset classes and
on management’s approach to sustainability.
In November 2025, the Board received a separate report
from the AL CRO who attends the Board meetings held
concurrently with those of AL enabling it to monitor the
company’s risk management and internal control systems
and to carry out its annual review of the effectiveness of
the Group’s risk management and internal control systems.
The report explained the Risk Management Policy, together
with principal risks, risk appetite, policies, three lines of
defence, systems, processes, procedures and controls and
the risk board dashboard. Following its review, the Board
confirms the effectiveness of the Company’s risk management
and internal control systems.
The Board also reviewed the analysis and consideration of
material controls, set out in the report, in place at the year
end. This will enable the Company to report against the
new element of Provision 29 in the 2024 Code, regarding
the monitoring of the risk management and internal control
framework, in its next Annual Report for the year ending
31 December 2026.
Shareholder Communications
The majority shareholder is Sir Henry Angest, Chairman and
Chief Executive. The Company maintains communications with
its major external shareholders via one-to-one meetings, as
appropriate, by the Chairman and Chief Executive, the Group
Chief Operating Officer or the Group Finance Director on
governance and other matters. When practicable it also makes
use of the AGM to communicate with shareholders in person.
The Company aims to present a balanced and understandable
assessment in all its reports to shareholders, its regulators, other
stakeholders and the wider public. Key announcements and other
information can be found at www.arbuthnotgroup.com.
Board Committees
The Board has Audit, Nomination, Remuneration, Donations
and Policy Committees, each with formally delegated duties
and responsibilities and with written terms of reference, which
require consideration of the committee’s effectiveness.
The Board keeps the governance arrangements under review.
Further information in relation to these committees is set out
below and the terms of reference of the Audit, Nomination
and Remuneration Committees are published on the
Company’s website. The Board maintains direct responsibility
for issues of Risk without the need for its own Risk Committee,
since responsibility for large lending proposals is a direct
responsibility of its subsidiary, AL.
Audit Committee
Membership and meetings
Membership of the Audit Committee comprises Lord Sassoon
(as Chairman), Jayne Almond, Sir Nigel Boardman, Charlotte
Crosswell (since 16 July 2025), Angela Knight and Richard
Gabbertas. All of the Committee’s members are independent
non-executive Directors. Ian Dewar and Sir Alan Yarrow were
members until their retirement as Directors on 21 May 2025.
Lord Sassoon and Mr. Gabbertas have recent and relevant
financial experience and the Committee as a whole has
competence relevant to the financial sector in which the
Company operates. The Company Secretary acts as its
Secretary.
The Audit Committee oversees, on behalf of the Board,
financial reporting, the appropriateness and effectiveness
of systems and controls, the work of Internal Audit and the
arrangements for and effectiveness of the external audit.
The ultimate responsibility for reviewing and approving the
Annual Report and Accounts and the Interim Report lies
with the Board. The Committee also reviews procedures for
detecting fraud and preventing bribery, reviews whistleblowing
arrangements for employees to raise concerns in confidence,
and reviews, as necessary, arrangements for outsourcing
significant operations.
External Audit
The external auditors, Forvis Mazars LLP, have held office since
their appointment in 2019 following a competitive tender.
The Committee assesses the independence and objectivity,
qualifications and effectiveness of the external auditors on
an annual basis as well as making a recommendation to the
Board on their reappointment. The Committee received a
report showing the level of non-audit services provided by the
external auditors during the year and members were satisfied
that the extent and nature of these did not compromise
auditor independence. The Committee has concluded that
Forvis Mazars are independent and that their audit is effective.
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Report & Accounts 2025
Activity in 2025
The Audit Committee held four meetings during the year,
each of which was held jointly with the Audit Committee of
Arbuthnot Latham.
Internal Audit
On behalf of the Board, the Audit Committee monitors the
effectiveness of systems and controls. To this end, Internal
Audit provides the Committee and the Board with detailed
independent and objective assurance on the effectiveness
of governance, risk management and internal controls.
It additionally provides assurance to the Board that the culture
throughout the business is aligned with the Group’s values,
incorporating within each internal audit an assessment of
culture in the area under review.
The Audit Committee approves the Internal Audit risk-based
programme of work and monitors progress against the annual
plan. The Committee reviews Internal Audit resources and the
arrangements that: ensure Internal Audit faces no restrictions
or limitations to conducting its work; that it continues to have
unrestricted access to all personnel and information; and
that Internal Audit remains objective and independent from
business management.
The Head of Internal Audit, who was appointed in 2023,
reports directly to the Chairman of the Audit Committee, Lord
Sassoon. He provides reports on the outcomes of Internal
Audit work directly to the Committee which monitors progress
against actions identified in these reports.
The Committee received a self-assessment report on Internal
Audit from the Head of Internal Audit in November 2025 and is
satisfied with Internal Audit arrangements during the year.
Integrity of Financial Statements and oversight of external audit
The Committee:
• Received and agreed the Audit Plan prepared by the external
auditors;
• Considered and formed a conclusion on the critical
judgements underpinning the Financial Statements, as
presented in papers prepared by management. In respect of
all of these critical judgements, the Committee concluded
that the treatment in the Financial Statements was
appropriate.
• Received reports from the external auditors on the matters
arising from their work, the key issues and conclusions they
had reached; and
• Reviewed closely the detailed work carried out by
management in respect of Going Concern and Viability.
The reports from the external auditors include details of
internal control matters that they have identified as part of the
annual statutory financial statements audit. Certain aspects
of the system of internal control are also subject to regulatory
supervision, the results of which are monitored closely by the
Committee and the Board. In addition, the Committee receives
by exception reports on the ICAAP and ILAAP which are key
control documents that receive detailed consideration by the
board of Arbuthnot Latham.
The Committee approved the terms of engagement and made
a recommendation to the Board on the remuneration to be paid
to the external auditors in respect of their audit services.
Significant areas of judgement and estimation
The Audit Committee considered the following significant
issues and accounting judgements and estimates in relation to
the Financial Statements:
Impairment of financial assets
The Committee reviewed presentations from management
detailing the provisioning methodology across the Group
as part of the full year results process. The Committee
considered and challenged the provisioning methodology
applied by management, including timing of cash flows,
valuation and recoverability of supporting collateral on
impaired assets. The Committee concluded that the
impairment provisions, including management’s judgements
and estimates, were appropriate.
The charge for impaired financial assets totalled £6.3m for
the year ended 31 December 2025. The disclosures relating to
impairment provisions are set out in Note 4.2(a) to the financial
statements.
Property Portfolio
The Group owns two commercial office properties and two
repossessed properties. Of these properties, three are
held as inventory and one as an investment property.
The properties held as inventory are valued at the lower
of cost and net realisable value on the basis of internal
discounted cash flow models and external valuation reports.
The investment property is valued at fair value on the basis
of an external valuation report. The Committee discussed the
bases of valuation with management and with the auditors
who had engaged an internal expert to review management’s
valuations.
As at 31 December 2025, the Group’s total property portfolio
totalled £21.2m. The disclosures relating to the carrying
value of the investment property and the properties held as
inventory and for sale are set out in Notes 4.2(c), 4.2(d), 24
and 30 to the financial statements.
54
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Report & Accounts 2025
Corporate
Governance
Residual Value Risk
The Committee discussed the annual review of the residual
values across the portfolio of leased assets of Asset Alliance
Group, taking comfort from the management oversight of its
Residual Value Committee, chaired by the AAG Group Risk
Director, which is attended by the Group’s Chief Risk Officer.
Going Concern and Viability Statement
The financial statements are prepared on the basis that the
Group and Company are each a going concern for a period of
at least twelve months from when the financial statements
are authorised for issue. The Audit Committee reviewed
management’s assessment, which incorporated analysis of the
ICAAP and ILAAP approved by the Board of Arbuthnot Latham
and of relevant metrics, focusing on liquidity, capital, and the
stress scenarios. It is satisfied that the going concern basis and
assessment of the Group’s longer-term viability is appropriate.
Other Committee activities
The Audit Committee reviewed and discussed a summary of
the minutes of meetings of the Financial Regulatory Reporting
Committee whose main responsibility is to ensure that the
Group meets the PRA’s regulatory reporting expectations.
The Committee performs this role since it is concerned with
financial reporting as well as with external reporting. During
the year, it also carried out an assessment of External Auditor
Performance and a review of all work being performed by
potential audit firms in accordance with the FRC Publication:
Audit Committees and the External Audit: Minimum Standard
which is included in the Committee terms of reference. In
November 2025, the Committee considered a report from the
FRC, setting out their findings following an inspection of the
quality of Forvis Mazars LLP’s audit of the financial statements
of Arbuthnot Latham for the year ended 31 December 2024.
The FRC’s audit quality assessment was good and there were
no key or other findings arising from the inspection.
In November 2025, the Committee also reviewed its
performance and agreed that it continued to operate effectively.
In March 2026, the Committee met separately with each of the
Head of Internal Audit and the Senior Statutory Auditor without
any other executives present. There were no concerns raised by
them in regard to discharging their responsibilities.
On behalf of the Board, the Audit Committee reviewed the
financial statements as a whole in order to assess whether
they were fair, balanced and understandable. The Committee
discussed and challenged the balance and fairness of the
overall report with the executive directors and also considered
the views of the external auditor. The Committee was satisfied
that the Annual Report could be regarded as fair, balanced and
understandable and that it provides the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy. It proposed that
the Board approve the Annual Report in that respect.
Nomination Committee
Membership and meetings
The Nomination Committee is chaired by Sir Henry Angest and
its other members are Sir Nigel Boardman and since 31 March
2025 Ms Knight and Mr. Gabbertas. A majority of the Committee’s
members are therefore independent non-executive Directors.
Sir Alan Yarrow was a member until his retirement as a Director.
The Company Secretary acts as its Secretary. The Committee
meets once a year and otherwise as required.
The Nomination Committee assists the Board in discharging
its responsibilities relating to the composition of the Board.
The Nomination Committee is responsible for and evaluates on
a regular basis the balance of skills, experience, independence
and knowledge on the Board, its size, structure and composition,
retirements and appointments of additional and replacement
directors and will make appropriate recommendations to
the Board on such matters. The Nomination Committee also
considers performance, training requirements and succession
planning, taking into account the skills and expertise that will be
needed on and beneficial to the Board in the future.
Activity in 2025
The Nomination Committee met three times during the year
including in March 2025 to recommend to the Board changes
in membership of certain Board Committees as a consequence
of the impending retirement of Sir Alan Yarrow. In May 2025,
it met to assess and recommend the appointment of Charlotte
Crosswell as a new independent Non-Executive Director of
the Company, Ms Crosswell is an experienced executive and
non-executive director within the financial services sector.
She has a breadth of experience from roles in high growth sectors
including financial technology, life sciences as well as financial
services. It was not considered appropriate to widen the search
to include other banking and financial services experts for this
role, given that Ms Crosswell’s knowledge and skillset covered
many of the necessary bases expected of a potential Board
appointee, including financial markets, the regulatory framework,
risk management and remuneration and legal and governance
requirements. She also has extensive technology experience.
It was also regarded that, from her meetings with Directors and
past experience, Ms Crosswell seemed a good cultural fit with the
Group and its Principles, Values and ESG Pillars. For all of these
reasons, she was approached directly, and so neither advertising
nor an external consultancy was used for this appointment.
The Nomination Committee also met to assess and confirm
the collective and individual suitability of the existing Board
members. In terms of individual performance, the Chairman
confirmed that his assessment of all Directors was that they
were performing well, with the Executive Directors additionally
being formally reviewed in the context of the Senior Managers’
Regime applicable to Arbuthnot Latham which confirmed
continued strong performance. The Committee agreed with
55
Arbuthnot Banking Group PLC
Report & Accounts 2025
this assessment individually in relation to all members of the
Board. Collectively, it was agreed that the Board has operated
effectively with a wide range of experience and knowledge.
The Committee also agreed that the Executive had performed
well and the Non-Executive Directors had provided appropriate
challenge and guidance.
In terms of the performance of the Company’s Board generally,
the Committee noted that it takes into account the provisions
of the Board Suitability & Diversity Policy. It reviewed the
summary of training carried out by each Director during the
year and noted that Directors had been able to carry out
sufficient training. In terms of diversity and inclusion, the
Committee noted this had been considered by the AL HR
department during the year with a view to understanding and
addressing the gender balance of senior management and
their direct reports. The current mix continues to emphasise
the need for the Group to develop internal talent to enable
internal progression, whilst continuing to attract diverse
talent into roles at all levels. The Committee agreed that the
key strategy of the business is to appoint the best person for
the position into a role to take into account their experience,
expertise in line with the company’s strategy. The Nomination
Committee takes into account the provisions of the Board
Suitability & Diversity Policy and the Inclusivity and Respect
Policy which promotes equality of opportunity for all staff with
the objective of creating a working environment in which there
is no unlawful discrimination and where all decisions are based
on merit.
In November 2025, the Nomination Committee confirmed that
the Board’s current composition provides the Company with
a balanced, knowledgeable, diverse and informed group of
directors, bringing strategic acumen, foresight and challenge
to the executive, commensurate with the size of the business.
The Committee reviewed succession planning and agreed that
a sensible and strong plan remained in place. It also agreed
that it continued to operate effectively and, as such, no
further changes to its membership, composition or activities
were proposed to the Board. It also agreed to recommend the
appointment and re-appointment of Directors due to stand for
respective election and re-election at the forthcoming AGM.
Remuneration Committee
Membership and meetings
Membership is detailed in the Remuneration Report on page 56.
The Committee meets once a year and otherwise as required.
The Remuneration Report on pages 56 to 58 gives information
on the Committee’s responsibilities, together with details of
each Director’s remuneration.
Donations Committee
Membership and meetings
The Donations Committee is chaired by Sir Henry Angest and
its other members are Andrew Salmon and since 31 March 2025
Ms Knight and Mr. Gabbertas. Sir Alan Yarrow was a member
until his retirement as a Director. The Company Secretary
acts as its Secretary. The Committee considers any political
donation or expenditure as defined within sections 366 and
367 of the Companies Act 2006. It meets as necessary.
Activity in 2025
The Donations Committee met once during the year. It agreed
that the Committee was constituted and continued to operate
efficiently with its overall performance and the performance of
its individual members effective throughout the year. As such,
no changes to its membership or activities were proposed to
the Board.
Policy Committee
Membership and meetings
The Policy Committee, which is a joint Committee with
Arbuthnot Latham, is chaired by Andrew Salmon. Its other
members are James Cobb, Sir Nigel Boardman, the AL Chief
Risk Officer, and the AL Chief Compliance Officer. A member of
the AL Operational Risk team acts as its Secretary. Amongst
its responsibilities, the Committee reviews the content of
policy documentation (other than credit policy documentation
which is reviewed by the AL Credit Committee) to ensure that
it meets legal and regulatory requirements and approves it on
behalf of the Board. The Committee met five times during the
year. Going forward, it is expected normally to meet three times
a year.
By order of the Board
N D Jennings
Secretary
25 March 2026
56
Arbuthnot Banking Group PLC
Report & Accounts 2025
Remuneration Committee
Membership of the Remuneration Committee is limited to
independent non-executive directors together with Sir Henry
Angest as Chairman. The other members of the Committee
are Sir Nigel Boardman and since 31 March 2025 Ms Knight
and Mr. Gabbertas. As such, a majority of the Committee’s
members are independent non-executive Directors.
Sir Alan Yarrow was a member until his retirement as a Director.
The Company Secretary acts as its Secretary. The Committee
normally meets twice a year and otherwise, as required.
The Remuneration Committee has responsibility for approving
the overall remuneration policy for directors for review by the
Board. The Committee is also responsible for remuneration
more generally including, inter alia, in relation to the Company’s
policy on executive remuneration determining, the individual
remuneration and benefits package of each of the Executive
Directors and the fees for Non-Executive Directors. Members
of the Committee do not vote on their own remuneration.
The Committee also deals with remuneration-related issues,
taking into account the requirements established by the PRA
and the FCA.
Remuneration Policy
The Remuneration Committee determines the remuneration
of individual directors having regard to the size and nature
of the business; the importance of attracting, retaining and
motivating management of the appropriate calibre without
paying more than is necessary for this purpose; remuneration
data for comparable positions, in particular at challenger
banks; the need to align the interests of executives with those
of shareholders; and an appropriate balance between current
remuneration and longer-term performance-related rewards.
The remuneration package can comprise a combination
of basic annual salary and benefits (including pension), a
discretionary annual bonus award related to the Committee’s
assessment of the contribution made by the executive during
the year and longer-term incentives, including executive share
options. Pension benefits take the form of contributions paid
by the Company to individuals in the form of cash allowances,
and, where applicable, to individual money purchase schemes.
The Committee reviews salary levels each year based on the
performance of the Group during the preceding financial
period. This review does not necessarily lead to increases in
salary levels. For the purposes of the requirements established
by the PRA and the FCA, the Company and its subsidiaries are
all considered to be Tier 3 institutions.
The Remuneration Policy reflects the changes made
to proportionality thresholds by the FCA and PRA in the
joint policy statement on remuneration and enhancing
proportionality for level 3 firms (small firms), published in
December 2023. These changes exempted firms that meet
these thresholds from requirements relating to malus,
clawback and buyout (i.e. firms buying out outstanding
deferred bonus awards for staff that have been cancelled
by their previous employer). The Company continues to
meet the criteria relating to firms in Proportionality Level 3
of the remuneration rules. Moreover, variable remuneration
awards are conditional, discretionary, and contingent upon a
sustainable and risk-adjusted performance, in excess of that
required to fulfil the employees job description as part of the
terms of employment. The Group reserves the discretionary
right to pay no variable remuneration at all where appropriate.
The Remuneration Policy retains the internal requirement that
all bonuses in excess of 33% of total remuneration and/or any
annual remuneration package in excess of £660,000 (increased
from £500,000) in relation to the Company must be specifically
approved in advance by the Ultimate Majority Shareholder who
has an express right of veto in relation to all such remuneration
packages. Current regulatory remuneration requirements
also establish that the Company must report to the PRA any
material changes to its remuneration structure. This includes
disclosing changes to: the ratio of the maximum payout of
bonus and executive incentive schemes when compared to
fixed remuneration; and the performance measures and the risk
adjustment used to determine whether and how much these
bonus schemes and executive incentive schemes will pay out.
Activity in 2025
The Remuneration Committee met three times during the
year. It undertook its regular activities including reviewing the
operation of the Remuneration Policy, having regard to the
performance of the Company during the year. It reviewed the
level of fees for non-executive Directors which reflect the
appropriate level of fee to continue to secure the services
of a high level non-executive director. It also reviewed and
approved the Executive Directors’ remuneration.
In November 2025, the Committee reviewed the joint policy
statement on remuneration for dual-regulated firms published
by the PRA and the FCA, the rules for which came into effect on
16 October 2025. The implications for the Company as a Small
Capital Requirement Regulation Firm concern the Material Risk
Takers (MRT) Identification Process where the Committee
noted the need for the Remuneration Policy and the MRT
identification methodology to be reviewed in due course.
Remuneration
Report
57
Arbuthnot Banking Group PLC
Report & Accounts 2025
In November 2025, the Committee also reviewed its own
performance and agreed that it had continued to operate
effectively.
Since the year end, the Committee has met to review Directors’
remuneration. It approved the award of bonuses to Messrs
Salmon and Cobb for exceptional performance in the year.
It also determined not to increase the salaries of the executive
Directors. This decision was made after due consideration of
comparable market rates and in view of an average salary rise
in low single digits for employees, due to the cost pressures on
the business. As in previous years, Sir Henry Angest waived his
right to be considered for receipt of a bonus. The Committee
decided not to increase the fees for acting as a non-executive
director.
Directors’ Service Contracts
Sir Henry Angest, Mr. Salmon and Mr. Cobb each have service
contracts terminable at any time on 12 months’ notice in
writing by either party.
Long Term Incentive Schemes
Grants were made to Messrs Salmon and Cobb on 23 July 2021
under the Phantom Option Scheme to subscribe for 200,000
and 100,000 ordinary 1p shares respectively in ABG at 990p.
50% of each director’s individual holding of phantom options
is exercisable at any time since 23 July 2024 and the other
50% is exercisable at any time after 23 July 2026 when a cash
payment would be made equal to any increase in market value.
All share options awarded on 23 July 2021, regardless of first
exercise date, may not be exercised later than 23 July 2028,
being the day before the seventh anniversary of the date of
grant. The fair value of the options as at 31 December 2025 was
£0.3m (2024: £0.2m). As at 31 December 2025 the initial 50% of
each director’s holding had reached the strike date of 24 July
2024 but have not been exercised.
Details of outstanding options are set out overleaf.
58
Arbuthnot Banking Group PLC
Report & Accounts 2025
Phantom Options
At
1 January
2025
At
31 December
2025
Exercise
Price
£
Date
from which
exercisable
Expiry
AA Salmon
100,000
100,000
£9.90
23-Jul-24
23-Jul-28
100,000
100,000
£9.90
23-Jul-26
23-Jul-28
200,000
200,000
JR Cobb
50,000
50,000
£9.90
23-Jul-24
23-Jul-28
50,000
50,000
£9.90
23-Jul-26
23-Jul-28
100,000
100,000
300,000
300,000
Directors’ Emoluments
2025
£000
2024
£000
Fees (including benefits in kind)
638
600
Salary payments (including benefits in kind)
6,452
6,309
Pension contributions
77
74
7,167
6,983
Salary
£000
Bonus
£000
Benefits
£000
Pension
£000
Fees
£000
Total 2025
£000
Total 2024
£000
Sir Henry Angest
1,300
-
72
-
-
1,372
1,327
JR Cobb
1,000
1,000
18
35
-
2,053
1,980
AA Salmon
1,500
1,400
25
35
-
2,960
2,935
JD Almond
-
-
-
-
70
70
70
FAH Angest*
96
40
1
7
50
194
152
The Hon Sir Nigel Boardman
-
-
-
-
175
175
171
CLB Crosswell (appointed 16 July 2025)
-
-
-
-
32
32
-
IA Dewar
-
-
-
-
29
29
76
RK Gabbertas
-
-
-
-
90
90
45
AA Knight
-
-
-
-
73
73
75
Lord Sassoon
-
-
-
-
90
90
82
Sir Alan Yarrow
-
-
-
-
29
29
70
3,896
2,440
116
77
638
7,167
6,983
* Mr. F. Angest received a bonus as an employee of the Company and not in his role as a non-executive director.
Remuneration
Report
Details of any shares or options held by directors are
presented above.
The emoluments reported above for Mr Gabbertas in the
prior year were pro-rated from the date he became a Director
of the Company.
Retirement benefits are accruing under money purchase
schemes for three directors who served during the year
(2024: three directors).
Sir Henry Angest
Chairman of the Remuneration Committee
25 March 2026
59
Arbuthnot Banking Group PLC
Report & Accounts 2025
Independent Auditor’s Report
to the members of Arbuthnot Banking Group PLC
Opinion
We have audited the financial statements of Arbuthnot
Banking Group PLC (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 December 2025 which
comprise the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Financial Position, the
Company Statement of Financial Position, the Consolidated
Statement of Changes in Equity, the Company Statement
of Changes in Equity, the Consolidated Statement of Cash
Flows, the Company Statement of Cash Flows, and notes to
the financial statements, including material accounting policy
information.
The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted
international accounting standards and, as regards the parent
company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
In our opinion, the financial statements:
• give a true and fair view of the state of the Group’s and of the
Parent Company’s affairs as at 31 December 2025 and of the
Group’s profit for the year then ended;
• have been properly prepared in accordance with UK-adopted
international accounting standards and, as regards the parent
company financial statements, as applied in accordance with
the provisions of the Companies Act 2006; and
• have been prepared in accordance with the requirements
of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the “Auditor’s responsibilities for the audit
of the financial statements” section of our report. We are
independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including
the Financial Reporting Council’s (“FRC”) Ethical Standard as
applied to listed entities and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
Our audit procedures to evaluate the directors’ assessment
of the Group’s and the Parent Company’s ability to continue
to adopt the going concern basis of accounting included but
were not limited to:
• Undertaking an initial assessment at the planning stage
of the audit to identify events or conditions that may cast
significant doubt on the Group’s and the Parent Company’s
ability to continue as a going concern;
• Obtaining an understanding of the relevant controls relating
to the directors’ going concern assessment;
• Obtaining the directors’ going concern assessment including
the cash flow forecast for the going concern period covering
12 months from the date of signing this audit opinion;
• Making enquiries of the directors to understand the period
of assessment considered by them, the assumptions they
considered and the implication of those when assessing the
Group’s and the Parent Company’s future financial performance;
• Evaluating management’s going concern assessment
of the Group and the Parent Company and challenging
the appropriateness of the key assumptions used in
and mathematical accuracy of management’s forecasts,
including assessing the historical accuracy of management’s
forecasting and budgeting;
• Reviewing the relevant period within management forecasts
for the following three periods of account;
• Assessing the sufficiency of the Group’s and Parent Company’s
capital and liquidity taking into consideration the most recent
Internal Capital Adequacy Assessment Process (‘ICAAP’) and
Internal Liquidity Assessment Process (‘ILAAP’) performed
by Arbuthnot Latham & Co., Ltd, a wholly owned subsidiary
within the Group which is a bank regulated by the Prudential
Regulation Authority (‘PRA’), and evaluating the results of
management’s scenarios and reverse stress testing which
includes sensitivity analysis, and including consideration of
principal and emerging risks on liquidity and regulatory capital;
• Assessing the accuracy of management’s forecast through a
review of post year-end performance;
• Evaluating the Group’s Resolution and Recovery plans which
include possible cost saving measures that could be taken in
the event circumstances prevent the forecast results from
being achieved;
• Reading regulatory correspondence, minutes of meetings
of the Audit Committee and the Board of Directors up to the
date of signing the financial statements;
• Considering whether there are events subsequent to the
balance sheet date which could have an impact on the Group’s
and the Parent Company’s ability to continue as a going concern;
• Considering the consistency of management’s forecasts with
other areas of the financial statements and our audit; and
• Evaluating the adequacy and appropriateness of the disclosures
in the financial statements related to going concern.
60
Arbuthnot Banking Group PLC
Report & Accounts 2025
Independent Auditor’s Report
to the members of Arbuthnot Banking Group PLC
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on
the Group’s and the Parent Company’s ability to continue as a
going concern for a period of at least twelve months from when
the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
In relation to Arbuthnot Banking Group PLC’s reporting on how
it has applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the
directors’ statement in the financial statements about whether
the directors considered it appropriate to adopt the going
concern basis of accounting.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the
efforts of the engagement team. This matter was addressed
in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not
provide a separate opinion on this matter.
We summarise below the key audit matter in forming our
opinion above, together with an overview of the principal
audit procedures performed to address the matter and
our key observations arising from those procedures.
This matter, together with our findings, were communicated to
those charged with governance through our Audit Completion
Report.
Key Audit Matter
Valuation of allowance for impairment of loans and advances
As at the reporting date, the Group had £1,983m (2024:
£2,094m) gross exposure to loans and advances held at
amortised cost with an allowance for Expected Credit Loss
(ECL’) of £12.7m (2024: £11.6m). Refer to notes 4, 22, and 23.
The determination of Expected Credit Loss (‘ECL’) under IFRS
9 is an inherently judgmental area due to the use of subjective
assumptions and a high degree of estimation. The allowance
for ECL relating to the Group’s loans and advances requires the
Directors to make judgements over the ability of the Groups’
counterparties to make future loan repayments.
ECL is measured using a three-stage model. For loans with no
significant deterioration in credit risk since origination (stage
l), ECL is determined through the use of a model and collective
portfolio assumptions. For loans that have experienced
a significant deterioration in credit risk since origination
(stage 2) or have defaulted (stage 3), key assumptions are
determined on a case-by-case basis.
The model used by the Group to determine the ECL allowance
requires judgement to be applied to the input parameters and
assumptions.
The most significant areas where we identified greater levels
of management judgement and estimation are:
• Staging of loans and advances to customers and the
identification of significant increase in credit risk (“SICR”)
over the Renaissance Asset Finance (“RAF”) portfolio;
• Stage 3 impairment assessments within the Core AL and RAF
models; and
• Adjustments to security valuations within the LGD
calculation, including collateral haircuts within the Core AL
model and the RAF portfolio.
Further detail on the key judgements and estimates involved
are set out within the critical accounting estimates and
judgements in applying accounting policies note 4 and in notes
22 and 23 to the financial statements.
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Arbuthnot Banking Group PLC
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How our scope addressed this matter
Our audit procedures included but were not limited to:
Staging of loans
We have:
• Assessed the methodology of identifying significant
increase in credit risk to ensure compliance with IFRS 9;
• Tested the design and implementation and tested the
operating effectiveness of the key controls in relation to
credit monitoring and missed payments monitoring;
• Tested management’s controls to allocate loans to the
respective staging categories;
• Tested the appropriateness of staging classifications and
movements;
• Back tested the staging criteria to assess previous
effectiveness of the criteria; and
• Assessed loans that have cured during the year, including
ensuring the curing is in line with management’s SICR policy
and IFRS 9.
Stage 3 impairment assessments
We have:
• Performed credit file reviews to verify data and evaluate key
assumptions used in the determination of LGD assumptions;
• Recalculated the ECL provision for a sample of loans,
including consideration of multiple economic recovery
scenarios and alternative scenarios;
• Developed a point estimate based on independent
assumptions for certain material stage 3 exposures; and
• Involved our in-house valuation specialists to independently
assess the underlying collateral used in the ECL
calculations for a sample of collateral selected on a risk
assessment basis. For a number of cases sampled we
relied on management’s external valuation experts, and,
in these cases, we assessed the capabilities, professional
competence, and objectivity of the experts.
Adjustments to security valuations within LGD
We have:
• Tested and challenged the key assumptions applied by
management when calculating LGD;
• Reviewed and challenged key LGD assumptions and collateral
valuations with the assistance of internal valuation experts;
• Challenged the appropriateness of key data used when
calculating LGD; and
• Back tested key assumptions to assess appropriateness.
Stand back assessment
We have performed a qualitative and quantitative stand back
analysis to assess the overall adequacy of the ECL coverage. In
performing this procedure, we considered the credit quality of
the portfolio and performed benchmarking across similar banks
considering both staging percentages and provision coverage
ratios. We have also performed univariate and multivariate
analysis for the risk parameters to assess further risk of material
misstatement.
Disclosures
We have assessed the adequacy and appropriateness of the
disclosures in the financial statements in relation to ECL.
Our observations
We found management’s approach taken in respect to ECL is
in accordance with the requirements of IFRS 9 and determined
that the allowance for impairment of loans and advances is not
materially misstated at 31 December 2025.
62
Arbuthnot Banking Group PLC
Report & Accounts 2025
Independent Auditor’s Report
to the members of Arbuthnot Banking Group PLC
Our application of materiality and an overview of the
scope of our audit
The scope of our audit was influenced by our application
of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually
and on the financial statements as a whole. Based on our
professional judgement, we determined materiality for the
financial statements as a whole as follows:
Group materiality
Overall
materiality
£2.2m (2024: £1.8m)
How we
determined
it
0.8% of net assets (2024: 5% of profit before tax)
Rationale
for
benchmark
applied
For the Group, the materiality benchmark has
been revised to Net Assets in the period.
This change reflects the Group’s strategic focus
on preserving capital for the future rather than
maximizing short-term profit. Additionally, the
regulator’s primary focus is the Group’s ability
to meet capital requirements.
Performance
materiality
Performance materiality is set to reduce, to
an appropriately low level, the probability that
the aggregate of uncorrected and undetected
misstatements in the financial statements
exceeds materiality for the financial statements
as a whole.
We set performance materiality at £1.5m
(2024: £1.2m), which represents 70% of overall
materiality (2024: 70%).
In determining the performance materiality, we
considered a number of factors, including the
level and nature of uncorrected and corrected
misstatements in the prior year and the
robustness of the control environment, and
concluded that an amount toward the upper
end of our normal range was appropriate.
Reporting
threshold
We agreed with the Audit Committee that we
would report to them misstatements identified
during our audit above £65k (2024: £53k) as well
as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Parent company materiality
Overall
materiality
£1.3m (2024: £1.6m)
How we
determined
it
0.8% of net assets – aligned with the group
thresholds (2024: 1% of net assets)
Rationale
for
benchmark
applied
Given that the Parent Company’s primary
purpose is to be an investment holding entity,
we consider net assets to be the most
appropriate benchmark to apply in our
determination of materiality. The Parent
Company does not have significant revenue
generating activities and therefore a profit-
based measure was not considered to be
appropriate.
Performance
materiality
Performance materiality is set to reduce, to
an appropriately low level, the probability that
the aggregate of uncorrected and undetected
misstatements in the financial statements
exceeds materiality for the financial statements
as a whole.
We set performance materiality at £0.7m –
capped at component aggregate materiality
thresholds (2024: £0.7m), which represents 70%
of overall materiality (2024: 70%).
In determining the performance materiality, we
considered a number of factors, including the
level and nature of uncorrected and corrected
misstatements in the prior year and the
robustness of the control environment, and
concluded that an amount toward the upper end
of our normal range was appropriate.
Reporting
threshold
We agreed with the Audit Committee that we
would report to them misstatements identified
during our audit above £39k (2024: £50k) as well
as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
As part of designing our audit, we assessed the risk of
material misstatement in the financial statements, whether
due to fraud or error, and then designed and performed audit
procedures responsive to those risks. In particular, we looked
at where the directors made subjective judgements, such as
assumptions on significant accounting estimates.
63
Arbuthnot Banking Group PLC
Report & Accounts 2025
We tailored the scope of our audit to ensure that we performed
sufficient work to be able to give an opinion on the financial
statements as a whole. We used the outputs of our risk
assessment, our understanding of the Group and the Parent
Company, their environment, controls and critical business
processes, to consider qualitative factors to ensure that we
obtained sufficient coverage across all financial statement line
items.
Our Group audit scope included an audit of the Group and
the Parent Company financial statements. Based on our risk
assessment, six components of the Group, including the
Parent Company, were subject to full scope audit. We used
a Forvis Mazars UK component audit team as component
auditor for one component (2024: one component). All other
components were audited by the Group audit team.
Our component performance materiality ranged from £0.01m
to £1.5m (2024: £0.01m to £1.2m). Full scope audits carried out
on five components (2024: five components), including the
Parent Company, account for 100% of interest income (2024:
100%), 100% of profit before tax (2024: 100%), 100% of net
assets (2024: 100%) and 100% of total assets (2024: 100%).
At the Parent Company level, the Group audit team also
tested the consolidation process and carried out analytical
procedures to confirm our conclusion that there were no
significant risks of material misstatement of the aggregated
financial information.
Working with our component audit team
We determined the level of involvement we needed as the
Group team in the work of the component audit team to be
able to conclude whether sufficient and appropriate audit
evidence was obtained to provide a basis for our opinion on
the financial statements as a whole. We maintained oversight
of the component audit team, directing and supervising their
activities related to our audit of the Group. The Group team
maintained frequent communications to monitor progress.
The Senior Statutory Auditor and senior members of the Group
team attended component meetings, which were held via
video conference. We issued instructions to our component
audit team and interacted with them throughout the audit
process. In the absence of component visits, we reviewed
electronic work papers remotely which were prepared by the
component audit team and held meetings with component
management.
Other information
The other information comprises the information included
in the Annual report & Accounts, other than the financial
statements and our auditor’s report thereon. The directors
are responsible for the other information. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the course of audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is
a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
• the information given in the Strategic report and the
Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
• the Strategic report and the Directors’ report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by
exception
In light of the knowledge and understanding of the Group
and the Parent Company and their environment obtained
in the course of the audit, we have not identified material
misstatements in the Strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the Parent Company financial statements and the part of
the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations we
require for our audit; or
• a corporate governance statement has not been prepared
by the parent company.
64
Arbuthnot Banking Group PLC
Report & Accounts 2025
Independent Auditor’s Report
to the members of Arbuthnot Banking Group PLC
Corporate governance statement
We have reviewed the directors’ statement in relation to going
concern, longer term viability and that part of the Corporate
Governance Statement relating to the Group and the Parent
Company’s voluntary compliance with the provisions of the UK
Corporate Governance Code.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent
with the financial statements or our knowledge obtained
during the audit:
• Directors’ statement with regards the appropriateness of
adopting the going concern basis of accounting and any
material uncertainties identified, set out on page 45 and 46;
• Directors’ explanation as to its assessment of the entity’s
prospects, the period this assessment covers and why they
period is appropriate, set out on page 45;
• Directors’ statement on whether it has reasonable
expectation that the group will be able to continue
operations and meet its liabilities, set out on pages 45 and 46;
• Directors’ statement on fair, balanced and understandable,
set out on page 48;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks, set out on
page 51;
• The section of the annual report that describes the review
of effectiveness of risk management and internal control
systems, set out on pages 48, 51 and 52; and;
• The section describing the work of the audit committee,
set out on pages 52 to 54.
Responsibilities of Directors
As explained more fully in the ‘Statement of Directors’
Responsibilities in Respect of the Strategic report and the
Directors’ report and the Financial Statements’ set out on page
48, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the Group or the Parent Company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not
a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
Based on our understanding of the Group and the Parent
Company and their industry, we considered that non-
compliance with the following laws and regulations might
have a material effect on the financial statements: regulations
and supervisory requirements of the PRA and the Financial
Conduct Authority (‘FCA’), Alternative Investment Market
(‘AIM’) rules, Aquis Stock Exchange (‘AQSE’) rules, Streamlined
Energy and Carbon Reporting (‘SECR’) requirements, Anti
Money Laundering regulations (‘AML’), General Data Protection
Regulation (‘GDPR’) and the UK Corporate Governance Code.
To help us identify instances of non-compliance with these
laws and regulations, and in identifying and assessing the risks
of material misstatement in respect to non-compliance, our
procedures included, but were not limited to:
• Gaining an understanding of the legal and regulatory
framework applicable to the Group and the Parent Company,
the industry in which they operate, and the structure of the
Group, and considering the risk of acts by the Group and the
Parent Company which were contrary to the applicable laws
and regulations, including fraud;
• Inquiring of the directors, management and, where
appropriate, those charged with governance, as to whether
the Group and the Parent Company are in compliance with
laws and regulations, and discussing their policies and
procedures regarding compliance with laws and regulations;
• Inspecting correspondence with relevant licensing or
regulatory authorities including the PRA and FCA, in addition
to holding a bilateral meeting with the Group’s PRA supervisor;
65
Arbuthnot Banking Group PLC
Report & Accounts 2025
• Reviewing of minutes of meetings of the Board of Directors
and the Audit Committee held during the year and up until
the date of approval of the financial statements;
• Discussing amongst the engagement team the laws
and regulations listed above, and remaining alert to any
indications of non-compliance throughout the audit; and
• Focusing on areas of laws and regulations that could
reasonably be expected to have a material effect on the
financial statements from our general commercial and
sector experience and through discussions with those
charged with governance and senior management, review
of regulatory and legal correspondence, and review of
minutes of meetings of the Board of Directors and the Audit
Committee during the year and up until the date of the
approval of the financial statements.
We also considered those laws and regulations that have a
direct effect on the preparation of the financial statements,
such as UK tax legislation, pension legislation and the
Companies Act 2006.
In addition, we evaluated the directors’ and management’s
incentives and opportunities for fraudulent manipulation of
the financial statements, including the risk of management
override of controls, and determined that the principal risks
related to posting manual journal entries to manipulate
financial performance, management bias through judgements
and assumptions in significant accounting estimates, cut-off
in revenue recognition at Asset Alliance Group, and significant
one-off or unusual transactions.
Our procedures in relation to fraud included but were not
limited to:
• Making enquiries of the Directors and management on
whether they had knowledge of any actual, suspected or
alleged fraud;
• Inspecting the regulatory and legal correspondence and
reviewing the minutes of the Board of Directors meeting in
the year;
• Gaining an understanding of the internal controls
established to mitigate risks related to fraud;
• Discussing amongst the engagement team the risks of fraud;
• Addressing the risks of fraud through management override
of controls by performing journal entry testing on a sample
basis; and
• Being sceptical to the potential of management bias through
judgements and assumptions in significant accounting
estimates.
The primary responsibility for the prevention and detection of
irregularities, including fraud, rests with both those charged
with governance and management. As with any audit,
there remained a risk of non-detection of irregularities, as
these may involve collusion, forgery, intentional omissions,
misrepresentations or the override of internal controls.
The risks of material misstatement that had the greatest
effect on our audit are discussed in the “Key Audit Matters”
section of this report.
A further description of our responsibilities is available on
the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Other matters which we are required to address
Following the recommendation of the Audit Committee,
we were appointed by the Board of Directors on 6 December
2019 to audit the financial statements for the year ended
31 December 2019 and subsequent financial periods. The period
of total uninterrupted engagement is seven years, covering the
years ended 31 December 2019 to 31 December 2025.
The non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the Group or the Parent
Company and we remain independent of the Group and the
Parent Company in conducting our audit.
Our audit opinion is consistent with our additional report to the
Audit Committee.
Use of the audit report
This report is made solely to the Company’s members as a
body in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we
might state to the Company’s members those matters we
are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body for our audit
work, for this report, or for the opinions we have formed.
Tim Hudson
(Senior Statutory Auditor)
for and on behalf of Forvis Mazars LLP Chartered
Accountants and Statutory Auditor
30 Old Bailey
London
EC4M 7AU
25 March 2026
66
Arbuthnot Banking Group PLC
Report & Accounts 2025
The notes on pages 74 to 148 are an integral part of these consolidated financial statements
Note
Year ended
31 December
2025
£000
Year ended
31 December
2024
£000
Income from banking activities
Interest income calculated using the effective interest method
8
247,248
263,435
Interest expense
(129,122)
(137,568)
Net interest income
118,126
125,867
Fee and commission income
9
31,689
29,142
Fee and commission expense
(1,444)
(1,029)
Net fee and commission income
30,245
28,113
Operating income from banking activities
148,371
153,980
Income from leasing activities
Revenue
10
118,569
110,832
Cost of goods sold
10
(97,466)
(85,301)
Gross profit from leasing activities
10
21,103
25,531
Total group operating income
169,474
179,511
Net impairment loss on financial assets
11
(2,501)
(6,275)
Other income
12
4,419
1,660
Operating expenses
13
(147,208)
(139,806)
Profit before tax
24,184
35,090
Income tax expense
14
(6,374)
(10,236)
Profit after tax
17,810
24,854
Other comprehensive income
Items that will not be reclassified to profit or loss
Changes in fair value of equity investments at fair value through other
comprehensive income
(59)
778
Tax on other comprehensive income
15
(182)
Other comprehensive income for the period, net of tax
(44)
596
Total comprehensive income for the period
17,766
25,450
Earnings per share for profit attributable to the equity holders of the Company during the year (expressed in pence per share):
Basic earnings per share
16
109.1
152.3
Diluted earnings per share
16
109.1
152.3
Consolidated Statement
of Comprehensive Income
67
Arbuthnot Banking Group PLC
Report & Accounts 2025
Note
At
31 December
2025
£000
At
31 December
2024
£000
ASSETS
Cash and balances at central banks
17
437,548
911,887
Loans and advances to banks
18
117,497
66,971
Debt securities at amortised cost
19
2,033,158
1,199,847
Derivative financial instruments
20
1,398
2,970
Loans and advances to customers
22
1,960,542
2,094,212
Current tax assets
1,619
–
Other assets
24
50,247
51,701
Financial investments
25
2,061
4,947
Intangible assets
27
33,448
30,565
Property, plant and equipment
28
310,569
313,366
Right-of-use assets
29
44,501
47,511
Investment property
30
5,250
5,250
Total assets
4,997,838
4,729,227
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital
37
167
167
Share premium
37
11,606
11,606
Retained earnings
38
265,738
254,575
Other reserves
38
(1,113)
608
Total equity
276,398
266,956
LIABILITIES
Deposits from banks
31
1,389
192,911
Deposits from customers
32
4,570,365
4,132,493
Current tax liability
–
3,001
Other liabilities
33
42,489
35,384
Deferred tax liability
26
10,258
5,671
Lease liabilities
34
58,267
54,829
Debt securities in issue
35
38,672
37,982
Total liabilities
4,721,440
4,462,271
Total equity and liabilities
4,997,838
4,729,227
The financial statements on pages 66 to 148 were approved and authorised for issue by the Board of directors on 25 March 2026 and were
signed on its behalf by:
AA Salmon
Director
JR Cobb
Director
Registered Number: 1954085
The notes on pages 74 to 148 are an integral part of these consolidated financial statements
Consolidated Statement
of Financial Position
68
Arbuthnot Banking Group PLC
Report & Accounts 2025
Note
At
31 December
2025
£000
At
31 December
2024
£000
ASSETS
Loans and advances to banks
18
4,760
920
Debt securities at amortised cost
19
38,781
38,103
Deferred tax assets
26
486
515
Property, plant and equipment
28
194
221
Other assets
24
1,739
3,355
Interests in subsidiaries
43
164,354
164,354
Total assets
210,314
207,468
EQUITY AND LIABILITIES
Equity
Share capital
37
167
167
Share premium account
37
11,606
11,606
Other reserves
38
(1,280)
(1,280)
Retained earnings*
38
150,006
149,238
Total equity
160,499
159,731
LIABILITIES
Current tax liability
5,391
4,288
Other liabilities
33
5,752
5,467
Debt securities in issue
35
38,672
37,982
Total liabilities
49,815
47,737
Total equity and liabilities
210,314
207,468
* The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent Company profit and loss account.
The Parent Company recorded a profit after tax for the year of £9,091k (2024: £11,363k).
The financial statements on pages 66 to 148 were approved and authorised for issue by the Board of directors on 25 March 2026 and were
signed on its behalf by:
AA Salmon
Director
JR Cobb
Director
Registered Number: 1954085
The notes on pages 74 to 148 are an integral part of these consolidated financial statements
Company Statement
of Financial Position
69
Arbuthnot Banking Group PLC
Report & Accounts 2025
Attributable to equity holders of the Group
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
Fair value
reserve
£000
Treasury
shares
£000
Retained
earnings
£000
Total
£000
Balance at 31 December 2024
167
11,606
19
1,888
(1,299)
254,575
266,956
Total comprehensive income for the period
Profit for 2025
–
–
–
–
–
17,810
17,810
Other comprehensive income, net of tax
Changes in fair value of equity investments at fair value
through other comprehensive income (FVOCI)
–
–
–
(59)
–
–
(59)
Sale of financial assets carried at FVOCI
–
–
–
(1,677)
–
1,677
–
Tax on other comprehensive income
–
–
–
15
–
–
15
Total other comprehensive income
–
–
–
(1,721)
–
1,677
(44)
Total comprehensive income for the period
–
–
–
(1,721)
–
19,487
17,766
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Final dividend relating to 2024
–
–
–
–
–
(4,734)
(4,734)
Interim dividend relating to 2025
–
–
–
–
–
(3,590)
(3,590)
Total contributions by and distributions to owners
–
–
–
–
–
(8,324)
(8,324)
Balance at 31 December 2025
167
11,606
19
167
(1,299)
265,738
276,398
The notes on pages 74 to 148 are an integral part of these consolidated financial statements
Consolidated Statement
of Changes in Equity
70
Arbuthnot Banking Group PLC
Report & Accounts 2025
Consolidated Statement
of Changes in Equity continued
The notes on pages 74 to 148 are an integral part of these consolidated financial statements
Attributable to equity holders of the Group
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
Fair value
reserve
£000
Treasury
shares
£000
Retained
earnings
£000
Total
£000
Balance at 31 December 2023
167
11,606
19
1,341
(1,299)
240,606
252,440
Total comprehensive income for the period
Profit for 2024
–
–
–
–
–
24,854
24,854
Other comprehensive income, net of tax
Changes in fair value of equity investments at fair value
through other comprehensive income (FVOCI)
–
–
–
778
–
–
778
Sale of financial assets carried at FVOCI
(49)
49
Tax on other comprehensive income
–
–
–
(182)
–
–
(182)
Total other comprehensive income
–
–
–
547
–
49
596
Total comprehensive income for the period
–
–
–
547
–
24,903
25,450
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Final dividend relating to 2023
–
–
–
–
–
(4,406)
(4,406)
Special dividend relating to 2024
–
–
–
–
–
(3,264)
(3,264)
Interim dividend relating to 2024
–
–
–
–
–
(3,264)
(3,264)
Total contributions by and distributions to owners
–
–
–
–
–
(10,934)
(10,934)
Balance at 31 December 2024
167
11,606
19
1,888
(1,299)
254,575
266,956
71
Arbuthnot Banking Group PLC
Report & Accounts 2025
Attributable to equity holders of the Company
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
Treasury
shares
£000
Retained
earnings
£000
Total
£000
Balance at 1 January 2024
167
11,606
19
(1,299)
148,809
159,302
Total comprehensive income for the period
Profit for 2024
–
–
–
–
11,363
11,363
Other comprehensive income, net of income tax
Total comprehensive income for the period
–
–
–
–
11,363
11,363
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Final dividend relating to 2023
–
–
–
–
(4,406)
(4,406)
Special dividend relating to 2024
–
–
–
–
(3,264)
(3,264)
Interim dividend relating to 2024
–
–
–
–
(3,264)
(3,264)
Total contributions by and distributions to owners
–
–
–
–
(10,934)
(10,934)
Balance at 31 December 2024
167
11,606
19
(1,299)
149,238
159,731
Total comprehensive income for the period
Profit for 2025
–
–
–
–
9,091
9,091
Other comprehensive income, net of income tax
Total comprehensive income for the period
–
–
–
–
9,091
9,091
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Final dividend relating to 2024
–
–
–
–
(4,734)
(4,734)
Interim dividend relating to 2025
–
–
–
–
(3,589)
(3,589)
Total contributions by and distributions to owners
–
–
–
–
(8,323)
(8,323)
Balance at 31 December 2025
167
11,606
19
(1,299)
150,006
160,499
The notes on pages 74 to 148 are an integral part of these consolidated financial statements
Company Statement
of Changes in Equity
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Arbuthnot Banking Group PLC
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The notes on pages 74 to 148 are an integral part of these consolidated financial statements
Note
Year ended
31 December
2025
£000
Year ended
31 December
2024
£000
Cash flows from operating activities
Profit before tax
24,184
35,090
Adjustments for:
- Depreciation and amortisation
28,27,29
10,843
11,834
- Impairment loss on loans and advances
23
1,576
4,782
- Net interest expense
3,205
598
- Elimination of exchange differences on debt securities
11,349
(3,157)
- Other non-cash or non-operating items included in profit before tax
31
(79)
- Tax paid
(6,377)
(6,976)
Cash flows from operating profits before changes in operating assets
and liabilities
44,811
42,092
Changes in operating assets and liabilities:
- Net decrease in derivative financial instruments
1,572
212
- Net decrease/(increase) in loans and advances to customers
132,094
(34,777)
- Net decrease/(increase) in assets held for leasing
626
(18,362)
- Net decrease in other assets
1,454
9,430
- Net increase in amounts due to customers
437,872
372,926
- Net increase/(decrease) in other liabilities
7,105
(2,362)
Net cash inflow from operating activities
625,534
369,159
Cash flows from investing activities
Acquisition of financial investments
(131)
(215)
Disposal of financial investments
2,958
84
Purchase of intangible assets
27
(6,425)
(4,739)
Purchase of property, plant and equipment
28
(1,102)
(23,204)
Proceeds from sale of property, plant and equipment
28
–
53
Purchase of debt securities
(3,273,055)
(1,621,196)
Proceeds from redemption of debt securities
2,428,998
1,366,350
Dividends received
18
–
Net cash outflow from investing activities
(848,739)
(282,867)
Cash flows from financing activities
Decrease in borrowings
(191,522)
(238)
Repayment of principal portions of lease liabilities
(762)
(2,202)
Dividends paid
(8,324)
(10,934)
Net cash outflow from financing activities
(200,608)
(13,374)
Net (decrease)/increase in cash and cash equivalents
(423,813)
72,918
Cash and cash equivalents at 1 January
978,858
905,940
Cash and cash equivalents at 31 December
41
555,045
978,858
Interest received was £249.1m (2024: £266.2m) and interest paid was £133.8m (2024: £144.8m).
Consolidated Statement
of Cash Flows
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The notes on pages 74 to 148 are an integral part of these consolidated financial statements
Note
Year ended
31 December
2025
£000
Year ended
31 December
2024
£000
Cash flows from operating activities
Profit before tax
13,346
16,260
Adjustments for:
- Depreciation and amortisation
27,28
30
27
- Net interest (income)
–
(1)
- Other non-cash or non-operating items included in profit before tax
(13)
(25)
- Tax paid
(3,101)
(2,826)
Cash flows from operating profits before changes in operating assets
and liabilities
10,262
13,435
Changes in operating assets and liabilities:
- Net decrease/(increase) in group company balances
1,612
(1,889)
- Net decrease/(increase) in other assets
4
(12)
- Net increase/(decrease) in other liabilities
285
(493)
Net cash inflow from operating activities
12,163
11,041
Cash flows from investing activities
Issue of subordinated debt to Arbuthnot Latham
–
(545)
Disposal of property, plant and equipment
–
39
Purchase of property, plant and equipment
28
–
(118)
Net cash outflow from investing activities
–
(624)
Cash flows from financing activities
Issue subordinated debt
–
814
Dividends paid
(8,323)
(10,934)
Net cash outflow from financing activities
(8,323)
(10,120)
Net increase in cash and cash equivalents
3,840
297
Cash and cash equivalents at 1 January
920
623
Cash and cash equivalents at 31 December
41
4,760
920
Company Statement
of Cash Flows
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Notes to the Consolidated
Financial Statements
1. Reporting entity
Arbuthnot Banking Group PLC is a company domiciled in the United Kingdom. The registered address of Arbuthnot Banking Group PLC is
20 Finsbury Circus, London, EC2M 7EA. The consolidated financial statements of Arbuthnot Banking Group PLC as at and for the year ended
31 December 2025 comprise Arbuthnot Banking Group PLC and its subsidiaries (together referred to as the “Group” and individually as
“subsidiaries”). The Company is the holding company of a group primarily involved in banking and financial services.
2. Basis of preparation
(a) Statement of compliance
The Group’s consolidated financial statements and the Company’s financial statements have been prepared in accordance with UK-adopted
international accounting standards in conformity with the requirements of the Companies Act 2006.
The consolidated financial statements were authorised for issue by the Board of Directors on 25 March 2026.
(b) Basis of measurement
The consolidated and company financial statements have been prepared under the historical cost convention, as modified by investment
property and derivatives, financial assets and financial liabilities at fair value through profit or loss or other comprehensive income.
(c) Functional and presentational currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment
in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Pounds Sterling, which is the
Company’s functional and the Group’s presentational currency.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in
Note 4.
(e) Going concern
After making appropriate enquiries which assessed strategy, profitability, funding, risk management (see Note 6), capital resources (see Note 7)
and the potential impact of climate-related risks, the directors are satisfied that the Company and the Group have adequate resources to
continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. The Audit
Committee reviewed management’s assessment, which incorporated analysis of the ICAAP and ILAAP approved by the Board of AL and of
relevant metrics, focusing on liquidity, capital, and the stress scenarios. It is satisfied that the going concern basis and assessment of the
Group’s longer-term viability is appropriate. The financial statements are therefore prepared on the going concern basis.
(f) Accounting developments
The accounting policies adopted are consistent with those of the previous financial year.
3. Material accounting policies
The accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
3.1. Consolidation
(a) Subsidiaries
Subsidiaries are all investees (including special purpose entities) controlled by the Group. The Group controls an investee when it is exposed, or
has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date
that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured
as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets
acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group’s shares of the
identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary
acquired, the difference is recognised directly in the Statement of Comprehensive Income as a gain on bargain purchase. Contingent
consideration related to an acquisition is initially recognised at the date of acquisition as part of the consideration transferred, measured at its
acquisition date fair value and recognised as a liability. The fair value of a contingent consideration liability recognised on acquisition is
remeasured at key reporting dates until it is settled, changes in fair value are recognised in the profit or loss.
The Company’s investments in subsidiaries are recorded at cost less, where appropriate, provisions for impairment in value.
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Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are
also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
(b) Special purpose entities
Special purpose entities (“SPEs”) are entities that are created to accomplish a narrow and well-defined objective such as the securitisation of
particular assets or the execution of a specific borrowing or lending transaction. SPEs are consolidated when the investor controls the investee.
The investor would only control the investee if it had all of the following:
• power over the investee;
• exposure, or rights, to variable returns from its involvement with the investee; and
• the ability to use its power over the investee to affect the amount of the investor’s returns.
The assessment of whether the Group has control over an SPE is carried out at inception and the initial assessment is only reconsidered at a
later date if there were any changes to the structure or terms of the SPE, or there were additional transactions between the Group and the SPE.
3.2. Foreign currency translation
Foreign currency transactions are translated into the functional currency using the spot exchange rates prevailing at the dates of the
transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the
Statement of Comprehensive Income. Foreign exchange differences arising from translation of equity instruments, where an election has been
made to present subsequent fair value changes in Other Comprehensive Income (“OCI”), will also be recognised in OCI.
3.3. Financial assets and financial liabilities
IFRS 9 requires financial assets and liabilities to be measured at amortised cost, fair value through other comprehensive income (“FVOCI”) or fair
value through the profit and loss (“FVPL”). Liabilities are measured at amortised cost or FVPL. The Group classifies financial assets and financial
liabilities in the following categories: financial assets and financial liabilities at FVPL; FVOCI, financial assets and liabilities at amortised cost and
other financial liabilities. Management determines the classification of its financial instruments at initial recognition.
A financial asset or financial liability is measured initially at fair value plus, transaction costs that are directly attributable to its acquisition or
issue with the exception of financial assets at FVPL where these costs are debited to the income statement.
(a) Financial assets measured at amortised cost
Financial assets that are held to collect contractual cash flows where those cash flows represent solely payments of principal and interest are
measured at amortised cost. A basic lending arrangement results in contractual cash flows that are solely payments of principal and interest
(“SPPI”) on the principal amount outstanding. Financial assets measured at amortised cost are predominantly loans and advances and debt
securities.
Loans and advances
Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise
when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable and the business model
assessment and SPPI criteria are met. Loans are recognised when cash is advanced to the borrowers inclusive of transaction costs. Loans and
advances, are carried at amortised cost using the effective interest rate method.
Debt securities at amortised cost
Debt securities at amortised cost are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group
has determined meets the SPPI criteria. Certain debt securities are held by the Group Central Treasury in a separate portfolio for long-term yield.
These securities may be sold, but such sales are not expected to be more than infrequent. The Group considers that these securities are held
within a business model whose objective is to hold assets to collect the contractual cash flows. Debt security investments are carried at
amortised cost using the effective interest rate method, less any impairment loss.
(b) Financial assets and financial liabilities at FVPL
Financial assets and liabilities are classified at FVPL where they do not meet the criteria to be measured at amortised cost or FVOCI or where
financial assets are designated at FVPL to reduce an accounting mismatch. They are measured at fair value in the statement of financial
position, with fair value gains/losses recognised in the income statement.
Financial assets that are held for trading or managed within a business model that is evaluated on a fair value basis are measured at FVPL,
because the business objective is neither hold-to-collect contractual cash flows nor hold-to-collect-and-sell contractual cash flows.
This category comprises derivative financial instruments and financial investments. Derivative financial instruments utilised by the Group
include structured notes and derivatives used for hedging purposes.
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Notes to the Consolidated
Financial Statements
3. Material accounting policies (continued)
Financial assets and liabilities at FVPL are initially recognised on the date from which the Group becomes a party to the contractual provisions of
the instrument, including any acquisition costs. Subsequent measurement of financial assets and financial liabilities held in this category are
carried at FVPL until the investment is sold.
(c) Financial assets at FVOCI
These include investments in special purpose vehicles and equity investments. They may be sold in response to liquidity requirements, interest
rate, exchange rate or equity price movements. Financial investments are initially recognised at cost, which is considered as the fair value of the
investment including any acquisition costs. The securities are subsequently measured at fair value in the statement of financial position.
Fair value changes in the securities are recognised directly in equity (“OCI”).
There is a rebuttable presumption that all equity investments are FVPL, however on initial recognition the Group may make an irrevocable
election to present the fair value movement of equity investments that are not held for trading within OCI. The election can be made on an
instrument by instrument basis.
For equity instruments, there are no reclassifications of gains and losses to the profit or loss statement on derecognition and no impairment
recognised in the profit or loss. Equity fair value movements are not reclassified from OCI under any circumstances.
(d) Financial guarantees and loan commitments
Financial guarantees represent undertakings that the Group will meet a customer’s obligation to third parties if the customer fails to do so.
Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans, guarantees or letters of credit.
The Group is exposed to loss in an amount equal to the total guarantees or unused commitments, however, the likely amount of loss is expected
to be significantly less; most commitments to extend credit are contingent upon customers maintaining specific credit standards, where the
amount of loss exceeds the total unused commitments an ECL is recognised. Liabilities under financial guarantee contracts are initially
recorded at their fair value, and the initial fair value is amortised over the life of the financial guarantee. Subsequently, the financial guarantee
liabilities are measured at the higher of the initial fair value, less cumulative amortisation, and the ECL of the obligations.
(e) Financial liabilities at amortised cost
Financial liabilities at amortised cost are non-derivative financial liabilities with fixed or determinable payments. These liabilities are recognised
when cash is received from the depositors and carried at amortised cost using the effective interest rate method. The fair value of these
liabilities repayable on demand is assumed to be the amount payable on demand at the Statement of Financial Position date.
Basis of measurement for financial assets and liabilities
Amortised cost measurement
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial
recognition, minus principal payments, plus or minus the cumulative amortisation using the effective interest rate method of any difference
between the initial amount recognised and the maturity amount, less any reduction for impairment.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date.
When available, the Group measures the fair value of an instrument using quoted prices in an active market for that instrument. A market is
regarded as active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on an
arm’s length basis.
If a market for a financial instrument is not active, the Group establishes fair value using a valuation technique. These include the use of recent
arm’s length transactions, reference to other instruments that are substantially the same for which market observable prices exist, net present
value and discounted cash flow analysis.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or when the Group has
transferred substantially all risks and rewards of ownership. Any interest in transferred financial assets that qualify for derecognition that is
created or retained by the Group is recognised as a separate asset or liability in the Statement of Financial Position. In transactions in which the
Group neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset and it retains control over the asset,
the Group continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to
changes in the value of the transferred asset. There have not been any instances where assets have only been partially derecognised.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled, expire, are modified or exchanged.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the
Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset
and settle the liability simultaneously.
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Income and expenses are presented on a net basis only when permitted under IFRS, or for gains and losses arising from a group of similar
transactions such as the Group’s trading activity.
Modification of financial assets
If the terms of financial assets are modified, then the Group evaluates whether the cash flow of the modified asset are substantially different.
If the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed to have
expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value plus any eligible transaction
costs. Any fees received as part of the modification are accounted as follows:
• fees that are considered in determining the fair value of the new asset and fees that represent reimbursement of eligible transaction costs
are included in the initial measurement of the asset; and
• other fees are included in profit or loss as part of gain or loss on derecognition.
3.4 Impairment for financial assets at amortised cost and lease receivables
IFRS 9 impairment model adopts a three stage expected credit loss approach (“ECL”) based on the extent of credit deterioration since
origination.
The three stages under IFRS 9 are as follows:
• Stage 1 – if, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, an entity
shall measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.
• Stage 2 – a lifetime loss allowance is held for financial assets where a significant increase in credit risk has been identified since initial
recognition for financial assets that are not credit impaired. The assessment of whether credit risk has increased significantly since initial
recognition is performed for each reporting period for the life of the loan.
• Stage 3 – a lifetime ECL allowance is required for financial assets that are credit impaired at the reporting date.
Measurement of ECL
The assessment of credit risk and the estimation of ECL are unbiased and probability weighted. ECL is measured on either a 12 month (Stage 1)
or lifetime (Stage 2) basis depending on whether a significant increase in credit risk has occurred since initial recognition or where an account
meets the Group’s definition of default (Stage 3).
The ECL calculation is a product of an individual loan’s probability of default (“PD”), exposure at default (“EAD”) and loss given default (“LGD”)
discounted at the effective interest rate (“EIR”).
Significant increase in credit risk (“SICR”) (movement to Stage 2)
The Group’s transfer criteria determines what constitutes a significant increase in credit risk, which results in a financial asset being moved from
Stage 1 to Stage 2. The Group has determined that a significant increase in credit risk arises when an individual borrower is more than 30 days
past due or in other circumstances such as forbearance measures.
The Group monitors the ongoing appropriateness of the transfer criteria, where any proposed amendments will be reviewed and approved by
the Group’s Credit Committees at least annually and more frequently if required.
A borrower will move back into Stage 1 conditional upon a period of good account conduct and the improvement of the Client’s situation to the
extent that the probability of default has receded sufficiently and a full repayment of the loan, without recourse to the collateral, is likely.
Definition of default (movement to Stage 3)
The Group uses a number of qualitative and quantitative criteria to determine whether an account meets the definition of default and as a result
moves into Stage 3. The criteria are as follows:
• The rebuttable assumption that more than 90 days past due is an indicator of default. The Group therefore deems more than 90 days past
due as an indicator of default except for cases where the customer is already within forbearance. This will ensure that the policy is aligned
with the Basel/Regulatory definition of default.
• The Group has also deemed it appropriate to classify accounts into Stage 3 where there has been a breach in agreed forbearance
arrangements, recovery action is in hand or bankruptcy proceedings or a similar insolvency process of a client, or director of a company have
been initiated.
A borrower will move out of Stage 3 when their credit risk improves such that they are no longer past due and remain up to date for a minimum
period of six months and the improvement in the borrower’s situation to the extent that credit risk has receded sufficiently and a full repayment
of the loan, without recourse to the collateral, is likely.
Forward looking macroeconomic scenarios
IFRS 9 requires the entity to consider the risk of default and impairment loss taking into account expectations of economic changes that are
reasonable.
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Notes to the Consolidated
Financial Statements
3. Material accounting policies (continued)
The Group uses bespoke macroeconomic models to determine the most significant factors which may influence the likelihood of an exposure
defaulting in the future. At present, the most significant macroeconomic factors relate to property prices, UK real GDP growth and
unemployment rate. The Group currently consider five probability weighted scenarios: baseline; extreme downside; downside 2; downside 1 and
upside. The Group has derived an approach for factoring probability weighted macroeconomic forecasts into ECL calculations, adjusting PD and
LGD estimates.
Expected life
IFRS 9 requires lifetime expected credit losses to be measured over the expected life. Currently the Group considers the loans’ contractual term
as the maximum period to consider credit losses. This approach will continue to be monitored and enhanced if and when deemed appropriate.
Government guarantees
During March and April 2020, the UK government launched a series of temporary schemes designed to support businesses and deal with the
impact of Covid-19. The BBLS, CBILS, CLBILS and RLS lending products were originated by the Group but are covered by government guarantees.
These are to be set against the outstanding balance of a defaulted facility after the proceeds of the business assets have been applied.
The government guarantee is 80% for CBILS, CLBILS and RLS and 100% for BBLS. Arbuthnot Latham recognises lower LGDs for these lending
products as a result, with 0% applied to the government guaranteed part of the exposure.
3.5 Derivatives held for risk management purposes and hedge accounting
The Group has elected, as an accounting policy choice permitted under IFRS 9 ‘Financial Instruments’, to continue to apply the hedge
accounting rules set out in IAS 39 ‘Financial Instruments – Recognition and measurement’. However, additional hedge accounting disclosures
introduced by IFRS 9’s consequential amendments to IFRS 7 are provided.
Derivatives held for risk management purposes include all derivative assets and liabilities that are not classified as trading assets or liabilities.
All derivatives are measured at fair value in the Statement of Financial Position.
The Group designates certain derivatives held for risk management as hedging instruments in qualifying hedging relationships.
Policy applicable generally to hedging relationships
On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s),
including the risk management objective and strategy in undertaking the hedge, together with the method that will be used to assess the
effectiveness of the hedging relationship. The Group makes an assessment, both on inception of the hedging relationship and on an ongoing
basis, of whether the hedging instrument(s) is (are) expected to be highly effective in offsetting the changes in the fair value of the respective
hedged item(s) during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of
80–125%.
Fair value hedges
When a derivative is designated as the hedging instrument in a hedge of the change in fair value of a recognised asset or liability or a firm
commitment that could affect profit or loss, changes in the fair value of the derivative are recognised immediately in profit or loss. The change in
fair value of the hedged item attributable to the hedged risk is recognised in profit or loss. If the hedged item would otherwise be measured at
cost or amortised cost, then its carrying amount is adjusted accordingly.
If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for fair value hedge accounting, or
the hedge designation is revoked, then hedge accounting is discontinued prospectively. However, if the derivative is novated to a central
counterparty by both parties as a consequence of laws or regulations without changes in its terms except for those that are necessary for the
novation, then the derivative is not considered expired or terminated.
Any adjustment up to the point of discontinuation to a hedged item for which the effective interest method is used is amortised to profit or loss
as an adjustment to the recalculated effective interest rate of the item over its remaining life.
On hedge discontinuation, any hedging adjustment made previously to a hedged financial instrument for which the effective interest method is
used is amortised to profit or loss by adjusting the effective interest rate of the hedged item from the date on which amortisation begins. If the
hedged item is derecognised, then the adjustment is recognised immediately in profit or loss when the item is derecognised.
3.6. Impairment of non-financial assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
Impairment for goodwill is discussed in more detail under Note 27.
3.7. Fiduciary activities
The Group commonly acts as trustee and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals,
trusts, retirement benefit plans and other institutions. These assets and income arising thereon are excluded from these financial statements,
as they are not assets of the Group.
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3.8. Standards issued but not yet effective
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2025 and earlier
application is permitted; however, the Group has not early adopted the new and amended standards in preparing these consolidated financial
statements.
IFRS 18 will replace IAS 1 Presentation of Financial Statements and applies for annual reporting periods beginning on or after 1 January 2027. The
new accounting standard introduces the following key new requirements.
• Entities are required to classify all income and expenses into 5 categories in the statement of comprehensive income, namely the operating,
investing, financing, discontinued operations and income tax categories. Entities are also required to present a newly defined operating
profit subtotal. Entities’ net profit will not change.
• Management-defined performance measures (“MPMs”) are disclosed in a single note in the financial statements.
• Enhanced guidance is provided on how to group information in the financial statements.
In addition, all entities are required to use the operating profit subtotal as the starting point for the statement of cash flows when presenting
operating cash flows under the indirect method.
The Group is still in the process of assessing the impact of the new accounting standard, particularly with respect to the Group’s statement of
comprehensive income, the statement of cash flows and the additional disclosures required for MPM’s. The Group is also assessing the impact
of how information is grouped in the financial statements, including for items currently labelled as ‘other’.
Other standards
The following new and amended standards are not expected to have a significant impact on the Group’s consolidated financial statements.
• Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) (effective for annual periods beginning on or
after 1 January 2026).
• IFRS 18 Presentation and Disclosures in Financial Statements (effective for annual periods beginning on or after 1 January 2027).
• IFRS 19 Subsidiaries without Public Accountability: Disclosures (effective for annual periods beginning on or after 1 January 2027).
• Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7); and
• Annual Improvements to IFRS Accounting Standards – Volume 11.
The Group is currently assessing the impact of these amendments.
4. Critical accounting estimates and judgements in applying accounting policies
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates
and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances.
4.1 Critical accounting judgements
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the
consolidated financial statements is included in the following notes:
• Notes 3.4 and 6(a): establishing the criteria for determining whether credit risk on a financial asset has increased significantly since initial
recognition.
• Notes 3.4 and 6(a): establishing the criteria to determine whether an account meets the definition of default and as a result moves into Stage 3.
• Notes 3.3 and 6(f): classification of financial assets: assessment of the business model within which the assets are held and assessment of
whether the contractual terms of financial assets are SPPI on the principal amount outstanding.
4.2 Estimation uncertainty
(a) Expected credit losses (“ECL”) on financial assets
The Group reviews its loan portfolios and debt security investments to assess impairment at least on a quarterly basis. The basis for evaluating
impairment losses is described in Note 11. The measurement of ECL required by the implementation of IFRS 9, necessitates a number of
significant judgements. Specifically, judgements and estimation uncertainties relate to assessment of whether credit risk on the financial asset
has increased significantly since initial recognition, incorporation of forward-looking information (“FLI”) in the measurement of ECLs and key
assumptions used in estimating recoverable cash flows. These estimates are driven by a number of factors that are subject to change which
may result in different levels of ECL allowances.
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Notes to the Consolidated
Financial Statements
4. Critical accounting estimates and judgements in applying accounting policies (continued)
The Group incorporates FLI into the assessment of whether there has been a significant increase in credit risk. Forecasts for key
macroeconomic variables that most closely correlate with the Bank’s portfolio are used to produce five economic scenarios, comprising of a
base case, which is the central scenario, developed internally based on consensus forecast, and four less likely scenarios, one upside and three
downside scenarios (downside 1, downside 2 and extreme downside), and the impacts of these scenarios are then probability weighted. The
estimation and application of this FLI will require significant judgement supported by the use of external information.
12-month ECLs on loans and advances (loans within Stage 1) are calculated using a statistical model on a collective basis, grouped together by
product and geographical location. The key assumptions are the probability of default, the economic scenarios and loss given default having
consideration to collateral. Lifetime ECLs on loans and advances (loans within Stage 2 and 3) are calculated based on an individual valuation of
the underlying asset and other expected cash flows.
For financial assets in Stage 2 and 3, ECL is calculated on an individual basis and all relevant factors that have a bearing on the expected future
cash flows are taken into account. These factors can be subjective and can include the individual circumstances of the borrower, the realisable
value of collateral, the Group’s position relative to other claimants, and the likely cost to sell and duration of the time to collect. The level of ECL is
the difference between the value of the recoverable amount (which is equal to the expected future cash flows discounted at the loan’s original
effective interest rate), and its carrying amount.
Five economic scenarios were modelled. A probability was assigned to each scenario to arrive at an overall weighted impact on ECL.
Management judgment is required in the application of the probability weighting for each scenario.
The Group considered the impact of various assumptions on the calculation of ECL (changes in GDP, unemployment rates, inflation, exchange
rates, equity prices, wages and collateral values/property prices) and concluded that collateral values/property prices, UK GDP and UK
unemployment rate are key drivers of credit risk and credit losses for each portfolio of financial instruments.
Using an analysis of historical data, management has estimated relationships between macro-economic variables and credit risk and credit
losses. The Group estimates each key driver for credit risk over the active forecast period of between two and five years. This is followed by a
period of mean reversion of five years.
The five macroeconomic scenarios modelled on future property prices and macroeconomic variables were as follows:
• Baseline
• Upside
• Downside 1
• Downside 2
• Extreme downside
The table below reflects the expected probability weightings applied for each macroeconomic scenario:
Probability weighting
Group
2025
2024
Economic Scenarios
Baseline
49.0%
46.0%
Upside
19.0%
21.0%
Downside 1
15.0%
15.0%
Downside 2
9.0%
9.0%
Extreme downside
8.0%
9.0%
The tables below show the five-year forecasted average growth for property prices, the UK unemployment rate and UK real GDP:
31 December 2025
Group
Base
Upside
Downside 1
Downside 2
Extreme downside
Five-year summary
UK House price index - average growth
3.2%
5.4%
1.1%
(1.0%)
(3.1%)
UK Commercial real estate price - average growth
1.3%
2.7%
(0.3%)
(2.0%)
(3.7%)
UK Unemployment rate - average
4.8%
4.2%
5.6%
6.4%
7.2%
UK GDP - average growth
1.3%
2.0%
0.9%
0.4%
0.0%
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Arbuthnot Banking Group PLC
Report & Accounts 2025
31 December 2024
Group
Base
Upside
Downside 1
Downside 2
Extreme downside
Five-year summary
UK House price index - average growth
3.0%
4.2%
0.8%
(1.4%)
(3.6%)
UK Commercial real estate price - average growth
1.4%
3.4%
(0.4%)
(2.3%)
(4.2%)
UK Unemployment rate - average
4.4%
3.9%
5.3%
6.2%
7.1%
UK GDP - average growth
1.4%
2.0%
0.9%
0.5%
0.1%
The tables below list the macroeconomic assumptions at 31 December 2025 used in the base, upside and downside scenarios over the five-year
forecast period. The assumptions represent the absolute percentage unemployment rates and year-on-year percentage change for GDP and
property prices.
UK House price index - four quarter growth
Year
Baseline
Upside
Downside 1
Downside 2
Extreme downside
2026
2.8%
6.0%
(0.2%)
(3.1%)
(6.0%)
2027
2.6%
4.6%
(2.5%)
(7.6%)
(12.8%)
2028
3.1%
5.1%
(1.6%)
(6.3%)
(11.0%)
2029
3.8%
5.9%
5.0%
6.2%
7.4%
2030
3.7%
5.4%
4.8%
5.8%
6.9%
5 year average
3.2%
5.4%
1.1%
(1.0%)
(3.1%)
UK Commercial real estate price - four quarter growth
Year
Baseline
Upside
Downside 1
Downside 2
Extreme downside
2026
1.7%
6.3%
(5.5%)
(12.8%)
(20.0%)
2027
2.0%
3.8%
(5.0%)
(11.9%)
(18.8%)
2028
0.9%
1.1%
2.9%
4.8%
6.8%
2029
0.8%
0.8%
2.8%
4.8%
6.9%
2030
1.3%
1.3%
3.1%
4.8%
6.6%
5 year average
1.3%
2.7%
(0.3%)
(2.0%)
(3.7%)
UK Unemployment rate - annual average
Year
Baseline
Upside
Downside 1
Downside 2
Extreme downside
2026
5.0%
4.3%
5.2%
5.4%
5.6%
2027
4.8%
4.2%
5.7%
6.6%
7.5%
2028
4.7%
4.2%
5.9%
7.1%
8.4%
2029
4.7%
4.1%
5.7%
6.6%
7.6%
2030
4.7%
4.2%
5.4%
6.1%
6.8%
5 year average
4.8%
4.2%
5.6%
6.4%
7.2%
UK GDP - annual growth
Year
Baseline
Upside
Downside 1
Downside 2
Extreme downside
2026
1.1%
2.5%
(0.7%)
(2.5%)
(4.3%)
2027
1.4%
2.4%
0.9%
0.5%
–
2028
1.4%
1.8%
1.4%
1.4%
1.4%
2029
1.4%
1.7%
1.4%
1.4%
1.4%
2030
1.4%
1.6%
1.4%
1.4%
1.4%
5 year average
1.3%
2.0%
0.9%
0.4%
0.0%
82
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
4. Critical accounting estimates and judgements in applying accounting policies (continued)
The graphs below plot the historical data for HPI, Commercial real estate price, unemployment rate and GDP growth rate in the UK as well as the
forecasted data under each of the five scenarios.
The table below compares the 31 December 2025 ECL provision derived using the 2025 and 2024 economic scenarios.
Economic scenarios as at
Group
2025
£000
2024
£000
ECL Provision
Stage 1
708
887
Stage 2
172
174
Stage 3
12,284
12,430
At 31 December 2025
13,163
13,491
Additionally, management have assessed the impact of assigning a 100% probability to each of the economic scenarios, which would have the
following impact on the Profit or Loss of the Group:
Group
2025
£m
2024
£m
Impact of 100% scenario probability
Baseline
0.4
0.5
Upside
2.6
1.8
Downside 1
(1.1)
(1.9)
Downside 2
(5.4)
(5.2)
Extreme downside
(19.6)
(21.4)
UK unemployment
UK Commercial Real Estate Price
UK House Price Index
UK GDP
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
2023
2024
2025
2026
2027
2028
2029
2030
2034
2033
2032
2031
Baseline
Upside
Downside 1
Downside 2
Extreme downside
50
70
90
110
130
150
2023
2024
2025
2026
2027
2028
2029
2030
2033
2034
2032
2031
Baseline
Upside
Downside 1
Downside 2
Extreme downside
50
70
90
110
130
150
170
2023
2024
2025
2026
2027
2028
2029
2030
2034
2033
2032
2031
Baseline
Upside
Downside 1
Downside 2
Extreme downside
2023
2024
2025
2026
2027
2028
2029
2030
2033
2034
2032
2031
90
100
110
95
105
115
120
Baseline
Upside
Downside 1
Downside 2
Extreme downside
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Arbuthnot Banking Group PLC
Report & Accounts 2025
(b) Effective Interest Rate
Loans and advances to customers are initially recognised at fair value. The fair value of a loan on initial recognition is generally its transaction
price. Subsequently, they are measured under the effective interest rate method. Management review the expected cash flows against actual
cash flows to ensure future assumptions on customer behaviour and future cash flows remain valid. If the estimates of future cash flows are
revised, the gross carrying value of the financial asset is recalculated as the present value of the estimated future contractual cash flows
discounted at the original effective interest rate. The adjustment to the carrying value of the loan book is recognised in the Statement of
Comprehensive Income.
The accuracy of the effective interest rate is affected by unexpected market movements resulting in altered customer behaviour, inaccuracies
in the models used compared to actual outcomes and incorrect assumptions.
In 2025 the Group recognised £42k (2024: £325k) additional interest income to reflect a revision in the timing of expected cash flows on the
originated book, reflecting a shortening of the expected life of originated loan book.
If customer loans repaid 6 months earlier than anticipated on the originated loan book, interest income would increase by £0.6m (2024: £0.5m),
due to acceleration of fee income.
In 2025 the Group recognised £33k additional (2024: £45k additional) interest income to reflect actual cash flows received on the acquired
mortgage book being less than forecast cash flows.
The key judgements in relation to calculating the net present value of the acquired mortgage book relate to the timing of future cash flows on
principal repayments. Management have considered an early and delayed 6-month sensitivity on the timing of repayment and a 10% increase
and decrease of principal repayments to be reasonably possible.
If the acquired loan book was modelled to accelerate cash flows by 6 months, it would increase interest income in 2025 by £0.14m (2024: £0.18m)
while a 10% increase in principal repayments will increase interest income in 2025 by £0.3m (2024: £0.4m) through a cash flow reset adjustment.
(c) Investment property
The valuation that the Group places on its investment property is subject to a degree of uncertainty and is calculated on the basis of
assumptions in relation to prevailing market rents and effective yields. These assumptions may not prove to be accurate, particularly in periods
of market volatility.
The uncertainty in current market conditions has resulted in less market evidence being available for Management in making its judgement on
the key assumptions of property yield and market rent. The Group currently owns one (2024: one) investment property, as outlined in Note 30.
Management valued the investment property utilising externally sourced market information and property specific knowledge.
Crescent Office Park in Bath with value of £5.3m (2024: £5.3m)
In December 2017, the office building was acquired with the intention to be included within a new property fund initiative that the Group had
planned to start-up. The property had tenants in situ with the Fund recognising rental income.
The property was initially recognised as held for sale under IFRS 5. In 2018 the launch of the property fund was placed on hold and as a result it
was reclassified as an investment property as the property no longer met the IFRS 5 criteria. The property remained occupied as at 31 December
2025 with the Group receiving rental income.
In accordance with IAS 40, the property is measured at fair value, with its carrying value at year end of £5.25m equal to its fair value.
The valuation of the property has the following key inputs:
• yield: 8.5%
• total rental income per annum: £0.48m
The external valuation that the Group places on its investment property is subject to a degree of uncertainty and is calculated on the basis of
assumptions in relation to prevailing market conditions and subject to comparable properties for sale. This valuation is therefore susceptible to
uncertainty particularly where there is a limited level of activity in the property market.
Management have assessed that should the fair value of the investment property reduce by 5% this would impact profit or loss by a reduction of
£0.3m (2024: £0.3m) and a reduction of 10% would impact profit or loss by a reduction of £0.5m (2024: £0.5m).
84
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
4. Critical accounting estimates and judgements in applying accounting policies (continued)
(d) Inventory
The Group owns one commercial property (2024: one property) and two repossessed properties (2024: two repossessed properties), classified
as inventory and presented as part of other assets in the Statement of Financial Position. The properties are assessed at the reporting date for
impairment.
The valuations for the Group’s properties are subject to a degree of uncertainty and are calculated on the basis of assumptions in relation to
prevailing market conditions, including effective yields and comparable properties for sale. These valuations are therefore susceptible to
uncertainty particularly where there is a limited level of activity in the property market and may not prove to be accurate, particularly in periods
of market volatility.
Similarly to investment property, the uncertainty in current market conditions resulted in less market evidence being available for Management
in making its judgement on the key assumptions of property yield and market rent.
Management have assessed that should the net realisable value less cost to sell of each of the combined property inventory reduce by 5% this
would impact profit or loss by a reduction of £0.8m (2024: £0.9m) and a reduction of 10% would impact profit or loss by a reduction of £1.6m (2024:
£1.7m) (or 10% of cost).
(e) Residual value
At the end of lease terms, assets may be sold to third parties or leased for further terms. Rentals are calculated to recover the cost of assets
less their residual value (“RV”), and earn finance income. RV’s represent the estimated value of the leased asset at the end of lease period.
Residual values are calculated after analysing the market place and the company’s own historical experience in the market. Expected residual
values of leased assets are prospectively adjusted for through the depreciation adjustments which are charged to the income statement each
year. The key estimates and judgements that arise in relation to RV’s are timing of lease terminations and expected residual value of returned
vehicles.
The profitability of the Group’s operating lease contracts is highly dependent on the RV of the vehicle at the end of the agreement. On inception
of the lease, the Group uses its knowledge and experience of the market and industry to estimate the final RV of the vehicle. The Group is
exposed to the risk that the RV of the vehicle may be less than anticipated at the outset of the contract impacting profitability. The Group
manages the risk through effective and robust procedures by continually monitoring historic, current and forecast RV performance.
Management have assessed that a residual value decrease of 5% as at 31 December 2025 would impact profit or loss by a reduction of £2.3m
(2024: £2.4m) and a residual value decrease of 10% would impact profit or loss by reduction of £4.6m (2024: £4.9m). Expected residual values
underlying the calculation of depreciation of leased assets are kept under review to take account of any change in circumstances. Refer to Note
28 for further detail.
85
Arbuthnot Banking Group PLC
Report & Accounts 2025
5. Maturity analysis of assets and liabilities
The table below shows the maturity analysis by expected maturity date of assets and liabilities of the Group as at 31 December 2025:
At 31 December 2025
Due within
one year
£000
Due after more
than one year
£000
Total
£000
ASSETS
Cash and balances at central banks
437,548
–
437,548
Loans and advances to banks
117,497
–
117,497
Debt securities at amortised cost
1,745,794
287,364
2,033,158
Derivative financial instruments
–
1,398
1,398
Current tax asset
1,619
–
1,619
Loans and advances to customers
560,072
1,400,470
1,960,542
Other assets
34,254
15,993
50,247
Financial investments
–
2,061
2,061
Intangible assets
3,388
30,060
33,448
Property, plant and equipment
136,354
174,215
310,569
Right-of-use assets
4,074
40,427
44,501
Investment property
–
5,250
5,250
3,040,600
1,957,238
4,997,838
LIABILITIES
Deposits from banks
1,389
–
1,389
Deposits from customers
4,534,879
35,486
4,570,365
Other liabilities
42,489
–
42,489
Deferred tax liability
–
10,258
10,258
Lease liabilities
3,964
54,303
58,267
Debt securities in issue
–
38,672
38,672
4,582,721
138,719
4,721,440
86
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
5. Maturity analysis of assets and liabilities (continued)
The table below shows the maturity analysis by expected maturity date of assets and liabilities of the Group as at 31 December 2024:
At 31 December 2024
Due within
one year
£000
Due after more
than one year
£000
Total
£000
ASSETS
Cash and balances at central banks
911,887
–
911,887
Loans and advances to banks
66,971
–
66,971
Debt securities at amortised cost
1,037,497
162,350
1,199,847
Derivative financial instruments
–
2,970
2,970
Loans and advances to customers
537,467
1,556,745
2,094,212
Other assets
26,380
25,321
51,701
Financial investments
–
4,947
4,947
Intangible assets
2,590
27,975
30,565
Property, plant and equipment
156,997
156,369
313,366
Right-of-use assets
4,385
43,126
47,511
Investment property
–
5,250
5,250
2,744,174
1,985,053
4,729,227
LIABILITIES
Deposits from banks
180,511
12,400
192,911
Deposits from customers
4,087,650
44,843
4,132,493
Current tax liability
3,001
–
3,001
Other liabilities
35,384
–
35,384
Deferred tax liability
–
5,671
5,671
Lease Liabilities
1,086
53,743
54,829
Debt securities in issue
–
37,982
37,982
4,307,632
154,639
4,462,271
87
Arbuthnot Banking Group PLC
Report & Accounts 2025
The table below shows the maturity analysis by expected maturity date of assets and liabilities of the Company as at 31 December 2025:
At 31 December 2025
Due within
one year
£000
Due after more
than one year
£000
Total
£000
ASSETS
Loans and advances to banks
7
–
7
Loans and advances to banks - due from subsidiary undertakings
4,753
–
4,753
Debt securities at amortised cost
–
38,781
38,781
Deferred tax asset
–
486
486
Property, plant and equipment
–
194
194
Other assets
1,739
–
1,739
Interests in subsidiaries
–
164,354
164,354
6,499
203,815
210,314
LIABILITIES
Current tax liability
5,391
–
5,391
Other liabilities
5,752
–
5,752
Debt securities in issue
–
38,672
38,672
11,143
38,672
49,815
The table below shows the maturity analysis by expected maturity date of assets and liabilities of the Company as at 31 December 2024:
At 31 December 2024
Due within
one year
£000
Due after more
than one year
£000
Total
£000
ASSETS
Loans and advances to banks
7
–
7
Loans and advances to banks - due from subsidiary undertakings
913
–
913
Debt securities at amortised cost
–
38,103
38,103
Deferred tax asset
–
515
515
Property, plant and equipment
–
221
221
Other assets
3,355
–
3,355
Interests in subsidiaries
–
164,354
164,354
4,275
203,193
207,468
LIABILITIES
Current tax liability
4,288
–
4,288
Other liabilities
5,467
–
5,467
Debt securities in issue
–
37,982
37,982
9,755
37,982
47,737
88
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
6. Financial risk management
Strategy
By their nature, the Group’s activities are principally related to the use of financial instruments. The Directors and senior management of the
Group have formally adopted a Group Risk and Controls Policy which sets out the Board’s attitude to risk and internal controls. Key risks
identified by the Directors are formally reviewed and assessed at least once a year by the Board, in addition to which key business risks are
identified, evaluated and managed by operating management on an ongoing basis by means of procedures such as physical controls, credit and
other authorisation limits and segregation of duties. The Board also receives regular reports on any risk matters that need to be brought to its
attention. Significant risks identified in connection with the development of new activities are subject to consideration by the Board. There are
budgeting procedures in place and reports are presented regularly to the Board detailing the results of each principal business unit, variances
against budget and prior year, and other performance data.
The principal non-operational risks inherent in the Group’s business are credit, macroeconomic, market, liquidity and capital.
(a) Credit risk
The Company and Group take on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due.
Significant changes in the economy, or in the health of a particular industry segment that represents a concentration in the Company and
Group’s portfolio, could result in losses that are different from those provided for at the balance sheet date. Credit risk is managed through
the Credit Committee of the banking subsidiary.
The Committee regularly reviews the credit risk profile of the Group, with a clear focus on performance against risk appetite statements and risk
metrics. The Committee considered credit conditions during the year, and in particular the impact of the high interest rates on performance
against both credit risk appetite and a range of key credit risk metrics.
The Company and Group structure the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to products,
and one borrower or groups of borrowers. Such risks are monitored on a revolving basis and subject to an annual or more frequent review.
The limits are approved periodically by the Board of Directors and actual exposures against limits are monitored daily.
Exposure to credit risk is managed through regular analysis of the ability of borrowers and potential borrowers to meet interest and capital
repayment obligations and by changing these lending limits where appropriate. Exposure to credit risk is also managed in part by obtaining
collateral, and corporate and personal guarantees.
The economic environment remains uncertain and future impairment charges may be subject to further volatility (including from changes to
macroeconomic variable forecasts).
Uncertainty in current market conditions has created a challenge for ECL modelling, given the severity of economic shock and associated
uncertainty for the future economic path coupled with the scale of government and central bank intervention that have altered the
relationships between economic drivers and default.
The Group has attempted to leverage stress test modelling insights to inform ECL model refinements to enable reasonable estimates.
Management review of modelling approaches and outcomes continues to inform any necessary adjustments to the ECL estimates through the
form of in-model adjustments, based on expert judgement including the use of available information. Management considerations included the
potential severity and duration of the economic shock, including the mitigating effects of government support actions, as well the potential
trajectory of the subsequent recovery.
The Group employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of collateral to secure
advances, which is common practice. The principal collateral types for loans and advances include, but are not limited to:
• Charges over residential and commercial properties;
• Charges over business assets such as premises, inventory and accounts receivable;
• Charges over financial instruments such as debt securities and equities;
• Charges over other chattels; and
• Personal guarantees
Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly used for the
corresponding assets. In order to minimise any potential credit loss the Group will seek additional collateral from the counterparty as soon as
impairment indicators are noticed for the relevant individual loans and advances. Repossessed collateral, not readily convertible into cash, is
made available for sale in an orderly fashion, with the proceeds used to reduce or repay the outstanding indebtedness, or held as inventory
where the Group intends to develop and sell in the future. Where excess funds are available after the debt has been repaid, they are available
either for other secured lenders with lower priority or are returned to the customer.
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Report & Accounts 2025
Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans, guarantees or letters of credit.
With respect to credit risk on commitments to extend credit, the Group is potentially exposed to loss in an amount equal to the total unused
commitments. However, the likely amount of loss is less than the total unused commitments, as most commitments to extend credit are
contingent upon customers maintaining specific credit standards.
The Group incorporates forward-looking information into both its assessment of whether the credit risk of an instrument has increased
significantly since its initial recognition and its measurement of ECL. The key inputs into the measurement of the ECL are:
• assessment of significant increase in credit risk
• future economic scenarios (see Note 4.2 (a))
• probability of default
• loss given default
• exposure at default
The IFRS 9 impairment model adopts a three stage approach based on the extent of credit deterioration since origination, see Note 11.
The Group’s maximum exposure to credit risk before collateral held or other credit enhancements is as follows:
2025
Group
Credit risk exposures (all stage 1, unless otherwise stated)
Banking
£000
RAF
£000
ACABL
£000
AAG
£000
All Other
Divisions
£000
Total
£000
On-balance sheet:
Cash and balances at central banks
–
–
–
–
437,548
437,548
Loans and advances to banks
–
–
–
–
117,497
117,497
Debt securities at amortised cost
–
–
–
–
2,033,158
2,033,158
Derivative financial instruments
–
–
–
–
1,398
1,398
Loans and advances to customers (Gross of ECL)
1,367,125
288,308
219,536
97,586
1,148
1,973,703
Stage 1
1,288,927
280,720
189,554
97,454
(12)
1,856,643
Stage 2
18,413
4,888
29,982
100
–
53,383
Stage 3
59,785
2,700
–
32
1,160
63,677
Other assets
–
–
–
–
7,011
7,011
Financial investments
–
–
–
–
2,061
2,061
Off-balance sheet:
Guarantees
3,059
–
–
–
–
3,059
Loan commitments and other credit related liabilities
74,457
–
300,835
–
–
375,292
At 31 December
1,444,641
288,308
520,371
97,586
2,599,821
4,950,727
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Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
6. Financial risk management (continued)
2024
Group
Credit risk exposures (all stage 1, unless otherwise stated)
Banking
£000
RAF
£000
ACABL
£000
AAG
£000
All Other
Divisions
£000
Total
£000
On-balance sheet:
Cash and balances at central banks
–
–
–
–
911,699
911,699
Loans and advances to banks
–
–
–
–
66,971
66,971
Debt securities at amortised cost
–
–
–
–
1,199,847
1,199,847
Derivative financial instruments
–
–
–
–
2,970
2,970
Loans and advances to customers (Gross of ECL)
1,549,071
249,789
228,507
77,305
1,129
2,105,801
Stage 1
1,420,547
242,482
189,097
77,065
(14)
1,929,177
Stage 2
60,379
4,407
38,249
240
–
103,275
Stage 3
68,145
2,900
1,161
–
1,143
73,349
Other assets
–
–
–
–
7,758
7,758
Financial investments
–
–
–
–
4,947
4,947
Off-balance sheet:
Guarantees
2,500
–
–
–
–
2,500
Loan commitments and other credit related liabilities
101,412
–
324,119
–
–
425,531
At 31 December
1,652,983
249,789
552,626
77,305
2,195,321
4,728,024
The Company’s maximum exposure to credit risk (all stage 1) before collateral held or other credit enhancements is as follows:
2025
£000
2024
£000
Credit risk exposures relating to on-balance sheet assets are as follows:
Loans and advances to banks
4,760
920
Debt securities at amortised cost
38,781
38,103
Other assets
1,676
3,280
At 31 December
45,217
42,303
The above tables represent the maximum credit risk exposure (before impairment) to the Group and Company at 31 December 2025 and 2024
without taking account of any collateral held or other credit enhancements attached. For financial assets, the balances are based on carrying
amounts as reported in the Statement of Financial Position. For guarantees and loan commitments, the amounts in the table represent the
amounts for which the Group is contractually committed.
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The table below represents an analysis of the loan to values of the exposures secured by property for the Group:
2025
Total
Group
Loan Balance
£000
Collateral
£000
Less than 60%
1,106,535
2,353,498
Stage 1
1,079,543
2,296,152
Stage 2
7,379
16,005
Stage 3
19,613
41,341
60%-80%
203,944
322,419
Stage 1
184,841
294,386
Stage 2
10,746
15,898
Stage 3
8,357
12,135
80%-100%
20,219
22,220
Stage 1
3,106
4,107
Stage 2
60
109
Stage 3
17,053
18,004
Greater than 100%
8,882
8,061
Stage 1
2,667
3,004
Stage 2
69
112
Stage 3
6,146
4,945
Total
1,339,580
2,706,198
The table below represents an analysis of the loan to values of the exposures secured by property for the Group:
2024
Total
Group
Loan Balance
£000
Collateral
£000
Less than 60%
1,113,713
2,455,910
Stage 1
1,058,577
2,334,164
Stage 2
31,121
72,836
Stage 3
24,015
48,910
60%-80%
348,701
569,311
Stage 1
304,176
497,360
Stage 2
26,322
41,414
Stage 3
18,203
30,537
80%-100%
22,304
31,581
Stage 1
12,594
18,683
Stage 2
659
1,008
Stage 3
9,051
11,890
Greater than 100%*
17,130
17,574
Stage 1
6,577
7,789
Stage 2
1,986
482
Stage 3
8,567
9,303
Total
1,501,848
3,074,376
* In addition to property, other security is taken, including charges over Arbuthnot Latham Investment Management portfolios, other chattels and personal
guarantees. Additionally under the government scheme for BBLs, collateral is not required as the loans are 100% backed by the government.
Loans with a loan to value of greater than 100% have no additional collateral (2024: £1.0m) in the form of cash deposits and security over
Arbuthnot Latham Investment Management Portfolios and personal guarantees of £2.2m (2024: £7.0m). Non-property collateral reduces loan to
value below 100% for all such exposures.
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Report & Accounts 2025
Notes to the Consolidated
Financial Statements
6. Financial risk management (continued)
The table below represents an analysis of loan commitments compared to the values of property collateral for the Group (all Stage 1):
2025
Group
Loan commitments
£000
Collateral
£000
Less than 60%
37,496
94,693
60%-80%
1,697
2,425
Total
39,193
97,118
2024
Group
Loan commitments
£000
Collateral
£000
Less than 60%
44,584
93,125
60%-80%
981
1,550
80%-100%
2,296
2,717
Total
47,861
97,392
Renegotiated loans and forbearance
The contractual terms of a loan may be modified due to factors that are not related to the current or potential credit deterioration of the
customer (changing market conditions, customer retention, etc.). In such cases, the modified loan may be derecognised and the renegotiated
loan recognised as a new loan at fair value.
When modification results in derecognition, a new loan is recognised and allocated to Stage 1 (assuming it is not credit-impaired at that time).
The Group renegotiates loans to customers in financial difficulties (referred to as ‘forbearance’) to maximise collection opportunities and
minimise the risk of default. Under the Group’s forbearance policy, loan forbearance is granted on a selective basis if the debtor is currently in
default on its debt, or if there is a high risk of default, there is evidence that the debtor made all reasonable efforts to pay under the original
contractual terms and the debtor is expected to be able to meet the revised terms.
The revised terms can include changing the timing of interest payments, extending the date of repayment of the loan, transferring a loan to
interest only payments and a payment holiday. Both retail and corporate loans are subject to the forbearance policy. The Group Credit
Committee regularly reviews reports on forbearance.
For financial assets modified as part of the Group’s forbearance policy, the estimate of PD (probability of default) reflects whether the
modification has improved or restored the Group’s ability to collect interest and principal and the Group’s previous experience of similar
forbearance action. As part of this process, the Group evaluates the borrower’s payment performance against the modified contractual terms
and considers various behavioural indicators. Whilst the customer is under forbearance, the customer will be classified as Stage 2 and the
Group recognise a lifetime ECL. The customer will transfer to Stage 1 and revert to a 12 month ECL when they exit forbearance. This is conditional
upon both a minimum six months’ good account conduct and the improvement to the client’s situation to the extent the probability of default
has receded sufficiently and full repayment of the loan, without recourse to the collateral, is likely.
Forbearance is a qualitative indicator of a SICR (see Note 3.4).
As at 31 December 2025, loans for which forbearance measures were in place totalled 0.86% (2024: 1.86%) of total value of loans to customers
for the Group. These are set out in the following table:
2025
Stage 1
Stage 2
Stage 3
Stage 4
Group
Number Loan Balance
£000
Number Loan Balance
£000
Number Loan Balance
£000
Number Loan Balance
£000
Term extension
–
–
3
271
1
463
4
734
Payment holiday
–
–
3
897
–
–
3
897
Modification in terms and conditions
–
–
36
9,061
35
6,124
71
15,185
Total forbearance
–
–
42
10,229
36
6,587
78
16,816
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Arbuthnot Banking Group PLC
Report & Accounts 2025
2024
Stage 1
Stage 2
Stage 3
Stage 4
Group
Number Loan Balance
£000
Number Loan Balance
£000
Number Loan Balance
£000
Number Loan Balance
£000
Time for asset sale
–
–
–
–
1
35
1
35
Term extension
–
–
7
1,911
1
118
8
2,029
Time for refinance with third party
–
–
1
2,440
–
–
1
2,440
Payment holiday
–
–
7
8,560
5
4,964
12
13,524
Covenant waived
–
–
1
752
–
–
1
752
Modification in terms and conditions
–
–
39
10,617
40
8,637
79
19,254
Restructure
–
–
5
392
1
285
6
677
Total forbearance
–
–
60
24,672
48
14,039
108
38,711
Concentration risk
The table below show the concentration in the loan book based on the most significant type of collateral held for each loan.
Loans and advances
to customers
Loan Commitments
2025
£000
2024
£000
2025
£000
2024
£000
Concentration by product
Asset based lending
219,362
228,196
300,835
324,119
Asset finance
385,254
325,191
–
–
Cash collateralised
6,894
7,034
529
1,946
Commercial lending
48,287
72,504
1,370
6,380
Investment portfolio secured
23,473
23,088
2,144
2,219
Residential mortgages
1,235,645
1,311,158
36,631
40,590
Mixed collateral*
32,893
108,232
1,144
1,416
Unsecured**
8,734
18,809
32,639
48,861
At 31 December
1,960,542
2,094,212
375,292
425,531
Concentration by location
East Anglia
28,900
34,335
4,226
1,642
London
658,972
731,280
19,093
27,693
Midlands
108,963
117,749
466
3,322
North East
68,017
111,818
28
404
North West
69,315
80,403
3,912
4,673
Northern Ireland
2,571
2,956
–
–
Scotland
10,364
24,405
–
500
South East
254,434
257,244
10,035
6,611
South West
98,221
127,112
1,686
2,615
Wales
8,984
10,452
196
–
Non-property collateral
651,801
596,458
335,650
378,071
At 31 December
1,960,542
2,094,212
375,292
425,531
* Mixed collateral is where there is no single, overall majority collateral type.
** Included within unsecured are £3.4m (2024: £4.5m) of loans which are backed by the government guarantee scheme for BBLs.
(b) Operational risk
Operational risk is the risk that the Group may be exposed to financial losses from conducting its business. The Group’s exposure to operational
risk include its Information Technology (“IT”) and Operating platforms. There are additional internal controls in these processes that are
designed to protect the Group from these risks. The Group’s overall approach to managing internal control and financial reporting is described in
the Corporate Governance section of the Annual Report.
In line with guidance issued by the Regulator, the Bank has continued to focus on ensuring that the design of systems and operational plans are
robust to maintain operational resilience in the face of unexpected incidents.
94
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Report & Accounts 2025
Notes to the Consolidated
Financial Statements
6. Financial risk management (continued)
Cyber risk
Cyber risk is an increasing risk for the Group within its operational processes. It is the risk that the Group is subject to some form of disruption
arising from an interruption to its IT and data infrastructure. The Group regularly tests the infrastructure to ensure that it remains robust to a
range of threats and has continuity of business plans in place including a disaster recovery plan.
Residual value risk
Residual value risk equals the difference in the residual value of a leased asset set at lease inception and the lower salvage value realised upon
its disposal or release at the end of the lease term. The Group is exposed to residual value risk in its AAG business. Normal residual value risk is
managed through the process set out below, and it should be noted that the transition to greener technology may further impact residual
values in two ways. Firstly, residual values could decrease due to assets becoming obsolete; climate related regulations might change, which
could result in legal restrictions on the use of assets or technological advances could lead to preferred environmental technologies. Secondly,
the lack of historical information on green vehicles could lead to inaccurate measurement of residual values at inception of leases.
The AAG business manage Residual Value setting through its Residual Value Committee that comprises representatives from its Asset
Management, Procurement, Sales and Leasing divisions and is chaired by the Residual Value Manager. Assets are valued using either an
approved Residual Value matrix or individually, dependent upon the nature of the asset and current market conditions. The strategy for Residual
Value setting and oversight of the Residual Value Committee is conducted by the AAG Residual Risk Committee, which in turn reports into the
Asset Alliance Group Holdings Limited board. The Residual Risk Committee, chaired by the AAG Group Risk Director, includes AAG CEO, AL Group
Risk Director, AAG Managing Director, AAG Finance Director and heads of Asset Management, Sales and Leasing divisions in AAG.
Conduct risk
As a financial services provider the Group faces conduct risk, including selling products to customers which do not meet their needs, failing to
deal with clients’ complaints effectively, not meeting clients’ expectations, and exhibiting behaviours which do not meet market or regulatory
standards.
The Group adopts a low risk appetite for any unfair customer outcomes. It maintains clear compliance guidelines and provides ongoing training
to all employees. Periodic spot checks, compliance monitoring and internal audits are performed to ensure these guidelines are followed.
The Group also has insurance policies in place to provide some cover for any claims that may arise.
Financial Crime
The Group is exposed to risk due to financial crime including money laundering, sanctions evasion, bribery and corruption, market abuse, tax
evasion and fraud. The Group operates policies and controls which are designed to ensure that financial crime risks are identified, appropriately
mitigated and managed.
Regulatory and capital risk
Regulatory and capital risk includes the risk that the Group will have insufficient capital resources to support the business and/or does not comply
with regulatory requirements. The Group adopts a conservative approach to managing its capital. The Board of Arbuthnot Latham approves an
ICAAP annually, which includes the performance of stringent stress tests to ensure that capital resources are adequate over a three year horizon.
Capital and liquidity ratios are regularly monitored against the Board’s approved risk appetite as part of the risk management framework.
Regulatory change also exists as a risk to the Group’s business. Notwithstanding the assessments carried out by the Group to manage
regulatory risk, it is not possible to predict how regulatory and legislative changes may alter and impact the business. Significant and
unforeseen regulatory changes may reduce the Group’s competitive situation and lower its profitability.
(c) Macroeconomic and competitive environment
The Group is exposed to risks that may arise from the macroeconomic and competitive environment.
In recent years there have been a number of global and domestic events which have had significant implications for the Group’s operating
environment, namely: The US-Israeli war with Iran, Russia’s war in the Ukraine, the Israel-Hamas war in Gaza and Coronavirus. The culmination of
these events has led to significant turmoil in both global and domestic markets. Geo-political volatility and uncertainty remains high with the
potential to adversely affect the UK economy, as well as the Group’s customers and assets.
(d) Market risk
Price risk
The Group is exposed to price risk from equity investments and derivatives held by the Group. The Group is not exposed to commodity price risk.
Based upon the financial investment exposure in Note 25, a stress test scenario of a 10% (2024: 10%) decline in market prices, would result in a
£Nil (2024: £Nil) decrease in the Group’s income and a decrease of £0.2m (2024: £0.5m) in the Group’s equity. The Group considers a 10% stress
test scenario appropriate after taking the current values and historic data into account.
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Report & Accounts 2025
Currency risk
The Company and Group take on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial
position and cash flows. This is managed through the Group entering into forward foreign exchange contracts. The Board sets limits on the level
of exposure for both overnight and intra-day positions, which are monitored daily. The table below summarises the Group’s exposure to foreign
currency exchange rate risk at 31 December 2025. Included in the table below are the Group’s assets and liabilities at carrying amounts,
categorised by currency.
At 31 December 2025
GBP (£)
£000
USD ($)
£000
Euro (€)
£000
Other
£000
Total
£000
ASSETS
Cash and balances at central banks
437,475
30
42
1
437,548
Loans and advances to banks
13,337
20,607
73,215
10,338
117,497
Debt securities at amortised cost
1,648,808
305,402
78,947
1
2,033,158
Derivative financial instruments
1,398
–
–
–
1,398
Loans and advances to customers
1,946,864
2,741
9,999
938
1,960,542
Other assets
7,011
–
3,267
–
10,278
Financial investments
–
1,865
196
–
2,061
4,054,893
330,645
165,666
11,278
4,562,482
LIABILITIES
Deposits from banks
1,389
–
–
–
1,389
Deposits from customers
4,079,131
330,130
149,700
11,404
4,570,365
Other liabilities
17,220
916
2,357
–
20,493
Debt securities in issue
25,605
–
13,067
–
38,672
4,123,345
331,046
165,124
11,404
4,630,919
Net on-balance sheet position
(68,452)
(401)
542
(126)
(68,437)
Credit commitments
375,292
–
–
–
375,292
The table below summarises the Group’s exposure to foreign currency exchange risk at 31 December 2024:
At 31 December 2024
GBP (£)
£000
USD ($)
£000
Euro (€)
£000
Other
£000
Total
£000
ASSETS
Cash and balances at central banks
911,754
76
–
57
911,887
Loans and advances to banks
10,882
26,209
23,004
6,876
66,971
Debt securities at amortised cost
888,567
237,474
73,805
1
1,199,847
Derivative financial instruments
2,970
–
–
–
2,970
Loans and advances to customers
2,090,263
(1,558)
4,632
874
2,094,211
Other assets
7,758
–
2,960
–
10,718
Financial investments
–
4,787
160
–
4,947
3,912,194
266,988
104,561
7,808
4,291,551
LIABILITIES
Deposits from banks
192,911
–
–
–
192,911
Deposits from customers
3,767,984
264,095
92,735
7,680
4,132,494
Other liabilities
6,229
–
–
–
6,229
Debt securities in issue
26,209
–
11,773
–
37,982
3,993,333
264,095
104,508
7,680
4,369,616
Net on-balance sheet position
(81,139)
2,893
53
128
(78,065)
Credit commitments
425,531
–
–
–
425,531
96
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
6. Financial risk management (continued)
Derivative financial instruments (see Note 20) are in place to mitigate foreign currency risk on net exposures for each currency. A 10%
strengthening of the pound against the US dollar would lead to a £40k decrease (2024: £289k increase) in Group profits and equity, while a 10%
weakening of the pound against the US dollar would lead to the same increase (2024: decrease) in Group profits and equity. Additionally, the
Group holds a property classified as inventory of £3.3m (2024: £3.0m). The property is located in the EU and relates to a Euro denominated loan
where the property was repossessed. Including this Euro asset, the net Euro exposure is positive £0.5m (2024: positive £0.1m).
The table below summarises the Company’s exposure to foreign currency exchange rate risk at 31 December 2025:
At 31 December 2025
GBP (£)
£000
Euro (€)
£000
Total
£000
ASSETS
Loans and advances to banks
4,760
–
4,760
Debt securities at amortised cost
25,613
13,168
38,781
Other assets
1,676
–
1,676
32,049
13,168
45,217
LIABILITIES
Other liabilities
1,824
–
1,824
Debt securities in issue
25,613
13,059
38,672
27,437
13,059
40,496
Net on-balance sheet position
4,612
109
4,721
The table below summarises the Company’s exposure to foreign currency exchange rate risk at 31 December 2024:
At 31 December 2024
GBP (£)
£000
Euro (€)
£000
Total
£000
ASSETS
Loans and advances to banks
920
–
920
Debt securities at amortised cost
25,575
12,528
38,103
Other assets
3,280
–
3,280
29,775
12,528
42,303
LIABILITIES
Other liabilities
1,812
–
1,812
Debt securities in issue
25,575
12,407
37,982
27,387
12,407
39,794
Net on-balance sheet position
2,388
121
2,509
A 10% strengthening of the pound against the Euro would lead to £10k increase (2024: £11k increase) in the Company profits and equity,
conversely a 10% weakening of the pound against the Euro would lead to a £12k decrease (2024: £13k decrease) in the Company profits and
equity.
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Interest rate risk
Interest rate risk is the potential adverse impact on the Company and Group’s future cash flows from changes in interest rates, and arises from
the differing interest rate risk characteristics of the Company and Group’s assets and liabilities. In particular, fixed rate savings and borrowing
products expose the Group to the risk that a change in interest rates could cause either a reduction in interest income or an increase in interest
expense relative to variable rate interest flows. The Group seeks to “match” interest rate risk on both assets and liabilities. However, this is not a
perfect match and interest rate risk is present in: Money market transactions of a fixed rate nature, fixed rate loans, fixed rate savings accounts
and floating rate products dependent on when they re-price at a future date.
Interest rate risk is measured throughout the maturity bandings of the book on a parallel shift scenario for a 200 basis points movement.
The current position of the balance sheet is such that it results in an favourable impact on the economic value of equity of £5.4m (2024: favourable
impact of £1.8m) for a positive 200bps shift and an adverse impact of £5.8m (2024: adverse impact of £2.0m) for a negative 200bps movement.
The following tables summarise the re-pricing periods for the assets and liabilities in the Company and Group, including derivative financial
instruments which are principally used to reduce exposure to interest rate risk. Items are allocated to time bands by reference to the earlier of
the next contractual interest rate re-price and the maturity date.
Group
As at 31 December 2025
Within 3 months
£000
More than
3 months
but less than
6 months
£000
More than
6 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Non interest
bearing
£000
Total
£000
ASSETS
Cash and balances at central banks
437,548
–
–
–
–
–
437,548
Loans and advances to banks
117,497
–
–
–
–
–
117,497
Debt securities at amortised cost
1,158,566
513,422
286,170
75,000
–
–
2,033,158
Derivative financial instruments
1,398
–
–
–
–
–
1,398
Loans and advances to customers
1,280,198
34,211
84,411
509,875
1,904
49,943
1,960,542
Other assets*
–
–
–
–
–
445,634
445,634
Financial investments
–
–
–
–
–
2,061
2,061
2,995,207
547,633
370,581
584,875
1,904
497,638
4,997,838
LIABILITIES AND EQUITY
Deposits from banks
1,389
–
–
–
–
–
1,389
Deposits from customers
3,219,973
396,462
537,257
414,778
1,895
–
4,570,365
Other liabilities**
54,340
–
–
–
–
56,674
111,014
Debt securities in issue
38,672
–
–
–
–
–
38,672
Equity
–
–
–
–
–
276,398
276,398
3,314,374
396,462
537,257
414,778
1,895
333,072
4,997,838
Impact of derivative instruments
33,750
–
–
(33,750)
–
–
Interest rate sensitivity gap
(285,417)
151,171
(166,676)
136,347
9
164,566
Cumulative gap
(285,417)
(134,246)
(300,922)
(164,575)
(164,566)
–
* Other assets include all remaining assets in the Statement of Financial Position, which are not shown separately above.
** Other liabilities include all remaining liabilities in the Statement of Financial Position, which are not shown separately above.
98
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
6. Financial risk management (continued)
Group
As at 31 December 2024
Within 3 months
£000
More than
3 months
but less than
6 months
£000
More than
6 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Non interest
bearing
£000
Total
£000
ASSETS
Cash and balances at central banks
911,887
–
–
–
–
–
911,887
Loans and advances to banks
66,971
–
–
–
–
–
66,971
Debt securities at amortised cost
567,847
295,895
173,755
162,350
–
–
1,199,847
Derivative financial instruments
2,970
–
–
–
–
–
2,970
Loans and advances to customers
1,495,051
23,589
67,855
489,688
6,238
11,791
2,094,212
Other assets*
–
–
–
–
–
448,393
448,393
Financial investments
–
–
–
–
–
4,947
4,947
3,044,726
319,484
241,610
652,038
6,238
465,131
4,729,227
LIABILITIES AND EQUITY
Deposits from banks
192,911
–
–
–
–
–
192,911
Deposits from customers
3,384,011
285,670
417,969
38,793
6,050
–
4,132,493
Other liabilities**
56,130
–
–
–
–
42,755
98,885
Debt securities in issue
(121)
–
–
–
38,103
–
37,982
Equity
(6,817)
–
–
226,488
3,850
43,435
266,956
3,626,114
285,670
417,969
265,281
48,003
86,190
4,729,227
Impact of derivative instruments
33,750
–
–
(33,750)
–
–
Interest rate sensitivity gap
(547,638)
33,814
(176,359)
353,007
(41,765)
378,941
Cumulative gap
(547,638)
(513,824)
(690,183)
(337,176)
(378,941)
–
* Other assets include all remaining assets in the Statement of Financial Position, which are not shown separately above.
** Other liabilities include all remaining liabilities in the Statement of Financial Position, which are not shown separately above.
99
Arbuthnot Banking Group PLC
Report & Accounts 2025
Company
As at 31 December 2025
Within 3 months
£000
More than
3 months
but less than
6 months
£000
More than
6 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Non interest
bearing
£000
Total
£000
ASSETS
Loans and advances to banks
7
–
–
–
–
–
7
Loans and advances to banks
- due from subsidiary
4,740
–
–
–
–
13
4,753
Debt securities at amortised cost
38,781
–
–
–
–
–
38,781
Other assets*
–
–
–
–
–
166,773
166,773
43,528
–
–
–
–
166,786
210,314
LIABILITIES AND EQUITY
Other liabilities**
–
–
–
–
–
11,143
11,143
Debt securities in issue
38,672
–
–
–
–
–
38,672
Equity
–
–
–
–
–
160,499
160,499
38,672
–
–
–
–
171,642
210,314
Interest rate sensitivity gap
4,856
–
–
–
–
(4,856)
Cumulative gap
4,856
4,856
4,856
4,856
4,856
–
* Other assets include all remaining assets in the Statement of Financial Position, which are not shown separately above.
** Other liabilities include all remaining liabilities in the Statement of Financial Position, which are not shown separately above.
Company
As at 31 December 2024
Within 3 months
£000
More than
3 months
but less than
6 months
£000
More than
6 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Non interest
bearing
£000
Total
£000
ASSETS
Loans and advances to banks
7
7
Loans and advances to banks
- due from subsidiary
877
–
–
–
–
36
913
Debt securities at amortised cost
38,103
–
–
–
–
–
38,103
Other assets*
–
–
–
–
–
168,445
168,445
38,987
–
–
–
–
168,481
207,468
LIABILITIES AND EQUITY
Other liabilities**
–
–
–
–
–
9,754
9,754
Debt securities in issue
37,982
–
–
–
–
–
37,982
Equity
–
–
–
–
–
159,732
159,732
37,982
–
–
–
–
169,486
207,468
Interest rate sensitivity gap
1,005
–
–
–
–
(1,005)
Cumulative gap
1,005
1,005
1,005
1,005
1,005
–
* Other assets include all remaining assets in the Statement of Financial Position, which are not shown separately above.
** Other liabilities include all remaining liabilities in the Statement of Financial Position, which are not shown separately above.
100
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
6. Financial risk management (continued)
(e) Liquidity risk
Liquidity risk is the risk that the Group, although solvent, either does not have sufficient financial resources to enable it to meet its obligations
as they fall due, or can only secure such resources at excessive cost.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The liquidity requirements of the Group are met through withdrawing funds from its Bank of England Reserve Account to cover any short-term
fluctuations and longer term funding to address any structural liquidity requirements.
The Group has formal governance structures in place to manage and mitigate liquidity risk on a day to day basis. The Board of AL sets and
approves the liquidity risk management strategy. The Assets and Liabilities Committee (“ALCO”), comprising senior executives of the Group,
monitors liquidity risk. Key liquidity risk management information is reported by the finance teams and monitored by the Chief Executive Officer,
Finance Director and Deputy CEO on a daily basis. The ALCO meets monthly to review liquidity risk against set thresholds and risk indicators
including early warning indicators, liquidity risk tolerance levels and Internal Liquidity Adequacy Assessment Process (“ILAAP”) metrics.
The PRA requires the Board to ensure that the Group has adequate levels of liquidity resources and a prudent funding profile, and that it
comprehensively manages and controls liquidity and funding risks. The Group maintains deposits placed at the Bank of England and highly
liquid unencumbered assets that can be called upon to create sufficient liquidity to meet liabilities on demand, particularly in a period of
liquidity stress.
Arbuthnot Latham & Co., Limited (“AL”) has a Board approved ILAAP, and maintains liquidity buffers in excess of the minimum requirements.
The ILAAP is embedded in the risk management framework of the Group and is subject to ongoing updates and revisions when necessary.
At a minimum, the ILAAP is updated annually. The Liquidity Coverage Ratio (“LCR”) regime has applied to the Group from 1 October 2015,
requiring management of net 30 day cash outflows as a proportion of high quality liquid assets. The LCR has exceeded the regulatory
minimum of 100% throughout the year. There has been an increase in deposits of 20%, which has accordingly improved the Bank’s liquidity.
The Group is exposed to daily calls on its available cash resources from current accounts, maturing deposits and loan draw-downs. The Group
maintains significant cash resources to meet all of these needs as they fall due. The matching and controlled mismatching of the maturities and
interest rates of assets and liabilities is fundamental to the management of the Group. It is unusual for banks to be completely matched, as
transacted business is often of uncertain term and of different types.
The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest bearing liabilities as they mature are important
factors in assessing the liquidity of the Group and its exposure to changes in interest rates.
The tables below show the undiscounted contractual cash flows of the Group’s financial liabilities and assets as at 31 December 2025:
At 31 December 2025
Carrying Amount
£000
Gross inflow/
(outflow)
£000
Not more than
3 months
£000
More than
3 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Financial liability by type
Non-derivative liabilities
Deposits from banks
1,389
(1,389)
(1,389)
–
–
–
Deposits from customers
4,570,365
(4,630,216)
(3,873,093)
(721,265)
(33,957)
(1,901)
Other liabilities
20,493
(20,493)
(18,953)
–
–
(1,540)
Debt securities in issue
38,672
(71,298)
(901)
(2,745)
(14,595)
(53,057)
Issued financial guarantee contracts
–
(3,059)
(3,059)
–
–
–
Unrecognised loan commitments
–
(375,292)
(375,292)
–
–
–
4,630,919
(5,101,747)
(4,272,687)
(724,010)
(48,552)
(56,498)
101
Arbuthnot Banking Group PLC
Report & Accounts 2025
At 31 December 2025
Carrying Amount
£000
Gross inflow/
(outflow)
£000
Not more than
3 months
£000
More than
3 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Financial asset by type
Non-derivative assets
Cash and balances at central banks
437,548
437,548
437,548
–
–
–
Loans and advances to banks
117,497
117,497
117,497
–
–
–
Debt securities at amortised cost
2,033,158
2,044,425
1,198,496
804,682
41,247
–
Loans and advances to customers
1,960,542
2,272,721
303,063
314,447
1,526,480
128,731
Other assets
7,011
7,011
7,011
–
–
–
Financial investments
2,061
2,061
2,061
–
–
–
4,557,817
4,881,263
2,065,676
1,119,129
1,567,727
128,731
Derivative assets
Risk management:
- Inflows
1,398
1,398
–
–
1,398
–
1,398
1,398
–
–
1,398
–
The tables below show the undiscounted contractual cash flows of the Group’s financial liabilities and assets as at 31 December 2024:
At 31 December 2024
Carrying Amount
£000
Gross inflow/
(outflow)
£000
Not more than
3 months
£000
More than
3 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Financial liability by type
Non-derivative liabilities
Deposits from banks
192,911
(195,453)
–
(182,357)
(13,096)
–
Deposits from customers
4,132,493
(4,190,738)
(3,529,962)
(614,451)
(40,017)
(6,308)
Other liabilities
6,229
(6,229)
(4,689)
–
–
(1,540)
Debt securities in issue
37,982
(76,656)
(985)
(2,956)
(15,805)
(56,910)
Issued financial guarantee contracts
–
(2,500)
(2,500)
–
–
–
Unrecognised loan commitments
–
(425,531)
(425,531)
–
–
–
4,369,615
(4,897,107)
(3,963,667)
(799,764)
(68,918)
(64,758)
At 31 December 2024
Carrying Amount
£000
Gross inflow/
(outflow)
£000
Not more than
3 months
£000
More than
3 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Financial asset by type
Non-derivative assets
Cash and balances at central banks
911,887
911,887
911,887
–
–
–
Loans and advances to banks
66,971
66,971
66,971
–
–
–
Debt securities at amortised cost
1,199,847
1,211,748
572,701
474,364
164,684
–
Loans and advances to customers
2,094,212
2,472,304
387,219
314,263
1,658,699
112,123
Other assets
7,758
7,758
7,758
–
–
–
Financial investments
4,947
4,947
4,947
–
–
–
4,285,622
4,675,615
1,951,483
788,627
1,823,383
112,123
Derivative assets
Risk management:
- Inflows
2,970
2,970
–
–
2,970
–
2,970
2,970
–
–
2,970
–
102
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
6. Financial risk management (continued)
The table below sets out the components of the Group’s liquidity reserves:
31 December 2025
31 December 2024
Amount
£000
Fair value
£000
Amount
£000
Fair value
£000
Liquidity reserves
Cash and balances at central banks
437,548
437,548
911,887
911,887
Loans and advances to banks
117,497
117,497
66,971
66,971
Debt securities at amortised cost
2,033,158
2,034,512
1,199,847
1,199,963
2,588,203
2,589,557
2,178,705
2,178,821
Assets pledged as collateral or encumbered
The total financial assets recognised in the statement of financial position that had been pledged as collateral for liabilities at 31 December 2025
were £Nil (2024: £237m). Assets are encumbered due to the Term Funding Scheme (Note 31).
Financial assets can be pledged as collateral as part of repurchases transactions under terms that are usual and customary for such activities.
The table below analyses the contractual cash flows of the Company’s financial liabilities and assets as at 31 December 2025:
At 31 December 2025
Carrying Amount
£000
Gross inflow/
(outflow)
£000
Not more than
3 months
£000
More than
3 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Financial liability by type
Non-derivative liabilities
Other liabilities
1,824
(1,824)
(284)
–
–
(1,540)
Debt securities in issue
38,672
(71,298)
(901)
(2,745)
(14,595)
(53,057)
40,496
(73,122)
(1,185)
(2,745)
(14,595)
(54,597)
At 31 December 2025
Carrying Amount
£000
Gross inflow/
(outflow)
£000
Not more than
3 months
£000
More than
3 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Financial asset by type
Non-derivative assets
Loans and advances to banks
4,760
4,760
4,760
–
–
–
Debt securities at amortised cost
38,781
71,298
901
2,745
14,595
53,057
Other assets
1,676
1,676
1,676
–
–
–
45,217
77,734
7,337
2,745
14,595
53,057
103
Arbuthnot Banking Group PLC
Report & Accounts 2025
The table below analyses the contractual cash flows of the Company’s financial liabilities and assets as at 31 December 2024:
At 31 December 2024
Carrying Amount
£000
Gross inflow/
(outflow)
£000
Not more than
3 months
£000
More than
3 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Financial liability by type
Non-derivative liabilities
Other liabilities
1,812
(1,812)
(272)
–
–
(1,540)
Debt securities in issue
37,982
(76,656)
(985)
(2,956)
(15,805)
(56,910)
39,794
(78,468)
(1,257)
(2,956)
(15,805)
(58,450)
At 31 December 2024
Carrying Amount
£000
Gross inflow/
(outflow)
£000
Not more than
3 months
£000
More than
3 months
but less
than 1 year
£000
More than
1 year but less
than 5 years
£000
More than
5 years
£000
Financial asset by type
Non-derivative assets
Loans and advances to banks
920
920
920
–
–
–
Debt securities at amortised cost
38,103
76,778
988
2,965
15,851
56,975
Other assets
3,280
3,280
3,280
–
–
–
42,303
80,978
5,188
2,965
15,851
56,975
The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature are important
factors in assessing the liquidity of the Group and its exposure to changes in interest rates and exchange rates.
Fiduciary activities
The Group provides investment management and advisory services to third parties, which involve the Group making allocation and purchase
and sale decisions in relation to a wide range of financial instruments. Those assets that are held in a fiduciary capacity are not included in these
financial statements, because the assets do not meet the recognition criteria. These services give rise to the risk that the Group may be
accused of maladministration or underperformance. At the balance sheet date, the Group had investment management accounts amounting to
approximately £2.7bn (2024: £2.2bn). Additionally, the Group provides investment advisory services.
104
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
6. Financial risk management (continued)
(f) Financial assets and liabilities
The tables below set out the Group’s financial assets and financial liabilities into their respective classifications:
At 31 December 2025
FVPL
£000
FVOCI
£000
Amortised
cost
£000
Total carrying
amount
£000
Fair value
£000
ASSETS
Cash and balances at central banks
–
–
437,548
437,548
437,548
Loans and advances to banks
–
–
117,497
117,497
117,497
Debt securities at amortised cost
–
–
2,033,158
2,033,158
2,034,512
Derivative financial instruments
1,398
–
–
1,398
1,398
Loans and advances to customers
–
–
1,960,542
1,960,542
1,963,911
Other assets
–
–
7,011
7,011
7,011
Financial investments
–
2,061
–
2,061
2,061
1,398
2,061
4,555,756
4,559,215
4,563,938
LIABILITIES
Deposits from banks
–
–
1,389
1,389
1,389
Deposits from customers
–
–
4,570,365
4,570,365
4,570,365
Lease liabilities
–
–
20,493
20,493
20,493
Debt securities in issue
–
–
38,672
38,672
38,672
–
–
4,630,919
4,630,919
4,630,919
At 31 December 2024
FVPL
£000
FVOCI
£000
Amortised
cost
£000
Total carrying
amount
£000
Fair value
£000
ASSETS
Cash and balances at central banks
–
–
911,887
911,887
911,887
Loans and advances to banks
–
–
66,971
66,971
66,971
Debt securities at amortised cost
–
–
1,199,847
1,199,847
1,199,963
Derivative financial instruments
2,970
–
–
2,970
2,970
Loans and advances to customers
–
–
2,094,212
2,094,212
2,088,933
Other assets
–
–
7,758
7,758
7,758
Financial investments
4,947
–
4,947
4,947
2,970
4,947
4,280,675
4,288,592
4,283,429
LIABILITIES
Deposits from banks
–
–
192,911
192,911
192,911
Deposits from customers
–
–
4,132,493
4,132,493
4,132,493
Other liabilities
–
–
6,229
6,229
6,229
Debt securities in issue
–
–
37,982
37,982
37,982
–
–
4,369,615
4,369,615
4,369,615
105
Arbuthnot Banking Group PLC
Report & Accounts 2025
The tables below set out the Company’s financial assets and financial liabilities into their respective classifications:
At 31 December 2025
FVPL
£000
FVOCI
£000
Amortised
cost
£000
Total carrying
amount
£000
Fair value
£000
ASSETS
Loans and advances to banks
–
–
4,760
4,760
4,760
Debt securities at amortised cost
–
–
38,781
38,781
38,781
Other assets
–
–
1,676
1,676
1,676
–
–
45,217
45,217
45,217
LIABILITIES
Other liabilities
–
–
1,824
1,824
1,824
Debt securities in issue
–
–
38,672
38,672
38,672
–
–
40,496
40,496
40,496
At 31 December 2024
FVPL
£000
FVOCI
£000
Amortised
cost
£000
Total carrying
amount
£000
Fair value
£000
ASSETS
Loans and advances to banks
–
–
920
920
920
Debt securities at amortised cost
–
–
38,103
38,103
38,103
Other assets
–
–
1
1
1
–
–
39,024
39,024
39,024
LIABILITIES
Other liabilities
–
–
1,812
1,812
1,812
Debt securities in issue
–
–
37,982
37,982
37,982
–
–
39,794
39,794
39,794
Valuation of financial instruments
The Group measures the fair value of an instrument using quoted prices in an active market for that instrument. A market is regarded as active if
quoted prices are readily and regularly available and represent actual and regularly occurring market transactions. If a market for a financial
instrument is not active, the Group establishes fair value using a valuation technique. These include the use of recent arm’s length transactions,
reference to other instruments that are substantially the same for which market observable prices exist, net present value and discounted cash
flow analysis. The objective of valuation techniques is to determine the fair value of the financial instrument at the reporting date as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
The Group measures fair value using the following fair value hierarchy that reflects the significance of the inputs used in making measurements:
• Level 1: Quoted prices in active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar
instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques
in which all significant inputs are directly or indirectly observable from market data.
• Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on
observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments
that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required
to reflect differences between the instruments.
The consideration of factors such as the magnitude and frequency of trading activity, the availability of prices and the size of bid/offer spreads
assists in the judgement as to whether a market is active. If, in the opinion of management, a significant proportion of the instrument’s carrying
amount is driven by unobservable inputs, the instrument in its entirety is classified as valued using significant unobservable inputs.
‘Unobservable’ in this context means that there is little or no current market data available from which to determine the level at which an arm’s
length transaction would be likely to occur. It generally does not mean that there is no market data available at all upon which to base a
determination of fair value (consensus pricing data may, for example, be used).
106
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
6. Financial risk management (continued)
The tables below analyses assets and liabilities measured at fair value by the level in the fair value hierarchy into which the measurement is
categorised:
At 31 December 2025
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
ASSETS
Derivative financial instruments
–
1,398
–
1,398
Financial investments
–
–
2,061
2,061
–
1,398
2,061
3,459
At 31 December 2024
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
ASSETS
Derivative financial instruments
–
2,970
–
2,970
Financial investments
–
–
4,947
4,947
–
2,970
4,947
7,917
There were no transfers between level 1 and level 2 during the year.
For assets which are accounted at fair value under Level 3 the valuations are primarily based on Fund Manager valuations and are based on
reasonable estimates. Changing one or more of the unobservable inputs to reflect reasonably possible alternative assumptions would not lead
to a significantly different fair value. The following table reconciles the movement in level 3 financial instruments measured at fair value during
the year:
Group
Movement in level 3
2025
£000
2024
£000
At 1 January
4,947
3,942
Purchases
131
294
Disposals
(2,958)
(84)
Movements recognised in Other Comprehensive Income
(59)
795
At 31 December
2,061
4,947
The valuation technique used for the fair value calculation, the unobservable inputs and sensitivities are discussed below.
Hetz Ventures, L.P.
Arbuthnot Latham currently holds an equity investment in Hetz Ventures, L.P. which was launched in January 2018. The primary objective was
to generate attractive risk-adjusted returns for its Partners, principally through long-term capital appreciation, by making, holding and disposing
of equity and equity-related investments in early stage revenue generating Israeli technology companies, primarily in cyber, fin-tech and the
disruptive software sectors. The company has committed to a capital contribution of USD2.5m of the total closing fund capital of USD132.5m.
At 31 December 2025 Arbuthnot Latham & Co., Ltd had made capital contributions into the Fund of USD2.4m (2024: USD2.2m).
The investment is classified as FVOCI and is valued at fair value by Hetz Ventures, L.P. at £1.7m (2024: £1.7m). As at year end the fair value is
deemed to be the Group’s share of the fund based on what a third party would pay for the underlying investments.
The fair values provided by the Hetz Ventures funds are classified as significant unobservable inputs. Management have assessed that should the
fund valuation decrease by 5% this would impact equity by a reduction of £84k and a reduction of 10% would impact equity by a reduction of £167k.
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The tables below show the fair value of financial instruments carried at amortised cost by the level in the fair value hierarchy:
Group
At 31 December 2025
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
ASSETS
Cash and balances at central banks
–
437,548
–
437,548
Loans and advances to banks
–
117,497
–
117,497
Debt securities at amortised cost
–
2,034,512
–
2,034,512
Loans and advances to customers
–
–
1,963,911
1,963,911
Other assets
–
–
7,011
7,011
–
2,589,557
1,970,922
4,560,479
LIABILITIES
Deposits from banks
–
1,389
–
1,389
Deposits from customers
–
4,570,365
–
4,570,365
Other liabilities
–
–
20,493
20,493
Debt securities in issue
–
–
38,672
38,672
–
4,571,754
59,165
4,630,919
Group
At 31 December 2024
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
ASSETS
Cash and balances at central banks
–
911,887
–
911,887
Loans and advances to banks
–
66,971
–
66,971
Debt securities at amortised cost
–
1,199,963
–
1,199,963
Loans and advances to customers
–
–
2,088,933
2,088,933
Other assets
–
–
7,758
7,758
–
2,178,821
2,096,691
4,275,512
LIABILITIES
Deposits from banks
–
192,911
–
192,911
Deposits from customers
–
4,132,493
–
4,132,493
Other liabilities
–
–
6,229
6,229
Debt securities in issue
–
–
37,982
37,982
–
4,325,404
44,211
4,369,615
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Notes to the Consolidated
Financial Statements
6. Financial risk management (continued)
Company
At 31 December 2025
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
ASSETS
Loans and advances to banks
–
7
4,753
4,760
Debt securities at amortised cost
–
38,781
–
38,781
–
38,788
4,753
43,541
LIABILITIES
Other liabilities
–
–
1,824
1,824
Debt securities in issue
–
–
38,672
38,672
–
–
40,496
40,496
Company
At 31 December 2024
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
ASSETS
Loans and advances to banks
–
7
913
920
Debt securities at amortised cost
–
38,103
–
38,103
–
38,110
913
39,023
LIABILITIES
Other liabilities
–
–
1,812
1,812
Debt securities in issue
–
–
37,982
37,982
–
–
39,794
39,794
All above assets and liabilities are carried at amortised cost. Therefore for these assets, the fair value hierarchy noted above relates to the
disclosure in this note only.
Cash and balances at central banks
The fair value of cash and balances at central banks was calculated based upon the present value of the expected future principal and interest
cash flows. The rate used to discount the cash flows was the market rate of interest at the balance sheet date.
At the end of each year, the fair value of cash and balances at central banks was calculated to be equivalent to their carrying value.
Loans and advances to banks
The fair value of loans and advances to banks was calculated based upon the present value of the expected future principal and interest cash
flows. The rate used to discount the cash flows was the market rate of interest at the balance sheet date.
Loans and advances to customers
The fair value of loans and advances to customers was calculated based upon the present value of the expected future principal and interest
cash flows. The rate used to discount the cash flows was the market rate of interest at the balance sheet date, and the same assumptions
regarding the risk of default were applied as those used to derive the carrying value.
The Group provides loans and advances to commercial, corporate and personal customers at both fixed and variable rates. To determine the fair
value of loans and advances to customers, loans are segregated into portfolios of similar characteristics. A number of techniques are used to
estimate the fair value of fixed rate lending; these take account of expected credit losses based on historic trends and expected future cash flows.
For the acquired loan book, the discount on acquisition is used to determine the fair value in addition to the expected credit losses and
expected future cash flows.
Debt securities at amortised cost
The fair value of debt securities is based on the quoted mid-market share price.
Derivatives
Where derivatives are traded on an exchange, the fair value is based on prices from the exchange.
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Deposits from banks
The fair value of amounts due to banks was calculated based upon the present value of the expected future principal and interest cash flows.
The rate used to discount the cash flows was the market rate of interest at the balance sheet date.
At the end of each year, the fair value of amounts due to banks was calculated to be equivalent to their carrying value due to the short maturity
term of the amounts due.
Deposits from customers
The fair value of deposits from customers was calculated based upon the present value of the expected future principal and interest cash flows.
The rate used to discount the cash flows was the market rate of interest at the balance sheet date for the notice deposits and deposit bonds.
The fair value of instant access deposits is equal to book value as they are repayable on demand.
Financial liabilities
The fair value of other financial liabilities was calculated based upon the present value of the expected future principal cash flows.
At the end of each year, the fair value of other financial liabilities was calculated to be equivalent to their carrying value due to their short
maturity. The other financial liabilities include all other liabilities other than non-interest accruals.
Debt Securities in Issue
The fair value of debt securities in issue was calculated based upon the present value of the expected future principal cash flows.
7. Capital management (unaudited)
The Group’s capital management policy is focused on optimising shareholder value over the long term. There is a clear focus on delivering
organic growth and ensuring capital resources are sufficient to support planned levels of growth. The Board regularly reviews the capital
position.
The Group and the individual banking operation, are authorised by the Prudential Regulation Authority (“PRA”) and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority. One of the requirements for the Group and the individual banking operation is that
capital resources must be in excess of capital requirements at all times.
In accordance with the parameters set out in the PRA Rulebook, the Internal Capital Adequacy Assessment Process (“ICAAP”) is embedded in
the risk management framework of the Group. The ICAAP identifies and assesses the risks to the Group, considers how these risks can be
mitigated and demonstrates that the Group has sufficient resources, after mitigating actions, to withstand all reasonable scenarios.
The Board determines the level of capital the Group needs to hold. The Group holds Pillar 1 capital for credit, market and operational risk as a
starting point, and then considers whether each of the calculations delivers a sufficient amount of capital to cover risks to which the Group is,
or could be, exposed. Where the Board considers that the Pillar 1 calculations do not adequately cover the risks, an additional Pillar 2A capital
requirement is applied. The PRA will set a Pillar 2A capital requirement in light of the calculations included within the ICAAP. The Group’s Total
Capital Requirement, as issued by the PRA, is the sum of the Pillar 1 and the Pillar 2A capital requirements. The current Total Capital Requirement
of the Group is 8.05%.
The Group’s regulatory capital is divided into two tiers:
• Common equity Tier 1 which comprises shareholder funds less regulatory deductions for intangible assets, including goodwill, and deferred
tax assets that do not arise from temporary differences.
• Tier 2 comprises qualifying subordinated loans.
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Notes to the Consolidated
Financial Statements
7. Capital management (unaudited) (continued)
The following table shows the regulatory capital resources as managed by the Group:
2025
£000
2024
£000
CET1 Capital
Share capital
167
167
Share premium
11,606
11,606
Capital redemption reserve
19
19
Treasury shares
(1,299)
(1,299)
Retained earnings*
265,738
254,575
IFRS 9 - Transitional add back
–
71
Fair value reserve
167
1,888
Deduction for goodwill
(5,202)
(5,202)
Deduction for other intangibles
(28,246)
(25,363)
Deduction for deferred tax asset that do not arise from temporary differences
(1,349)
(1,977)
Deduction for Prudent valuation
(3)
(8)
CET1 capital resources
241,598
234,477
Tier 2 Capital
Debt securities in issue
38,672
37,982
Total Tier 2 capital resources
38,672
37,982
Own Funds (sum of Tier 1 and Tier 2)
280,270
272,459
CET1 Capital Ratio (CET1 Capital/Total Risk Exposure)*
13.3%
13.2%
Total Capital Ratio (Own Funds/Total Risk Exposure)*
15.4%
15.3%
* Includes current year audited profit.
Capital ratios are reviewed on a monthly basis to ensure that external requirements are adhered to. During the period all regulated entities have
complied with all of the externally imposed capital requirements to which they are subject.
Pillar 3 complements the minimum capital requirements (Pillar 1) and the supervisory review process (Pillar 2). Its aim is to encourage market
discipline by developing a set of disclosure requirements which will allow market participants to assess key pieces of information on a firm’s
capital resources, risk exposures and risk assessment processes. Our Pillar 3 disclosures for the year ended 31 December 2025 are published as
a separate document on the Group’s website under Investor Relations. These disclosures are prepared in accordance with the PRA rules for
Small Domestic Deposit Takers.
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8. Net interest income
Interest income and expense are recognised in the Statement of Comprehensive Income for all instruments measured at amortised cost using
the effective interest rate (“EIR”) method.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the
financial instrument to:
• the gross carrying amount of the financial asset; or
• the amortised cost of the financial liability.
The ‘gross carrying amount of a financial asset’ is the amortised cost of a financial asset before adjusting for any expected credit loss
allowance. When calculating the effective interest rate, the Group takes into account all contractual terms of the financial instrument but does
not consider expected credit losses.
The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate,
transaction costs and all other premiums or discounts. The carrying amount of the financial asset or financial liability is adjusted if the Group
revises its estimates of payments or receipts. The adjusted carrying amount is calculated based on the original effective interest rate and the
change in carrying amount is recorded as interest income or expense.
For financial assets that have become credit impaired following initial recognition, interest income is calculated by applying the effective
interest rate to the amortised cost of the financial asset. If the asset is no longer credit impaired, then the calculation of interest income reverts
to the gross basis.
The Group monitors the actual cash flows for each acquired book and where they diverge significantly from expectation, the future cash flows
are reset. Expectation may diverge due to factors such as one-off payments or expected credit losses. In assessing whether to adjust future
cash flows on an acquired portfolio, the Group considers the cash variance on an absolute and percentage basis. The Group also considers the
total variance across all acquired portfolios. Where cash flows for an acquired portfolio are reset, they are discounted at the EIR to derive a new
carrying value, with changes taken to the Statement of Comprehensive Income as interest income. The EIR rate is adjusted for events where
there is a change to the reference interest rate (e.g. Bank of England base rate) affecting portfolios with a variable interest rate which will impact
future cash flows. The revised EIR is the rate which exactly discounts the revised cash flows to the net carrying value of the loan portfolio.
Net interest income is analysed as follows.
2025
£000
2024
£000
Cash and balances at central banks
33,114
33,099
Loans and advances to banks
3,211
4,907
Debt securities at amortised cost
67,927
57,025
Loans and advances to customers
142,996
168,404
Total interest income
247,248
263,435
Deposits from banks
(6,628)
(9,566)
Deposits from customers
(115,465)
(120,692)
Debt securities in issue
(3,751)
(4,179)
Interest on lease liabilities
(3,278)
(3,131)
Total interest expense
(129,122)
(137,568)
Net interest income
118,126
125,867
112
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Notes to the Consolidated
Financial Statements
9. Fee and commission income
Fee and commission income which is integral to the EIR of a financial asset are included in the effective interest rate (see Note 8).
All other fee and commission income is recognised as the related services are performed, under IFRS 15, revenues from Contracts with
Customers. Fee and commission income is reported in the below segments.
Types of fee
Description
Banking commissions
- Banking Tariffs are charged monthly for services provided.
Investment management fees
- Annual asset management fees relate to a single performance obligation that is continuously
provided over an extended period of time.
Wealth planning fees
- Provision of bespoke, independent Wealth Planning solutions to Arbuthnot Latham’s clients. Fees are
recognised as the service is performed.
Foreign exchange fees
- Provides foreign currencies for our clients to purchase/sell.
The principles in applying IFRS 15 to fee and commission use the following 5 step model:
• identify the contract(s) with a customer;
• identify the performance obligations in the contract;
• determine the transaction price;
• allocate the transaction price to the performance obligations in the contract; and
• recognise revenue when or as the Group satisfies its performance obligations.
Asset and other management, advisory and service fees are recognised, under IFRS 15, as the related services are performed. The same
principle is applied for wealth planning services that are continuously provided over an extended period of time.
The Group includes the transaction price of variable consideration only when it is highly probable that a significant reversal in the amount
recognised will not occur or when the variable element becomes certain.
Fee and commission income is disaggregated below and includes a total for fees in scope of IFRS 15:
Group
At 31 December 2025
Banking
£000
Wealth
Management
£000
RAF
£000
ACABL
£000
AAG
£000
All other
divisions
£000
Total
£000
Banking commissions
3,871
–
14
7,182
–
–
11,067
Foreign exchange fees
1,700
–
–
–
–
1,819
3,519
Investment management fees
–
15,919
–
–
–
–
15,919
Wealth planning fees
–
596
–
–
–
–
596
Broker commissions
–
–
–
–
588
–
588
Total fee and commission income
5,571
16,515
14
7,182
588
1,819
31,689
Group
At 31 December 2024
Banking
£000
Wealth
Management
£000
RAF
£000
ACABL
£000
All other
divisions
£000
Total
£000
Banking and services fees
2,988
–
169
9,922
1
13,080
Foreign exchange fees
1,509
–
–
–
1,013
2,522
Investment management fees
–
13,183
–
–
–
13,183
Wealth planning fees
–
357
–
–
–
357
Total fee and commission income
4,497
13,540
169
9,922
1,014
29,141
113
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Report & Accounts 2025
10. Gross profit from leasing activities
Accounting for operating lease and related income:
The statement of comprehensive income is credited with:
• Income from operating leases recognised on a straight-line basis over the period of the lease.
• The sales proceeds from the sale of vehicles at the end of operating lease agreements, when a vehicle is transferred to a buyer, and the
buyer obtains control of the vehicle.
• Income from service and maintenance contracts recognised on a straight-line method.
Revenue from service and maintenance contracts is recognised in accordance with the principles of IFRS 15, Revenue from contracts with
customers. Payments from customers for service and maintenance contracts are deferred on the balance sheet until the point they are
recognised and when the performance obligations are met. For these contracts the obligation or part of the obligation is satisfied at the point
the costs for service and maintenance are incurred.
Revenue is the aggregate of operating lease income and service and maintenance contracts. Revenue also includes the sales proceeds from
the sale of vehicles at the end of operating lease agreements and other returned vehicles. Amounts recognised within gross profit from leasing
activities in the statement of comprehensive income are set out below:
Group
2025
£000
2024
£000
Income from lease or rental of commercial vehicles
79,114
72,981
Sale of commercial vehicles
25,971
27,003
Income from service and maintenance contracts
13,237
10,183
Other income
247
665
Revenue
118,569
110,832
Depreciation and rental costs of commercial vehicles held for lease or rent
(57,036)
(51,339)
Carrying amount of vehicles disposed
(27,439)
(24,009)
Service & maintenance cost
(12,682)
(9,744)
Other expenditure
(309)
(209)
Cost of goods sold
(97,466)
(85,301)
Gross profit from leasing activities
21,103
25,531
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Notes to the Consolidated
Financial Statements
11. Net impairment loss on financial assets
(a) Assets carried at amortised cost
The Group recognises loss allowances on an expected credit loss basis for all financial assets measured at amortised cost, including loans and
advances, debt securities and loan commitments.
Credit loss allowances are measured as an amount equal to lifetime ECL, except for the following assets, for which they are measured as
12 month ECL:
• Financial assets determined to have a low credit risk at the reporting date. The assets, to which the low credit risk exemption applies, include
cash and balances at central banks (Note 17), loans and advances to banks (Note 18) and debt securities at amortised cost (Note 19). These
assets are all considered investment grade.
• Financial assets which have not experienced a significant increase in credit risk since their initial recognition.
Impairment model
The IFRS 9 impairment model adopts a three stage approach based on the extent of credit deterioration since origination:
• Stage 1: 12-month ECL applies to all financial assets that have not experienced a significant increase in credit risk (“SICR”) since origination
and are not credit impaired. The ECL will be computed based on the probability of default events occurring over the next 12 months. Stage 1
includes the current performing loans (up to date and in arrears of less than 10 days) and those within Heightened Business Monitoring
(“HBM”). Accounts requiring HBM are classified as a short-term deterioration in financial circumstances and are tightly monitored with
additional proactive client engagement, but not deemed SICR.
• Stage 2: When a financial asset experiences a SICR subsequent to origination, but is not in default, it is considered to be in Stage 2. This
requires the computation of ECL based on the probability of all possible default events occurring over the remaining life of the financial asset.
Provisions are higher in this stage (except where the value of charge against the financial asset is sufficient to enable recovery in full)
because of an increase in credit risk and the impact of a longer time horizon being considered (compared to 12 months in Stage 1).
Evidence that a financial asset has experienced a SICR includes, but is not limited to, the following considerations:
– A loan is in arrears between 31 and 90 days;
– Forbearance action has been undertaken;
– Any additional reasons whereby the Probability of Default is considered to have increased significantly since inception of the facility.
• Stage 3: Financial assets that are credit impaired are included in this stage. Similar to Stage 2, the allowance for credit losses will continue to
capture the lifetime expected credit losses. At each reporting date, the Group will assess whether financial assets carried at amortised cost
are in default. A financial asset will be considered to be in default when an event(s) that has a detrimental impact on estimated future cash
flows have occurred.
Evidence that a financial asset is within Stage 3 includes, but is not limited to, the following data:
– A loan is in arrears in excess of 90 days;
– Breach of terms of forbearance;
– Recovery action is in hand;
– Bankruptcy proceedings or similar insolvency process of a client, or director of a company;
– Any additional reasons where default and/or recovery action is considered inevitable.
The credit risk of financial assets that become credit impaired are not expected to improve, beyond the extent that they are no longer
considered to be credit impaired.
A borrower will move back into Stage 1 conditional upon both a minimum of six months’ good account conduct and the improvement of the
Client’s situation to the extent that the credit risk has receded sufficiently and a full repayment of the loan, without recourse to the collateral,
is likely.
Presentation of allowance for ECL in the statement of financial position
For financial assets measured at amortised cost, these are presented as the gross carrying amount of the assets minus a deduction for the ECL.
115
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Write-off
Loans and debt securities are written off (either partially or in full) when there is no realistic prospect of recovery. This is the case when the
Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the
outstanding amount due.
(b) Renegotiated loans
Renegotiated loans are derecognised if the new terms are significantly different to the original agreement. Loans that have been modified to
such an extent the renegotiated loan is a substantially different to the original loan, are no longer considered to be past due and are treated as
new loans.
(c) Forbearance
Under certain circumstances, the Group may use forbearance measures to assist borrowers who are experiencing significant financial
hardship. Any forbearance support is assessed on a case by case basis in line with best practice and subject to regular monitoring and review.
The Group seeks to ensure that any forbearance results in a fair outcome for both the customer and the Group.
(d) Assets classified as financial investments
Equity instruments at fair value through other comprehensive income
Equity investments are not subject to impairment charges recognised in the income statement. Any fair value gains and losses are recognised
in OCI which are not subject to reclassification to the income statement on derecognition.
2025
£000
2024
£000
Net Impairment losses / (reversals) on financial assets
2,501
6,275
Of which:
Loans and advances to customers
Stage 1
82
(242)
Stage 2
(1,450)
1,192
Stage 3
3,812
5,331
Treasury assets (Balances at central banks, Loans and advances to banks and Debt securities at amortised cost)
Stage 1
57
(6)
2,501
6,275
During the year, the Group recovered £94k (2024: £17k) of loans which had previously been written off.
12. Other income
Other income includes £3.25m in relation to a settled claim related to a negligent property valuation.
Other items reflected in other income include rental income from the investment property of £0.5m (2024: £0.5m).
Accounting for rental income
Rental income is recognised on a straight line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the
total rental income over the term of the lease.
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Notes to the Consolidated
Financial Statements
13. Operating expenses
Operating expenses comprise:
2025
£000
2024
£000
Staff costs, including Directors:
Wages, salaries and bonuses
80,518
77,940
Social security costs
10,120
8,875
Pension costs
3,961
3,825
Share based payment transactions (Note 39)
29
(132)
Depreciation (Note 28, 29)
7,060
6,119
Amortisation of intangibles (Note 27)
3,680
3,018
Premises and equipment*
20,918
16,959
Consultancy, legal and professional fees
9,059
11,051
Marketing and advertising*
1,839
1,700
Financial Services Compensation Scheme Levy
894
721
Expenses relating to short-term leases
791
1,066
Write down of repossessed and commercial properties
–
1,359
Charitable donations
42
162
Loss/(profit) on disposals of property, plant and equipment
3
(37)
Other administrative expenses*
8,294
7,180
Total operating expenses from continuing operations
147,208
139,806
* Prior year expenses have been re-presented to better reflect internal cost categories
Details on Directors remuneration are disclosed in the Remuneration Report on page 58.
Remuneration of the auditor and its associates, excluding VAT, was as follows:
2025
£000
2024
£000
Fees payable to the Company's auditor for the audit of the Company's annual accounts
79
138
Audit of the accounts of subsidiaries
710
638
Audit related assurance services
155
155
Total fees payable
944
931
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14. Income tax expense
Current income tax which is payable on taxable profits is recognised as an expense in the period in which the profits arise. Income tax
recoverable on tax allowable losses is recognised as an asset only to the extent that it is regarded as recoverable by offset against current or
future taxable profits.
United Kingdom corporation tax at 25% (2024: 25%)
2025
£000
2024
£000
Current taxation
Corporation tax charge - current year
7,299
7,490
Corporation tax charge - adjustments in respect of prior years
(221)
1,496
7,078
8,986
Deferred taxation
Origination and reversal of temporary differences
(996)
1,790
Adjustments in respect of prior years
292
(540)
(704)
1,250
Income tax expense
6,374
10,236
Tax reconciliation
Profit before tax
24,184
35,089
Tax at 25% (2024: 25%)
6,046
8,773
Other permanent differences
256
236
Tax rate change
–
272
Prior period adjustments
72
955
Corporation tax charge for the year
6,374
10,236
The effective tax rate for the year is 26.36%
15. Average number of employees
2025
2024
Banking
291
286
RAF
66
59
ACABL
37
35
AAG
149
146
All Other Divisions
393
369
Group Centre
18
19
954
914
Accounting for employee benefits
(a) Post-retirement obligations
The Group contributes to a defined contribution scheme and to individual defined contribution schemes for the benefit of certain employees.
The schemes are funded through payments to insurance companies or trustee-administered funds at the contribution rates agreed with
individual employees.
The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit
expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future
payments is available.
There are no post-retirement benefits other than pensions.
118
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
15. Average number of employees (continued)
(b) Share-based compensation – cash settled
The Group adopts a Black-Scholes valuation model in calculating the fair value of the share options as adjusted for an attrition rate for members
of the scheme and a probability of pay-out reflecting the risk of not meeting the terms of the scheme over the vesting period. The number of
share options that are expected to vest are reviewed at least annually.
The fair value of cash settled share-based payments is recognised as personnel expenses in the profit or loss with a corresponding increase in
liabilities over the vesting period. The liability is remeasured at each reporting date and at settlement date based on the fair value of the options
granted, with a corresponding adjustment to personnel expenses.
(c) Deferred cash bonus scheme
The Bank has a deferred cash bonus scheme for senior employees. The cost of the award is recognized in the income statement over the period
to which the performance relates.
(d) Short-term incentive plan
The Group has a short-term incentive plan payable to employees of one of its subsidiary companies. The award of a profit share is based on a
percentage of the net profit of a Group subsidiary.
16. Earnings per ordinary share
Basic
Basic earnings per ordinary share are calculated by dividing the profit after tax attributable to equity holders of the Company by the weighted
average number of ordinary shares of 16,319,926 (2024: 16,319,926) in issue during the year (this includes Ordinary shares and Ordinary
Non-Voting shares).
Diluted
There are no convertible instruments, conditional ordinary shares or options or warrants that would create diluted earnings per share.
Therefore, the diluted earnings per share is equal to basic earnings per share.
2025
£000
2024
£000
Profit after tax attributable to equity holders of the Company
17,810
24,854
2025
p
2024
p
Basic Earnings per share
109.1
152.3
17. Cash and balances at central banks
Group
2025
£000
2024
£000
Cash and balances at central banks
437,548
911,887
ECL has been assessed to be immaterial.
Surplus funds are mainly held in the Bank of England reserve account, with the remainder held in certificates of deposit and fixed and floating
rate notes in investment grade banks.
119
Arbuthnot Banking Group PLC
Report & Accounts 2025
18. Loans and advances to banks
Group
2025
£000
2024
£000
Placements with banks included in cash and cash equivalents (Note 41)
117,497
66,971
The table below presents an analysis of loans and advances to banks by rating agency designation as at 31 December, based on Moody’s short
and long term ratings:
Group
2025
£000
2024
£000
A1
117,497
66,971
117,497
66,971
None of the loans and advances to banks are past due (2024: nil). ECL has been assessed as immaterial.
Company
2025
£000
2024
£000
Placements with banks included in cash and cash equivalents (Note 41)
4,760
920
Loans and advances to banks include bank balances of £Nil (2024: £Nil) with Arbuthnot Latham & Co., Ltd. ECL has been assessed as
insignificant.
19. Debt securities at amortised cost
Debt securities represent certificates of deposit.
The movement in debt securities may be summarised as follows:
Group
2025
£000
2024
£000
At 1 January
1,199,847
942,437
Exchange difference
(10,747)
2,564
Additions
3,273,056
1,621,196
Redemptions
(2,428,998)
(1,366,350)
At 31 December
2,033,158
1,199,847
The table below presents an analysis of debt securities by rating agency designation at 31 December, based on Moody’s long term ratings:
Group
2025
£000
2024
£000
Aaa
554,058
476,103
Aa1
106,986
151,619
Aa2
241,133
126,533
Aa3
1,096,188
413,252
A1
34,793
32,340
2,033,158
1,199,847
None of the debt securities are past due (2024: nil). ECL has been assessed as immaterial.
120
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
19. Debt securities at amortised cost (continued)
The movement in debt securities for the Company may be summarised as follows:
Company
2025
£000
2024
£000
At 1 January
38,103
38,129
Exchange difference on monetary assets
649
(593)
Additions
29
28,834
Redemptions
–
(28,267)
At 31 December
38,781
38,103
The exposure relates to Arbuthnot Latham & Co., Limited, which is unrated. A new facility of £26m subordinated loan notes were issued on
3 June 2024 and are denominated in Pound Sterling. The principal amount outstanding at 31 December 2025 was £26m (2024: £26m). The notes
carry interest at 7.25% over 3 month average SONIA and are repayable at par in June 2034 unless redeemed or repurchased earlier by the Arbuthnot
Latham & Co., Limited. On 24 May 2023 an additional €15m subordinated loan notes were issued and denominated in EURO. The principal amount
outstanding at 31 December 2025 was €15m / £13.1m (2024: €15m / £13m). The notes carry interest at 3% over 3 Month EURIBOR and are repayable at
par in August 2035. ECL has been assessed as immaterial.
20. Derivative financial instruments
All derivatives are recognised at their fair value. Fair values are obtained using recent arm’s length transactions or calculated using valuation
techniques such as discounted cash flow models at the prevailing interest rates, and for structured notes classified as financial instruments fair
values are obtained from quoted market prices in active markets. Derivatives are shown in the Statement of Financial Position as assets when
their fair value is positive and as liabilities when their fair value is negative.
2025
2024
Group
Contract/
notional amount
£000
Fair value
assets
£000
Fair value
liabilities
£000
Contract/
notional amount
£000
Fair value
assets
£000
Fair value
liabilities
£000
Interest rate swaps
33,750
1,398
–
33,750
2,970
–
33,750
1,398
–
33,750
2,970
–
The principal derivatives used by the Group are over the counter exchange rate contracts. Exchange rate related contracts include currency
swaps and interest rate swaps.
A forward foreign exchange contract is an agreement to buy or sell a specified amount of foreign currency on a specified future date at an
agreed rate. Currency swaps generally involve the exchange of interest payment obligations denominated in different currencies; exchange of
principal can be notional or actual. The currency swaps are settled net and therefore the fair value is small in comparison to the contract/
notional amount. Interest rate swaps are used to hedge against the Profit or Loss impact resulting from the movement in interest rates, due to
some exposures having fixed rate terms.
The Group primarily uses investment graded banks as counterparties for derivative financial instruments.
The table below presents an analysis of derivative financial instruments contract/notional amounts by rating agency designation of
counterparty bank at 31 December, based on Moody’s long term ratings:
Group
2025
£000
2024
£000
A1
33,750
33,750
33,750
33,750
121
Arbuthnot Banking Group PLC
Report & Accounts 2025
21. Derivatives held for risk management and hedge accounting
See accounting policy in Note 3.
Derivatives held for risk management
The following table describes the fair values of derivatives held for risk management purposes by type of risk exposure.
2025
2024
Group
Fair value
assets
£000
Fair value
liabilities
£000
Fair value
assets
£000
Fair value
liabilities
£000
Interest rate - Designated fair value hedges
1,398
–
2,970
–
Total interest rate derivatives
1,398
–
2,970
–
Details of derivatives designated as hedging instruments in qualifying hedging relationships are provided in the hedge accounting section
below. The instruments used principally include interest rate swaps.
For more information about how the Group manages its market risks, see Note 6.
Hedge accounting
Fair value hedges of interest rate risk
The Group uses interest rate swaps to hedge its exposure to changes in the fair values of fixed rate pound sterling loans to customers in
respect of the SONIA (The Sterling Overnight Index Average) benchmark interest rate. Pay-fixed/receive-floating interest rate swaps are
matched to specific fixed-rate loans and advances with terms that closely align with the critical terms of the hedged item.
The Group’s approach to managing market risk, including interest rate risk, is discussed in Note 6. The Group’s exposure to interest rate risk is
disclosed in Note 6. Interest rate risk to which the Group applies hedge accounting arises from fixed-rate loans and advances, whose fair value
fluctuates when benchmark interest rates change. The Group hedges interest rate risk only to the extent of benchmark interest rates because
the changes in fair value of a fixed-rate loan are significantly influenced by changes in the benchmark interest rate (“SONIA”). Hedge accounting
is applied where economic hedging relationships meet the hedge accounting criteria.
By using derivative financial instruments to hedge exposures to changes in interest rates, the Group also exposes itself to credit risk of the
derivative counterparty, which is not offset by the hedged item. The Group minimises counterparty credit risk in derivative instruments by
entering into transactions with high-quality counterparties whose credit rating is not lower than A.
Before fair value hedge accounting is applied by the Group, the Group determines whether an economic relationship between the hedged item
and the hedging instrument exists based on an evaluation of the qualitative characteristics of these items and the hedged risk that is
supported by quantitative analysis. The Group considers whether the critical terms of the hedged item and hedging instrument closely align
when assessing the presence of an economic relationship. The Group evaluates whether the fair value of the hedged item and the hedging
instrument respond similarly to similar risks. The Group further supports this qualitative assessment by using regression analysis to assess
whether the hedging instrument is expected to be and has been highly effective in offsetting changes in the fair value of the hedged item.
The Group establishes a hedge ratio by aligning the par amount of the fixed-rate loan and the notional amount of the interest rate swap
designated as a hedging instrument. Under the Group policy, in order to conclude that a hedging relationship is effective, all of the following
criteria should be met.
• The regression co-efficient (R squared), which measures the correlation between the variables in the regression, is at least 0.8.
• The slope of the regression line is within a 0.8–1.25 range.
• The confidence level of the slope is at least 95%.
In these hedging relationships, the main sources of ineffectiveness are:
• the effect of the counterparty and the Group’s own credit risk on the fair value of the interest rate swap, which is not reflected in the fair
value of the hedged item attributable to the change in interest rate; and
• differences in payable/receivable fixed rates of the interest rate swap and the loans.
There were no other sources of ineffectiveness in these hedging relationships.
The effective portion of fair value gains on derivatives held in qualifying fair value hedging relationships and the hedging gain or loss on the
hedged items are included in net interest income.
122
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
21. Derivatives held for risk management and hedge accounting (continued)
At 31 December 2025 and 31 December 2024, the Group held the following interest rate swaps as hedging instruments in fair value hedges of
interest risk.
Maturity 2025
Maturity 2024
Group
Less than
1 year
1–5 years
More than
5 years
Less than
1 year
1–5 years
More than
5 years
Risk category: Interest rate risk - Hedge of loans and advances
Nominal amount (in £000)
–
33,750
–
–
33,750
–
Average fixed interest rate
–
0.09%
–
–
0.09%
–
The amounts relating to items designated as hedging instruments and hedge ineffectiveness at 31 December 2025 were as follows:
2025
Carrying Amount
Group
Nominal
amount
£000
Assets
£000
Liabilities
£000
Interest rate risk
Interest rate swaps – hedge of loans and advances
33,750
1,398
–
The amounts relating to items designated as hedging instruments and hedge ineffectiveness at 31 December 2024 were as follows:
2024
Carrying Amount
Group
Nominal
amount
£000
Assets
£000
Liabilities
£000
Interest rate risk
Interest rate swaps – hedge of loans and advances
33,750
2,970
–
The amounts relating to items designated as hedged items at 31 December 2025 were as follows:
2025
Carrying Amount
Group
Assets
£000
Liabilities
£000
Loans and advances
32,682
–
The amounts relating to items designated as hedged items at 31 December 2024 were as follows:
2024
Carrying Amount
Group
Assets
£000
Liabilities
£000
Loans and advances
31,189
–
123
Arbuthnot Banking Group PLC
Report & Accounts 2025
2025
Group
Line item in the statement of financial position where the hedging
instrument is included
Change in fair value used for
calculating hedge ineffectiveness
£000
Ineffectiveness
recognised in profit or loss
£000
Derivative financial instruments
(1,573)
(80)
2024
Group
Line item in the statement of financial position where the hedging
instrument is included
Change in fair value used for
calculating hedge ineffectiveness
£000
Ineffectiveness
recognised in profit or loss
£000
Derivative financial instruments
(2,740)
62
2025
Change in fair value used for
calculating hedge ineffectiveness
Accumulated amount of fair value hedge
adjustments on the hedged item included in
the carrying amount of the hedged item
Group
Line item in the statement of financial position where the hedging
instrument is included
£000
Assets
£000
Liabilities
£000
Loans and advances to customers
1,493
(1,068)
–
2024
Change in fair value used for
calculating hedge ineffectiveness
Accumulated amount of fair value hedge
adjustments on the hedged item included in
the carrying amount of the hedged item
Group
Line item in the statement of financial position where the hedging
instrument is included
£000
Assets
£000
Liabilities
£000
Loans and advances to customers
3,360
(3,169)
608
124
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
22. Loans and advances to customers
Analyses of loans and advances to customers:
2025
Group
Stage 1
£000
Stage 2
£000
Stage 3
£000
Total
£000
Gross loans and advances at 1 January 2025
1,929,178
103,276
73,347
2,105,801
Originations and repayments
(78,388)
(20,873)
(31,905)
(131,166)
Write-offs
–
–
(930)
(930)
Transfer to Stage 1
23,554
(21,430)
(2,124)
–
Transfer to Stage 2
(8,221)
10,241
(2,020)
–
Transfer to Stage 3
(9,477)
(17,832)
27,309
–
Gross loans and advances at 31 December 2025
1,856,646
53,382
63,677
1,973,705
Less allowances for ECLs (see Note 23)
(707)
(172)
(12,284)
(13,163)
Net loans and advances at 31 December 2025
1,855,939
53,210
51,393
1,960,542
2024
Group
Stage 1
£000
Stage 2
£000
Stage 3
£000
Total
£000
Gross loans and advances at 1 January 2024
1,908,942
82,752
79,331
2,071,025
Originations
110,716
(33,647)
(40,769)
36,300
Repayments and write-offs
–
–
(1,524)
(1,524)
Transfer to Stage 1
12,379
(11,717)
(662)
–
Transfer to Stage 2
(83,360)
84,328
(968)
–
Transfer to Stage 3
(19,499)
(18,440)
37,939
–
Gross loans and advances at 31 December 2024
1,929,178
103,276
73,347
2,105,801
Less allowances for ECLs (see Note 23)
(665)
(1,623)
(9,301)
(11,589)
Net loans and advances at 31 December 2024
1,928,513
101,653
64,046
2,094,212
* Originations include further advances and drawdowns on existing commitments.
For a maturity profile of loans and advances to customers, refer to Note 6.
125
Arbuthnot Banking Group PLC
Report & Accounts 2025
Loans and advances to customers by division (net of ECL):
2025
Group
Banking
£000
RAF
£000
ACABL
£000
AAG
£000
All other
divisions
£000
Total
£000
Stage 1
1,288,476
280,674
189,461
97,326
–
1,855,937
Stage 2
18,410
4,801
29,901
100
–
53,212
Stage 3
49,761
1,604
–
28
–
51,393
At 31 December 2025
1,356,647
287,079
219,362
97,454
–
1,960,542
2024
Group
Banking
£000
RAF
£000
ACABL
£000
AAG
£000
All other
divisions
£000
Total
£000
Stage 1
1,420,274
242,417
189,011
76,811
–
1,928,513
Stage 2
59,035
4,355
38,023
240
–
101,653
Stage 3
60,867
2,018
1,161
–
–
64,046
At 31 December 2024
1,540,176
248,790
228,195
77,051
–
2,094,212
Analyses of past due loans and advances to customers by division:
2025
Group
Banking
£000
RAF
£000
ACABL
£000
All Other Divisions
£000
Total
£000
Up to 30 days
7,626
5,140
–
–
12,766
Stage 1
7,183
3,455
–
–
10,638
Stage 2
443
1,510
–
–
1,953
Stage 3
–
175
–
–
175
30 – 60 days
1,603
1,745
–
–
3,348
Stage 2
1,494
1,206
–
–
2,700
Stage 3
109
539
–
–
648
60 – 90 days
2,528
192
–
–
2,720
Stage 2
2,528
168
–
–
2,696
Stage 3
–
24
–
–
24
Over 90 days
53,526
1,271
–
721
55,518
Stage 2*
1,189
–
–
–
1,189
Stage 3
52,337
1,271
–
721
54,329
At 31 December 2025
65,283
8,348
–
721
74,352
* These represent forborne customers
126
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
22. Loans and advances to customers (continued)
Analyses of past due loans and advances to customers by division:
2024
Group
Banking
£000
RAF
£000
ACABL
£000
All Other Divisions
£000
Total
£000
Up to 30 days
10,966
4,214
–
–
15,180
Stage 1
8,782
1,632
–
–
10,414
Stage 2
1,971
1,989
–
–
3,960
Stage 3
213
593
–
–
806
30 - 60 days
15,867
211
–
–
16,078
Stage 2
5,347
137
–
–
5,484
Stage 3
10,520
74
–
–
10,594
60 - 90 days
12,759
53
–
368
13,180
Stage 2
10,470
–
–
–
10,470
Stage 3
2,289
53
–
368
2,710
Over 90 days
58,485
1,411
–
144
60,040
Stage 2
4,702
–
–
144
4,846
Stage 3
53,783
1,411
–
–
55,194
At 31 December 2024
98,077
5,889
–
512
104,478
Loans and advances to customers include finance lease receivables as follows:
Group
2025
£000
2024
£000
Gross investment in finance lease receivables:
- No later than 1 year
162,460
142,107
- Later than 1 year and no later than 5 years
263,237
229,630
- Later than 5 years
17,654
958
443,351
372,695
Unearned future finance income on finance leases
(58,686)
(46,856)
Net investment in finance leases
384,665
325,839
The net investment in finance leases may be analysed as follows:
- No later than 1 year
137,588
103,719
- Later than 1 year and no later than 5 years
233,699
221,316
- Later than 5 years
13,378
804
384,665
325,839
(b) Loans and advances renegotiated
Restructuring activities include external payment arrangements, modification and deferral of payments. Following restructuring, a previously
overdue customer account is reset to a normal status and managed together with other similar accounts. Restructuring policies and practices
are based on indicators or criteria which, in the judgement of management, indicate that payment will most likely continue. These policies are
kept under continuous review. Renegotiated loans that would otherwise be past due or impaired totalled £Nil (2024: £Nil).
(c) Collateral held
Collateral is measured at fair value less costs to sell. Most of the loans are secured by property. The fair value of the collateral held against
loans and advances in Stage 3 is £89m (2024: £106m), against loans of £63.5m (2024: £73.3m). The weighted average loan-to-value of loans and
advances in Stage 3 is 71.2% (2024: 69.1%).
127
Arbuthnot Banking Group PLC
Report & Accounts 2025
23. Allowances for impairment of loans and advances
An analysis of movements in the allowance for ECLs (2025):
Group
Stage 1
£000
Stage 2
£000
Stage 3
£000
Total
£000
At 1 January 2025
665
1,623
9,301
11,589
Transfer to Stage 1
2
(2)
–
–
Transfer to Stage 2
(6)
6
–
–
Transfer to Stage 3
(3)
(1,609)
1,612
–
Current year charge
237
157
2,347
2,741
Change in assumptions
(188)
(2)
(148)
(338)
Repayments and write-offs
–
–
(829)
(829)
At 31 December 2025
707
173
12,283
13,163
An analysis of movements in the allowance for ECLs (2024):
Group
Stage 1
£000
Stage 2
£000
Stage 3
£000
Total
£000
At 1 January 2024
902
427
5,479
6,808
Transfer to Stage 2
(17)
17
–
–
Transfer to Stage 3
(43)
(1)
44
–
Current year charge
(127)
1,207
5,593
6,673
Change in assumptions
(50)
(27)
(291)
(368)
Repayments and write-offs
–
–
(1,524)
(1,524)
At 31 December 2024
665
1,623
9,301
11,589
24. Other assets
Group
2025
£000
2024
£000
Trade receivables
7,011
7,758
Inventory
20,644
27,349
Prepayments and accrued income
22,592
16,594
50,247
51,701
Trade receivables
Gross balance
7,127
7,818
Allowance for bad debts
(116)
(60)
Net receivables
7,011
7,758
128
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
24. Other assets (continued)
Inventory
Inventory is measured at the lower of cost or net realisable value. The cost of inventories comprises all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in
the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
As at 31 December 2025 inventory included the following 3 properties:
• Pinnacle Universal is a special purpose vehicle, 100% owned by the Bank, which owns land that is currently in the process of being
redeveloped with a view to selling off as individual residential plots. The value of the property at 31 December 2025 is £3.4m (2024: £5.0m).
• In 2019 a property was reclassified from investment property to inventory due to being under development with a view to sell. The property
was still owned at 31 December 2025 when it was valued at net realisable value less costs to sell of £9.3m (2024: cost of £9.5m).
• The Group holds a property classified as inventory of £3.3m (2024: £3.0m). The property is located in the EU and relates to a Euro
denominated loan where the property was repossessed
Company
2025
£000
2024
£000
Trade receivables
1,676
3,280
Prepayments and accrued income
63
75
1,739
3,355
25. Financial investments
Group
2025
£000
2024
£000
Designated at fair value through other comprehensive income
- Unlisted securities
2,061
4,947
Total financial investments
2,061
4,947
Unlisted securities
All unlisted securities have been designated as FVOCI as they are held for strategic reasons. These securities are measured at fair value in the
Statement of Financial Position with fair value gains/losses recognised in OCI.
Dividends received during the year amounted to £18k (2024: £19k).
An additional investment in an unlisted investment vehicle was made in 2025. The Group received a distribution of £0.1m (2024: £0.1m) which
included a gain of £0.05m (2024: £0.1m) in the year.
129
Arbuthnot Banking Group PLC
Report & Accounts 2025
26. Deferred taxation
Accounting for deferred tax
Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements. However, deferred tax is not accounted for if it arises from the initial recognition of goodwill, the initial
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting
nor taxable profit or loss, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable
future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the Statement of Financial
Position date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to
taxes levied by the same tax authority on the same taxable entity, or on different tax entities, when they intend to settle current tax liabilities
and assets on a net basis or the tax assets and liabilities will be realised simultaneously.
Deferred tax assets are recognised where it is probable that future taxable profits will be available against which the temporary differences can
be utilised.
The deferred tax liability comprises:
Group
2025
£000
2024
£000
Accelerated capital allowances and other short-term timing differences
(11,656)
(7,306)
Movement in fair value of financial investments FVOCI
(56)
(499)
Unutilised tax losses
1,349
1,977
IFRS 9 adjustment*
105
157
Deferred tax liability
(10,258)
(5,671)
At 1 January
(5,671)
(4,910)
Other Comprehensive Income - FVOCI
590
(199)
Profit and loss account - accelerated capital allowances and other short-term timing differences
(4,495)
(1,666)
Profit and loss account - tax losses
(629)
1,158
IFRS 9 adjustment*
(53)
(54)
Deferred tax liability at 31 December
(10,258)
(5,671)
* This relates to the timing difference on the adoption of IFRS 9 spread over 10 years for tax purposes.
Company
2025
£000
2024
£000
Accelerated capital allowances and other short-term timing differences
120
2
Movement in fair value of financial investments
–
147
Unutilised tax losses
366
366
Deferred tax asset
486
515
At 1 January
515
520
Profit and loss account - accelerated capital allowances and other short-term timing differences
(29)
(5)
Deferred tax asset at 31 December
486
515
Deferred tax assets are recognised for tax losses to the extent that the realisation of the related tax benefit through future taxable profits is
probable.
130
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
27. Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired
subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in ‘intangible assets’. Gains and losses on the disposal
of an entity include the carrying amount of goodwill relating to the entity sold.
The Group reviews the goodwill for impairment at least annually or more frequently when events or changes in economic circumstances indicate
that impairment may have taken place and carries goodwill at cost less accumulated impairment losses. Assets are grouped together in the
smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or
groups of assets (the “cash-generating unit” or “CGU”). For impairment testing purposes goodwill cannot be allocated to a CGU that is greater
than a reported operating segment. CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested
reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated
to groups of CGUs that are expected to benefit from the synergies of the combination. The test for impairment involves comparing the carrying
value of goodwill with the present value of pre-tax cash flows, discounted at a rate of interest that reflects the inherent risks of the CGU to which
the goodwill relates, or the CGU’s fair value if this is higher.
(b) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These
costs are amortised on a straight line basis over the expected useful lives (three to fifteen years).
Costs associated with maintaining computer software programs are recognised as an expense as incurred.
Costs associated with developing computer software which are assets in the course of construction, which management has assessed to not
be available for use, are not amortised.
Expenditure on internally developed software is recognised as an asset when the Group is able to demonstrate: that the product is technically
and commercially feasible, its intention and ability to complete the development and use the software in a manner that will generate future
economic benefits, and that it can reliably measure the costs to complete the development. The capitalised costs of internally developed
software include all costs directly attributable to developing the software, and are amortised over its useful life.
(c) Other intangibles
Other intangibles include trademarks, customer relationships, broker relationships, technology and banking licences acquired. These costs are
amortised on a straight line basis over the expected useful lives (three to fourteen years).
(d) SaaS (Software as a Service) costs
The Group assesses its SaaS arrangements to determine whether the arrangement results in any resources controlled by the Group. Where the
arrangement provides the Group with control over the software asset, and the criteria for recognition as an intangible asset are met, the related
costs are capitalised. Where the arrangement does not convey control over the software asset, the SaaS costs are expensed when the Group
receives the configuration and customisation services.
131
Arbuthnot Banking Group PLC
Report & Accounts 2025
Group
Goodwill
£000
Computer
software
£000
Other
intangibles
£000
Total
£000
Cost
At 1 January 2024
5,202
37,995
6,829
50,026
Additions
–
4,739
–
4,739
Transfers
–
742
(742)
–
At 31 December 2024
5,202
43,476
6,087
54,765
Additions
–
6,427
–
6,427
Disposals and write-off of fully amortised assets
–
(962)
–
(962)
At 31 December 2025
5,202
48,941
6,087
60,230
Accumulated amortisation
At 1 January 2024
–
(17,973)
(2,466)
(20,439)
Amortisation charge
–
(3,024)
(737)
(3,761)
At 31 December 2024
–
(20,997)
(3,203)
(24,200)
Amortisation charge
–
(3,073)
(471)
(3,544)
Disposals and write-off of fully amortised assets
–
962
–
962
At 31 December 2025
–
(23,108)
(3,674)
(26,782)
Net book amount
At 31 December 2024
5,202
22,479
2,884
30,565
At 31 December 2025
5,202
25,833
2,413
33,448
Significant management judgements are made in estimations, to evaluate whether an impairment of goodwill is necessary. Impairment testing
is performed at CGU level and the following two items, with judgements surrounding them, have a significant impact on the estimations used in
determining the necessity of an impairment charge:
• Future cash flows - Cash flow forecasts reflect management’s view of future business forecasts at the time of the assessment. A detailed
three year budget is done every year and management also uses judgement in applying a growth rate. The accuracy of future cash flows is
subject to a high degree of uncertainty in volatile market conditions. During such conditions, management would perform impairment
testing more frequently than annually to ensure that the assumptions applied are still valid in the current market conditions.
• Discount rate - Management also apply judgement in determining the discount rate used to discount future expected cash flows.
The discount rate is derived from the cost of capital for each CGU.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. There are currently two CGUs
(2024: two) with goodwill attached; the core Arbuthnot Latham CGU (£1.7m) and RAF CGU (£3.5m).
Management considers the value in use for the Arbuthnot Latham CGU to be the discounted cash flows over 3 years with a terminal value
(2024: 3 years with a terminal value). The 3 year discounted cash flows with a terminal value are considered to be appropriate as the goodwill
relates to an ongoing well established business and not underlying assets with finite lives. The terminal value is calculated by applying a
discounted perpetual growth model to the profit expected in 2024 as per the approved 3 year plan. A growth rate of 4.9% (2024: 2.2%) was
used for income and 6.3% (2024: 6.3%) for expenditure from 2025 to 2027 (these rates were the best estimate of future forecasted
performance), while a 3% (2024: 3%) percent growth rate for income and expenditure was used for cash flows after the approved 3 year plan.
Management considers the value in use for the RAF CGU to be the discounted cash flows over 3 years with a terminal value. The 3 year
discounted cash flows with a terminal value are considered to be appropriate as the goodwill relates to an ongoing, well established, business
and not underlying assets with finite lives. The terminal value is calculated by applying a discounted perpetual growth model to the profit
expected in 2027 as per the approved budget. A growth rate of 3% (2024: 3%) was used (this rate was the best estimate of future forecasted
performance).
132
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
27. Intangible assets (continued)
Cash flows were discounted at a pre-tax rate of 14.8% (2024: 14.9%) to their net present value. The discount rate of 14.8% is considered to be
appropriate after evaluating current market assessments of the time value of money and the risks specific to the assets or CGUs.
Currently, the value in use and fair value less costs to sell of both CGUs exceed the carrying values of the associated goodwill and as a result no
sensitivity analysis was performed.
Company
Computer
software
£000
Cost
At 1 January 2024
7
At 31 December 2024
7
At 31 December 2025
7
Accumulated amortisation
At 1 January 2024
(7)
At 31 December 2024
(7)
At 31 December 2025
(7)
Net book amount
At 31 December 2024
–
At 31 December 2025
–
28. Property, plant and equipment
Land and buildings comprise mainly branches and offices and are stated at the latest valuation, with subsequent additions at cost less
depreciation. Plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values
over their estimated useful lives, applying the following annual rates, which are subject to regular review:
Leasehold improvements
3 to 20 years
Commercial vehicles
2 to 7 years
Plant and machinery
5 years
Computer and other equipment
3 to 10 years
Motor vehicles
4 years
Leasehold improvements are depreciated over the term of the lease (until the first break clause). Gains and losses on disposals are determined
by deducting carrying amount from proceeds. These are included in the Statement of Comprehensive Income.
Commercial vehicles are subject to operating leases. The other assets are owned and used by the Group.
133
Arbuthnot Banking Group PLC
Report & Accounts 2025
Group
Leasehold
improvements
£000
Commercial
vehicles
£000
Plant and
machinery
£000
Computer
and other
equipment
£000
Motor
Vehicles
£000
Total
£000
Cost or valuation
At 1 January 2024
11,727
309,623
17
6,873
848
329,088
Additions
20,581
90,472
–
2,216
407
113,676
Disposals and write-off of fully depreciated assets
–
(50,471)
–
–
(247)
(50,718)
At 31 December 2024
32,308
349,624
17
9,089
1,008
392,046
Additions
310
79,340
–
674
118
80,442
Disposals of assets acquired through acquisition*
–
33,102
–
–
–
33,102
Disposals and write-off of fully depreciated assets
(5,471)
(46,588)
–
(2,133)
(98)
(54,290)
At 31 December 2025
27,147
415,478
17
7,630
1,028
451,300
Accumulated depreciation
At 1 January 2024
(6,644)
(42,032)
(12)
(5,814)
(280)
(54,782)
Depreciation charge
(1,405)
(51,337)
(8)
(899)
(141)
(53,790)
Disposals and write-off of fully depreciated assets
–
29,698
10
–
184
29,892
At 31 December 2024
(8,049)
(63,671)
(10)
(6,713)
(237)
(78,680)
Depreciation charge
(1,857)
(57,013)
(4)
(1,175)
(170)
(60,219)
Disposals of assets acquired through acquisition*
–
(33,102)
–
–
–
(33,102)
Disposals and write-off of fully depreciated assets
5,471
23,635
–
2,132
32
31,270
At 31 December 2025
(4,435)
(130,151)
(14)
(5,756)
(375)
(140,731)
Net book amount
At 31 December 2024
24,259
285,953
7
2,376
771
313,366
At 31 December 2025
22,712
285,327
3
1,874
653
310,569
* Elimination of consolidation adjustment on disposal of assets acquired through a subsidiary and previously measured at acquisition date fair value in the
Group accounts
134
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
28. Property, plant and equipment (continued)
Company
Leasehold
improvements
£000
Motor
Vehicles
£000
Total
£000
Cost or valuation
At 1 January 2024
217
91
308
Additions
(1)
118
117
Disposals and write-off of fully amortised assets
–
(91)
(91)
At 31 December 2024
216
118
334
At 31 December 2025
216
118
334
Accumulated depreciation
At 1 January 2024
(88)
(90)
(178)
Depreciation charge
–
(26)
(26)
Disposals and write-off of fully amortised assets
–
91
91
At 31 December 2024
(88)
(25)
(113)
Depreciation charge
–
(27)
(27)
At 31 December 2025
(88)
(52)
(140)
Net book amount
At 31 December 2024
128
93
221
At 31 December 2025
128
66
194
Minimum lease payments receivable under operating and contract hire leases fall due as follows:
Group
2025
£000
2024
£000
Maturity analysis for operating lease receivables:
- No later than 1 year
56,615
55,825
- Later than 1 year and no later than 5 years
98,961
76,293
- Later than 5 years
7,051
3,722
162,627
135,840
29. Right-of-use assets
At inception or on reassessment of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an identified asset, the Group assesses whether:
• the contract involves the use of an identified asset. This may be specified explicitly or implicitly, and should be physically distinct or
represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is
not identified;
• the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
• the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant
to changing how and for what purpose the asset is used.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each
lease component on the basis of their relative stand-alone prices.
135
Arbuthnot Banking Group PLC
Report & Accounts 2025
(a) As a lessee
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore it or its site, less any lease
incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same
basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted
for certain remeasurements of the lease liability.
Practical exemptions
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of
12 months or less and leases of low value assets. The Group recognises the lease payments associated with these leases as an expense on
a straight-line basis over the lease term.
(b) As a lessor
Assets leased to customers under agreements which transfer substantially all the risks and rewards of ownership, with or without ultimate legal
title, are classified as finance leases. When assets are held subject to finance leases, the present value of the lease payments is recognised as
a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income.
Lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return.
Assets leased to customers under agreements which do not transfer substantially all the risks and rewards of ownership are classified as
operating leases. When assets are held subject to operating leases, the underlying assets are held at cost less accumulated depreciation.
The assets are depreciated down to their estimated residual values on a straight-line basis over the lease term. Lease rental income is
recognised on a straight line basis over the lease term.
Group
Properties
£000
Equipment
£000
Total
£000
At 1 January 2024
52,637
177
52,816
Additions
181
134
315
Amortisation
(5,452)
(168)
(5,620)
At 31 December 2024
47,368
143
47,511
Additions
690
393
1,083
Amortisation
(3,909)
(184)
(4,093)
At 31 December 2025
44,149
352
44,501
In the year, the Group received £Nil (2024: £Nil) of rental income from subleasing right-of-use assets through operating leases.
The Group recognised £3.3m (2024: £3.1m) of interest expense related to lease liabilities. The Group also recognised £0.8m (2024: £0.7m) of
expense in relation to leases with a duration of less than 12 months.
136
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
30. Investment property
Investment property is initially measured at cost. Transaction costs are included in the initial measurement. Subsequently, investment property
is measured at fair value, with any change therein recognised in profit and loss within other income.
Group
2025
£000
2024
£000
Opening balance
5,250
5,950
Fair value adjustment
–
(700)
At 31 December 2025
5,250
5,250
Crescent Office Park, Bath
The property represents a freehold office building in Bath and comprises 25,528 square ft. over ground and two upper floors with parking
spaces. The property was acquired for £6.35m. On the date of acquisition, the property was being multi-let to tenants and was at full capacity.
The Group has elected to apply the fair value model (see Note 4.2 (c)). The fair value of the investment property was determined by an external,
independent property valuer, having appropriate recognised professional qualifications and recent experience in the location and category of
property being valued.
The fair value measurements for the investment property have been categorised as Level 3 fair value measurement.
The Group recognised £0.5m (2024: £0.5m) rental income during the year and incurred £0.4m (2024: £0.5m) of direct operating expenses.
The property remained tenanted during 2025.
31. Deposits from banks
Group
2025
£000
2024
£000
1,389
192,911
Deposits from banks include £Nil (2024: £190m) obtained through the Bank of England Term Funding Scheme with additional incentives for small
and medium-sized enterprises (“TFSME”).
32. Deposits from customers
Group
2025
£000
2024
£000
Current/demand accounts
3,155,647
2,754,141
Notice accounts
145,808
158,537
Term deposits
1,268,910
1,219,815
4,570,365
4,132,493
Included in customer accounts are deposits of £20.8m (2024: £24.8m) held as collateral for loans and advances. The fair value of these deposits
approximates their carrying value.
For a maturity profile of deposits from customers, refer to Note 6.
137
Arbuthnot Banking Group PLC
Report & Accounts 2025
33. Other liabilities
Group
2025
£000
2024
£000
Trade payables
20,493
6,229
Accruals and deferred income
21,996
29,155
42,489
35,384
Company
2025
£000
2024
£000
Trade payables
1,824
1,812
Accruals and deferred income
3,928
3,655
5,752
5,467
34. Lease liabilities
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Primarily, the
Group uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
• fixed payments, including in-substance payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rates as at the commencement date;
• amounts expected to be payable under a residual value guarantee.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease
payments arising from a change in index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a
residual value guarantee.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is
recorded in the statement of comprehensive income if the carrying amount of the right-of-use asset has been reduced to zero.
Group
Properties
£000
Equipment
£000
Total
£000
At 1 January 2024
53,602
159
53,761
Additions
197
134
331
Interest expense
3,125
7
3,132
Lease payments
(2,215)
(180)
(2,395)
At 31 December 2024
54,709
120
54,829
Additions
689
393
1,082
Interest expense
3,258
20
3,278
Lease payments
(752)
(170)
(922)
At 31 December 2025
57,904
363
58,267
138
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
34. Lease liabilities (continued)
Maturity analysis
Group
2025
£000
2024
£000
Less than one year
7,022
1,216
One to five years
26,780
26,121
More than five years
54,702
61,099
Total undiscounted lease liabilities at 31 December
88,504
88,436
Lease liabilities included in the statement of financial position at 31 December
58,267
54,829
Current
3,963
1,087
Non-current
54,303
53,742
35. Debt securities in issue
Issued financial instruments or their components are classified as liabilities where the contractual arrangement results in the Group having a
present obligation to either deliver cash or another financial asset to the holder.
Financial liabilities, other than trading liabilities at fair value, are carried at amortised cost using the effective interest rate method as set out in
the policy in Note 8.
Group and Company
2025
£000
2024
£000
Subordinated loan notes
38,672
37,982
Euro subordinated loan notes
The subordinated loan notes 2035 were issued on 7 November 2005 and are denominated in Euros. The principal amount outstanding at
31 December 2025 was €15.0m / £13.1m (2024: €15.0m / £12.4m). The notes carry interest at 3% over the interbank rate for three month deposits
in euros and are repayable at par in August 2035 unless redeemed or repurchased earlier by the Company.
The contractual amount that will be required to be paid at maturity of the above debt securities is €15.0m.
The fair value of these Euro subordinated loan notes approximates their carrying value.
Pounds Sterling subordinated loan notes
£26m subordinated loan notes were issued on 3 June 2024 and are denominated in Pound Sterling. The principal amount outstanding at
31 December 2025 was £26m (2024: £26m). The notes carry interest at 7.25% over 3 month average SONIA and are repayable at par in
June 2034 unless redeemed or repurchased earlier by the Arbuthnot Latham & Co., Limited.
The contractual amount that will be required to be paid at maturity of the above debit securities is £26.0m.
The fair value of these subordinated loan notes approximates their carrying value.
139
Arbuthnot Banking Group PLC
Report & Accounts 2025
36. Contingent liabilities and commitments
Financial guarantees and loan commitments policy
Financial guarantees represent undertakings that the Group will meet a customer’s obligation to third parties if the customer fails to do so.
Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans, guarantees or letters of credit.
The Group is theoretically exposed to loss in an amount equal to the total guarantees or unused commitments. However, the likely amount of
loss is expected to be significantly less; most commitments to extend credit are contingent upon customers maintaining specific credit
standards. Liabilities under financial guarantee contracts are initially recorded at their fair value, and the initial fair value is amortised over the
life of the financial guarantee. Subsequently, the financial guarantee liabilities are measured at the higher of the initial fair value, less cumulative
amortisation, and the best estimate of the expenditure to settle obligations.
Provisions and contingent liabilities policy
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow
of economic resources will be required from the Group and amounts can be reliably measured.
Onerous contract provisions are recognised for losses on contracts where the forecast costs of fulfilling the contract throughout the contract
period exceed the forecast income receivable. In assessing the amount of the loss to provide on any contract, account is taken of the Group’s
forecast results which the contract is servicing. The provision is calculated based on discounted cash flows to the end of the contract.
Contingent liabilities are disclosed when the Group has a present obligation as a result of a past event, but the probability that it will be required
to settle that obligation is more than remote, but not probable.
Contingent liabilities
The Group is subject to extensive regulation in the conduct of its business. A failure to comply with applicable regulations could result in
regulatory investigations, fines and restrictions on some of the Group’s business activities or other sanctions. The Group seeks to minimise this
risk through the adoption and compliance with policies and procedures, continuing to refine controls over business practices and behaviour,
employee training, the use of appropriate documentation, and the involvement of outside legal counsel where appropriate.
No material contingent liabilities existed as at 31 December 2025 and 2024.
Capital commitments
At 31 December 2025 the Group had capital commitments of £11.9m (2024: £14.3m). Of this total, AAG fleet purchases amounted to £11.8m
(2024: £14.1m).
Credit commitments
The contractual amounts of the Group’s off-balance sheet financial instruments that commit it to extend credit to customers are as follows:
Group
2025
£000
2024
£000
Guarantees and other contingent liabilities
3,059
2,500
Commitments to extend credit:
- Original term to maturity of one year or less
375,292
425,531
378,351
428,031
140
Arbuthnot Banking Group PLC
Report & Accounts 2025
Notes to the Consolidated
Financial Statements
37. Share capital and share premium
Group and Company
31 December 2025
£000
31 December 2024
£000
Share capital
167
167
Share premium
11,606
11,606
Share capital and share premium
11,773
11,773
Ordinary share capital
Group and Company
Number of
shares
Share Capital
£000
At 1 January 2025
16,576,619
166
At 31 December 2025
16,576,619
166
Ordinary non-voting share capital
Group and Company
Number of
shares
Share Capital
£000
At 1 January 2025
152,621
1
At 31 December 2025
152,621
1
Total share capital
Group and Company
Number of
shares
Share Capital
£000
At 1 January 2025
16,729,240
167
At 31 December 2025
16,729,240
167
(a) Share issue costs
Incremental costs directly attributable to the issue of new shares or options by Company are shown in equity as a deduction, net of tax, from
the proceeds.
(b) Dividends on ordinary shares
Dividends on ordinary shares are recognised in equity in the period in which they are approved.
(c) Share buybacks
Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly
attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are
cancelled or reissued.
The Ordinary shares have a par value of 1p per share (2024: 1p per share). At 31 December 2025 the Company held 409,314 shares (2024: 409,314)
in treasury. This includes 390,274 (2024: 390,274) Ordinary shares and 19,040 (2024: 19,040) Ordinary Non-Voting shares.
38. Reserves and retained earnings
Group
2025
£000
2024
£000
Capital redemption reserve
19
19
Fair value reserve
167
1,888
Treasury shares
(1,299)
(1,299)
Retained earnings
265,738
254,575
Total reserves at 31 December
264,625
255,183
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The capital redemption reserve represents a reserve created after the Company purchased its own shares which resulted in a reduction of
share capital.
The fair value reserve relates to gains or losses on assets which have been recognised through other comprehensive income.
Company
2025
£000
2024
£000
Capital redemption reserve
19
19
Treasury shares
(1,299)
(1,299)
Retained earnings
150,006
149,238
Total reserves as 31 December
148,726
147,958
39. Share-based payment options
Company – cash settled
Grants were made to Messrs Salmon and Cobb on 23 July 2021 under the Phantom Option Scheme to subscribe for 200,000 and 100,000 ordinary
1p shares respectively in ABG at 990p. 50% of each director’s individual holding of phantom options is exercisable at any time since 23 July 2024
and the other 50% is exercisable at any time after 23 July 2026 when a cash payment would be made equal to any increase in market value.
All share options awarded on 23 July 2021, regardless of first exercise date, may not be exercised later than 23 July 2028, being the day before
the seventh anniversary of the date of grant. The valuation of the share options are considered as level 2 within the fair value hierarchy,
with the Group adopting a Black-Scholes valuation model as adjusted for an attrition rate for members of the scheme and a probability of
pay-out reflecting the risk of not meeting the terms of the scheme over the vesting period. The number of share options that are expected to
vest is reviewed at least annually. The fair value of the options as at 31 December 2025 was a liability of £0.3m (2024: £0.2m). As at 31 December
2025 the initial 50% of each director’s holding had reached the strike date of 24 July 2024 but have not been exercised.
The performance conditions of the Scheme are that, from the grant date to the date the Option is exercised, there must be no public criticism
by any regulatory authority on the operation of the Company or any of its subsidiaries which has a material impact on the business of Group
and for the duration of the vesting period, there has been satisfactory growth in the dividends paid by the Company.
Options are forfeited if they remain unexercised after a period of more than 7 years from the date of grant. If the participant ceases to be
employed by the Group by reason of injury, disability, ill-health or redundancy; or because his employing company ceases to be a shareholder
of the Group; or because his employing business is being transferred out of the Group, his option may be exercised within 6 months after such
cessation. In the event of the death of a participant, the personal representatives of a participant may exercise an option, to the extent
exercisable at the date of death, within 6 months after the death of the participant.
On cessation of employment for any other reason (or when a participant serves, or has been served with, notice of termination of such
employment), the option will lapse although the Remuneration Committee has discretion to allow the exercise of the option for a period not
exceeding 6 months from the date of such cessation.
In such circumstances, the performance conditions may be modified or waived as the Remuneration Committee, acting fairly and reasonably
and taking due consideration of the circumstances, thinks fit. The number of Ordinary Shares which can be acquired on exercise will be
pro-rated on a time elapsed basis, unless the Remuneration Committee, acting fairly and reasonably and taking due consideration of the
circumstances, decides otherwise. In determining whether to exercise its discretion in these respects, the Remuneration Committee must
satisfy itself that the early exercise of an option does not constitute a reward for failure.
The probability of payout has been assigned based on the likelihood of meeting the performance criteria, which is 100%. The Directors consider
that there is some uncertainty surrounding whether the participants will all still be in situ and eligible at the vesting date. Therefore the directors
have assumed a 15% attrition rate for the share options vesting in July 2026. The attrition rate will increase by 3% per year until the vesting date.
ABG had a credit of £0.03m in relation to share based payments during 2025 (2024: £0.13m cost), as disclosed in Note 13.
Measurement inputs and assumptions used in the Black-Scholes model are as follows:
2025
2024
Expected Stock Price Volatility
27.0%
23.2%
Risk Free Interest Rate
1.1%
2.1%
Average Expected Life (in years)
0.28
0.78
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Notes to the Consolidated
Financial Statements
40. Dividends per share
The Directors recommend the payment of a final dividend of 31p (2024: 29p) per Ordinary share and Ordinary Non-Voting share. This represents
total dividends for the year of 53p (2024: 69p which also included a special dividend of 20p) per Ordinary share and Ordinary Non-Voting share.
The final dividend is not recognised at 31 December 2025. If approved by members at the forthcoming AGM, the final dividend will be paid on 29
May 2026 to shareholders on the register at close of business on 17 April 2026.
41. Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents comprises cash on hand and demand deposits, and cash
equivalents are deemed highly liquid investments that are convertible into cash with an insignificant risk of changes in value with a maturity
of three months or less at the date of acquisition.
Group
2025
£000
2024
£000
Cash and balances at central banks (Note 17)
437,548
911,887
Loans and advances to banks (Note 18)
117,497
66,971
555,045
978,858
Company
2025
£000
2024
£000
Loans and advances to banks
4,760
920
42. Related party transactions
Related parties of the Company and Group include subsidiaries, directors, Key Management Personnel, close family members of Key
Management Personnel and entities which are controlled, jointly controlled or significantly influenced, or for which significant voting power
is held, by Key Management Personnel or their close family members.
A number of banking transactions are entered into with related parties in the normal course of business on normal commercial terms.
These include loans and deposits. Directors and Key Management includes solely Executive and Non-Executive Directors.
Group - Directors and close family members
2025
£000
2024
£000
Loans
Loans outstanding at 1 January
2,783
1,450
Loans advanced during the year
241
1,540
Loan repayments during the year
(1,999)
(105)
Transfer to deposits during the year
–
(102)
Loans outstanding at 31 December
1,025
2,783
Interest income earned
74
61
The loans to directors are mainly secured on property, shares or cash and bear interest at rates linked to base rate. No provisions have been
recognised in respect of loans given to related parties (2024: £nil). During the year, Arbuthnot Latham made available facilities of £0.2m and
£0.9m. The facilities are guaranteed by Sir Henry Angest, with the £0.9m facility also supported by a charge over cash. No fees or benefits were
provided to the director in connection with these transactions.
2025
2024
Group - Directors and close family members
Highest balance
during the year
£000
Balance at
31 December
£000
Highest balance
during the year
£000
Balance at
31 December
£000
Deposits
5,741
5,630
3,901
3,887
Interest expense on deposits
130
106
Details of directors’ remuneration are given in the Remuneration Report on pages 57 and 58. The Directors do not believe that there were any
other transactions with key management or their close family members that require disclosure.
143
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Details of principal subsidiaries are given in Note 43. Transactions and balances with subsidiaries are shown below:
2025
2024
Highest balance
during the year
£000
Balance at
31 December
£000
Highest balance
during the year
£000
Balance at
31 December
£000
ASSETS
Due from subsidiary undertakings - Loans and advances to banks
9,179
4,753
6,231
913
Due from subsidiary undertakings - Debt securities at amortised cost
39,253
38,781
38,776
38,103
Shares in subsidiary undertakings
164,354
164,354
164,354
164,354
212,786
207,888
209,361
203,370
Interest income
3,755
4,180
LIABILITIES
Due to subsidiary undertakings
2,597
128
7,014
1,406
2,597
128
7,014
1,406
The disclosure of the year end balance and the highest balance during the year is considered the most meaningful information to represent the
transactions during the year. The above transactions arose during the normal course of business and are on substantially the same terms as for
comparable transactions with third parties.
The Company undertook the following transactions with other companies in the Group during the year:
2025
£000
2024
£000
Arbuthnot Latham & Co., Ltd - Recharge of property and IT costs
1,142
995
Arbuthnot Latham & Co., Ltd - Recharge for costs paid on the Company's behalf
9,720
5,279
Arbuthnot Latham & Co., Ltd - Recharge of costs paid on behalf of Arbuthnot Latham & Co., Ltd
(25)
(44)
Arbuthnot Latham & Co., Ltd - Group recharges for shared services
(9,878)
(10,058)
Arbuthnot Latham & Co., Ltd - Group recharges for liquidity
(2,047)
(1,349)
Total
(1,088)
(5,177)
43. Interests in subsidiaries
Company
Investment
at cost
£000
Impairment
provisions
£000
Net
£000
At 1 January 2025
164,354
–
164,354
At 31 December 2025
164,354
–
164,354
Company
2025
£000
2024
£000
Subsidiary undertakings:
Bank
162,814
162,814
Other
1,540
1,540
Total
164,354
164,354
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Report & Accounts 2025
Notes to the Consolidated
Financial Statements
43. Interests in subsidiaries (continued)
(a) List of subsidiaries
Arbuthnot Latham & Co., Limited is the only significant subsidiary of Arbuthnot Banking Group. Arbuthnot Latham is incorporated in the United
Kingdom, has a principal activity of Private and Commercial Banking and is 100% owned by the Group.
% shareholding
Country of
incorporation
Principal activity
Direct shareholding
Arbuthnot Fund Managers Limited
100.0%
UK
Dormant
Arbuthnot Investments Limited
100.0%
UK
Dormant
Arbuthnot Limited
100.0%
UK
Dormant
Arbuthnot Properties Limited
100.0%
UK
Dormant
Arbuthnot Unit Trust Management Limited
100.0%
UK
Dormant
Gilliat Financial Solutions Limited
100.0%
UK
Dormant
Indirect shareholding via intermediate holding companies
Arbuthnot Commercial Asset Based Lending Limited
100.0%
UK
Asset Finance
Arbuthnot Latham (Nominees) Limited
100.0%
UK
Dormant
Arbuthnot Latham Real Estate PropCo 1 Limited
100.0%
Jersey
Property Investment
Arbuthnot Securities Limited
100.0%
UK
Dormant
Arbuthnot Specialist Finance Limited
100.0%
UK
Specialist Finance
Asset Alliance Group Holdings Limited
100.0%
UK
Commercial Vehicle Financing
Asset Alliance Leasing Limited
100.0%
UK
Commercial Vehicle Financing
Asset Alliance Limited
100.0%
UK
Commercial Vehicle Financing
ATE Truck & Trailer Sales Limited
100.0%
UK
Dormant
Forest Asset Finance Limited
100.0%
UK
Commercial Vehicle Financing
Hanbury Riverside Limited
100.0%
UK
Dormant
John K Gilliat & Co., Limited
100.0%
UK
Dormant
Pinnacle Universal Limited
100.0%
UK
Property Development
Renaissance Asset Finance Limited
100.0%
UK
Asset Finance
AAG Traffic Management Limited
100.0%
UK
Dormant
The Peacocks Management Company Limited
100.0%
UK
Property Management
Valley Finance Limited
100.0%
UK
Dormant
All the subsidiaries above were 100% owned during the current and prior year and are unlisted and none are banking institutions. All entities are
included in the consolidated financial statements and have an accounting reference date of 31 December.
The Jersey entity’s registered office is 26 New Street, St Helier, Jersey, JE2 3RA. All other entities listed above have their registered office as
20 Finsbury Circus, London, EC2M 7EA.
Arbuthnot Specialist Finance Limited is exempt from the requirement to prepare audited accounts under section 479A of the Companies Act 2006.
The following entities were dissolved during the current year:
• Asset Alliance Group Finance No.2 Limited was dissolved on 25 November 2025
• Asset Alliance Finance Limited was dissolved on 9 December 2025.
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Report & Accounts 2025
(b) Non-controlling interests in subsidiaries
There were no non-controlling interests at the end of 2025 or 2024.
(c) Significant restrictions
The Group does not have significant restrictions on its ability to access or use its assets and settle its liabilities other than those resulting from
the supervisory frameworks within which banking subsidiaries operate. The supervisory frameworks require banking subsidiaries to keep
certain levels of regulatory capital and liquid assets, limit their exposure to other parts of the Group and comply with other ratios. The carrying
amounts of the banking subsidiary’s assets and liabilities are £5.0bn and £4.7bn respectively (2024: £4.7bn and £4.4bn respectively).
(d) Risks associated with interests
During the year Arbuthnot Banking Group PLC did not make capital contributions to Arbuthnot Latham & Co., Ltd.
44. Operating segments
The Group is organised into seven operating segments as disclosed below:
1) Banking – Includes Private and Commercial Banking. Private Banking – Provides traditional private banking services.
Commercial Banking – Provides bespoke commercial banking services and tailored secured lending against property investments and
other assets.
2) Wealth Management – Offering financial planning and investment management services.
3) RAF – Specialist asset finance lender mainly in high value cars but also business assets.
4) ACABL – Provides finance secured on either invoices, assets or stock of the borrower.
5) AAG – Provides vehicle finance and related services, predominantly in the truck & trailer and bus & coach markets.
6) All Other Divisions – All other smaller divisions and central costs in Arbuthnot Latham & Co., Ltd (Investment property and Central costs)
7) Group Centre – ABG Group management.
Transactions between the operating segments are on normal commercial terms. Centrally incurred expenses are charged to operating
segments on an appropriate pro-rata basis. Segment assets and liabilities comprise loans and advances to customers and customer deposits,
being the majority of the balance sheet.
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Notes to the Consolidated
Financial Statements
44. Operating segments (continued)
Year ended 31 December 2025
Banking
£000
Wealth
Management
£000
RAF
£000
ACABL
£000
AAG
£000
All Other
Divisions
£000
Group
Centre
£000
Total
£000
Interest revenue
94,002
–
23,305
19,196
6,298
104,447
3,755
251,003
Inter-segment revenue
–
–
–
–
–
–
(3,755)
(3,755)
Interest revenue from external customers
94,002
–
23,305
19,196
6,298
104,447
–
247,248
Fee and commission income
5,410
16,678
112
7,182
588
1,719
–
31,689
Revenue
–
–
–
–
118,569
–
–
118,569
Revenue from external customers
99,412
16,678
23,417
26,378
125,455
106,166
–
397,506
Interest expense
4,671
674
(7,667)
(10,276)
(13,406)
(103,122)
–
(129,126)
Cost of goods sold
–
–
–
–
(97,466)
–
–
(97,466)
Add back inter-segment revenue
–
–
–
–
–
–
3,755
3,755
Subordinated loan note interest
–
–
–
–
–
–
(3,751)
(3,751)
Fee and commission expense
(303)
(180)
(20)
–
(163)
(778)
–
(1,444)
Segment operating income
103,780
17,172
15,730
16,102
14,420
2,266
4
169,474
Impairment losses
(1,275)
–
(922)
(3)
86
(387)
–
(2,501)
Other income
–
–
–
–
–
5,536
(1,117)
4,419
Operating expenses
(73,979)
(20,185)
(7,612)
(7,241)
(16,758)
(10,598)
(10,835)
(147,208)
Segment profit / (loss) before tax
28,526
(3,013)
7,196
8,858
(2,252)
(3,183)
(11,948)
24,184
Income tax (expense) / income
–
–
(1,824)
(2,230)
503
1,432
(4,255)
(6,374)
Segment profit / (loss) after tax
28,526
(3,013)
5,372
6,628
(1,749)
(1,751)
(16,203)
17,810
Loans and advances to customers
1,355,936
–
287,079
219,362
97,454
721
(10)
1,960,542
Assets available for lease
–
–
–
–
285,327
–
–
285,327
Other assets
–
–
–
–
–
2,760,821
(8,852)
2,751,969
Segment total assets
1,355,936
–
287,079
219,362
382,781
2,761,542
(8,862) 4,997,838
Customer deposits
4,575,114
–
–
–
–
–
(4,749)
4,570,365
Other liabilities
–
–
–
–
–
149,142
1,933
151,075
Segment total liabilities
4,575,114
–
–
–
–
149,142
(2,816)
4,721,440
Other segment items:
Capital expenditure
–
–
(558)
–
(82,077)
(4,232)
–
(86,867)
Depreciation and amortisation
–
–
(26)
–
(57,714)
(6,022)
(27)
(63,789)
The “Group Centre” segment above includes the parent entity and all intercompany eliminations.
147
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Report & Accounts 2025
Year ended 31 December 2024
Banking
£000
Wealth
Management
£000
RAF
£000
ACABL
£000
AAG
£000
All Other
Divisions
£000
Group
Centre
£000
Total
£000
Interest revenue
117,660
–
19,340
25,456
5,119
95,860
4,180
267,615
Inter-segment revenue
–
–
–
–
–
–
(4,180)
(4,180)
Interest revenue from external customers
117,660
–
19,340
25,456
5,119
95,860
–
263,435
Fee and commission income
4,695
13,779
256
9,922
–
490
–
29,142
Revenue
–
–
–
–
110,832
–
–
110,832
Revenue from external customers
122,355
13,779
19,596
35,378
115,951
96,350
–
403,409
Interest expense
(20,250)
–
(6,468)
(15,413)
(15,327)
(80,105)
(7)
(137,570)
Cost of goods sold
–
–
–
–
(85,301)
–
–
(85,301)
Add back inter-segment revenue
–
–
–
–
–
–
4,180
4,180
Subordinated loan note interest
–
–
–
–
–
–
(4,178)
(4,178)
Fee and commission expense
(896)
(114)
(17)
–
(15)
13
–
(1,029)
Segment operating income
101,209
13,665
13,111
19,965
15,308
16,258
(5)
179,511
Impairment losses
(5,571)
–
(554)
(32)
(60)
(58)
–
(6,275)
Other income
–
–
–
–
88
2,473
(901)
1,660
Operating expenses
(67,515)
(18,558)
(6,981)
(7,993)
(15,308)
(12,948)
(10,503)
(139,806)
Segment profit / (loss) before tax
28,123
(4,893)
5,576
11,940
28
5,725
(11,409)
35,090
Income tax (expense) / income
–
–
(1,397)
(2,998)
(1,358)
414
(4,897)
(10,236)
Segment profit / (loss) after tax
28,123
(4,893)
4,179
8,942
(1,330)
6,139
(16,306)
24,854
Loans and advances to customers
1,539,155
–
248,790
228,195
77,051
1,035
(14)
2,094,212
Assets available for lease
–
–
–
–
285,953
–
–
285,953
Other assets
–
–
–
–
–
2,353,779
(4,717) 2,349,062
Segment total assets
1,539,155
–
248,790
228,195
363,004
2,354,814
(4,731) 4,729,227
Customer deposits
4,133,406
–
–
–
–
–
(913)
4,132,493
Other liabilities
–
–
–
–
–
326,779
2,999
329,778
Segment total liabilities
4,133,406
–
–
–
–
326,779
2,086
4,462,271
Other segment items:
Capital expenditure
–
–
–
–
–
(118,298)
(117)
(118,415)
Depreciation and amortisation
–
–
–
–
–
(57,525)
(26)
(57,551)
Segment profit is shown prior to any intra-group eliminations.
All operations of the Group are conducted wholly within the United Kingdom and geographical information is therefore not presented.
148
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Report & Accounts 2025
Notes to the Consolidated
Financial Statements
45. Country by Country Reporting
Article 89 of the EU Directive 2013/36/EU otherwise known as the Capital Requirements Directive IV (“CRD IV”) was implemented into UK
domestic legislation through statutory instrument 2013 No. 3118, the Capital Requirements (Country-by-Country Reporting) Regulations 2013
(the Regulations), which were laid before the UK Parliament on 10 December 2013 and which came into force on 1 January 2014.
Article 89 requires credit institutions and investment firms in the EU to disclose annually, specifying, by Member State and by third country in
which it has an establishment, the following information on a consolidated basis for the financial year: name, nature of activities, geographical
location, turnover, number of employees, profit or loss before tax, tax on profit or loss and public subsidies received.
31 December 2025
Location
Turnover
£m
FTE
employees
Number
Profit/(loss)
before tax
£m
Tax paid
£m
UK
169.5
890
24.2
6.4
31 December 2024
Location
Turnover
£m
FTE
employees
Number
Profit/(loss)
before tax
£m
Tax paid
£m
UK
179.5
883
35.1
10.2
No public subsidies were received during 2025 or 2024.
46. Ultimate controlling party
The Company regards Sir Henry Angest, the Group Chairman and Chief Executive Officer, who has a beneficial interest in 58.0% of the issued
Ordinary share capital of the Company, as the ultimate controlling party. Details of his remuneration are given in the Remuneration Report and
Note 42 of the consolidated financial statements includes related party transactions with Sir Henry Angest.
47. Events after the balance sheet date
There were no material post balance sheet events to report.
149
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Report & Accounts 2025
2021
£000
2022
£000
2023
£000
2024
£000
2025
£000
Profit / (loss) for the year after tax
6,786
16,458
35,379
24,854
17,810
Profit / (loss) before tax from continuing operations
4,638
20,009
47,117
35,090
24,184
Total Earnings per share
Basic (p)
45.2
109.6
222.8
152.3
109.1
Earnings per share from continuing operations
Basic (p)
45.2
109.6
222.8
152.3
109.1
Dividends per share (p) - ordinary
38.0
42.0
46.0
49.0
53.0
- special
21.0
–
–
20.0
–
Other KPI:
2021
2022
2023
2024
2025
Net asset value per share (p)
1,337.2
1,411.1
1,546.8
1,635.8
1,693.6
Five Year Summary
(unaudited)
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NOTICE IS HEREBY GIVEN that the fortieth Annual General Meeting (“Meeting”) of Arbuthnot Banking Group PLC (the Company) will be held at
Arbuthnot House, 20 Finsbury Circus, London EC2M 7EA on Tuesday, 19 May 2026 at 3 p.m. for the purpose of transacting the following business
as ordinary resolutions (as regards resolutions 1 to 9) and as special resolutions (as regards resolutions 10 and 11).
ORDINARY RESOLUTIONS
1. To receive and adopt the Annual Report and Accounts for the year ended 31 December 2025.
2. To receive the report of the Remuneration Committee.
3. To declare a final dividend in respect of the year ended 31 December 2025 which the directors propose should be 31p per Ordinary Share or
Ordinary Non-Voting Share, payable on 29 May 2026 to shareholders on the register of members at the close of business on 17 April 2026.
4. To elect Ms. C.L.B. Crosswell as a Director who, having been appointed as a Director since the last annual general meeting, offers herself for
election in accordance with Article 75 of the Articles of Association.
5. To re-elect Sir Nigel Boardman as a Director who retires by rotation in accordance with Article 78 of the Articles of Association and offers
himself for re-election.
6. To re-elect Mr. F.A.H. Angest as a Director who retires by rotation in accordance with Article 78 of the Articles of Association and offers herself
for re-election.
7. To re-elect Ms A.A. Knight as a Director who retires by rotation in accordance with Article 78 of the Articles of Association and offers herself
for re-election.
8. To re-appoint Forvis Mazars LLP as Auditor of the Company.
9. To authorise the Directors to determine the remuneration of the Auditor.
To consider and, if thought fit, pass the following resolutions which in the case of resolutions 10 and 11 will be proposed as special resolutions
and in the case of resolution 11 as an ordinary resolution:
SPECIAL RESOLUTIONS
10. That the Company be and is hereby generally and unconditionally authorised to make market purchases (as defined in section 693(4) of the
Companies Act 2006) of Ordinary Shares provided that:
(a) the maximum number of Ordinary Shares hereby authorised to be purchased shall be 1,657,000 (being approximately 10% of the number
of issued Ordinary Shares in the Company as at 25 March 2026);
(b) the minimum price (excluding expenses) which may be paid for an Ordinary Share shall be £0.01;
(c) the maximum price (excluding expenses) which may be paid for an Ordinary Share shall be 5 per cent. above the average of the closing
middle market price of the Ordinary Shares (as derived from the London Stock Exchange Daily Official List) for the ten business days prior
to the day the purchase is made;
(d) the authority hereby conferred shall expire on 19 August 2027 or, if earlier, on the conclusion of the next Annual General Meeting of the
Company unless such authority is renewed prior to such time; and
(e) the Company may enter into contracts to purchase Ordinary Shares under the authority hereby conferred prior to the expiry of such
authority, which contracts will or may be executed wholly or partly after the expiry of such authority, and may make purchases of
Ordinary Shares pursuant to any such contracts.
11. That the Company be and is hereby generally and unconditionally authorised to make market purchases (as defined in section 693(4) of the
Companies Act 2006) of Ordinary Non-Voting Shares provided that:
(a) the maximum number of Ordinary Non-Voting Shares hereby authorised to be purchased shall be 15,200 (being approximately 10% of the
number of issued Ordinary Non-Voting Shares in the Company as at 25 March 2026);
(b) the minimum price (excluding expenses) which may be paid for an Ordinary Non-Voting Share shall be £0.01;
(c) the maximum price (excluding expenses) which may be paid for an Ordinary Non-Voting Share shall be 5 per cent. above the average of
the closing middle market price of the Ordinary Non-Voting Shares (as derived from the share information published by the AQSE Growth
Market) for the ten business days prior to the day the purchase is made;
(d) the authority hereby conferred shall expire on 19 August 2027 or, if earlier, on the conclusion of the next Annual General Meeting of the
Company unless such authority is renewed prior to such time; and
(e) the Company may enter into contracts to purchase Ordinary Non-Voting Shares under the authority hereby conferred prior to the expiry
of such authority, which contracts will or may be executed wholly or partly after the expiry of such authority, and may make purchases of
Ordinary Non-Voting Shares pursuant to any such contracts.
By order of the Board
N.D. Jennings
Secretary
25 March 2026
Registered Office
Arbuthnot House
20 Finsbury Circus
London
EC2M 7EA
Notice of
Annual General Meeting
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NOTES:
1. You may vote your shares by proxy. To be effective this must be submitted on Investor Centre app or website at https://uk.investorcentre.
mpms.mufg.com/ so as to have been received by the Company’s registrars, MUFG Corporate Markets, not less than 48 hours (excluding
weekends and public holidays) before the time appointed for the meeting or any adjournment of it. Investor Centre is a free app for
smartphone and tablet provided by MUFG Corporate Markets (the company’s registrar). It allows you to securely manage and monitor your
shareholdings in real time, take part in online voting, keep your details up to date, access a range of information including payment history
and much more. The app is available to download on both the Apple App Store and Google Play, or by scanning the relevant QR code below.
2. We recommend that Ordinary shareholders appoint the Chairman of the meeting as proxy. This will ensure that your vote will be counted if
you are unable to attend the meeting in person.
3. Any power of attorney or other authority under which the proxy is submitted must be returned to MUFG Corporate Markets, PXS1, Central
Square, 29 Wellington Street, Leeds, LS1 4DL.
4. The Company is no longer sending paper forms of proxy to shareholders unless specifically asked to do so. If you need help with voting
online, or require a paper proxy form, please contact MUFG Corporate Markets by email at shareholderenquiries@cm.mpms.mufg.com,
or by telephone on 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. They are open between 9 a.m. and 5 p.m. Monday to Friday excluding public
holidays in England and Wales. Submission of a Proxy vote shall not preclude a member from attending and voting in person at the meeting
in respect of which the proxy is appointed or at any adjournment thereof.
5. If a paper form of proxy is requested from the Registrar, it should be completed and returned to MUFG Corporate Markets at the address
above to be received not less than 48 hours before the time of the meeting.
6. In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, the Company gives notice that only those shareholders
entered on the relevant register of members (the Register) for certificated or uncertificated shares of the Company (as the case may be)
at close of business on 15 May 2026 (“the Specified Time”) will be entitled to attend or vote at the Meeting in respect of the number of shares
registered in their name at that time. Changes to entries on the Register after the Specified Time will be disregarded in determining the
rights of any person to attend or vote at the Meeting. Should the Meeting be adjourned to a time not more than 48 hours after the Specified
Time, that time will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purpose of
determining the number of votes they may cast) at the adjourned Meeting. Should the Meeting be adjourned for a longer period, then
to be so entitled, members must be entered on the Register at the time which is 48 hours before the time fixed for the adjourned Meeting,
or, if the Company gives notice of the adjourned Meeting, at the time specified in the notice.
7. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting
and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST personal members or other CREST
sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or
voting service provider(s), who will be able to take the appropriate action on their behalf.
8. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a CREST Proxy
Instruction) must be properly authenticated in accordance with Euroclear UK & International Limited’s specifications and must contain the
information required for such instruction, as described in the CREST Manual (available via www.euroclear.com). The message, regardless of
whether it constitutes the appointment of a proxy, or is an amendment to the instruction given to a previously appointed proxy must, in order
to be valid, be transmitted so as to be received by the Company’s registrars (ID: RA10) by 3p.m. on 15 May 2026. For this purpose, the time of
receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the
issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of
instructions to proxies appointed through CREST should be communicated to the appointee through other means.
Apple App Store
Google Play
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Notice of
Annual General Meeting
9. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & International Limited
does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in
relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a
CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in
particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings (www.euroclear.com).
10. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001 (as amended).
11. Unless otherwise indicated on the Form of Proxy, CREST voting, Proxymity or any other electronic voting channel instruction, the proxy will
vote as they think fit or, at their discretion, withhold from voting.
12. Institutional investors may also be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by
the Company and approved by the registrar. Further information regarding Proxymity can be found at www.proxymity.io. Your proxy must be
lodged by 3 p.m. on 15 May 2026 in order to be considered valid or, if the meeting is adjourned, by the time which is 48 hours before the time
of the adjourned meeting. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and
conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your
proxy. An electronic proxy appointment via the Proxymity platform may be revoked completely by sending an authenticated message via the
platform instructing the removal of your proxy vote.
13. A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a
member provided that no more than one corporate representative exercises power over the same share.
14. At 25 March 2026 (being the latest practicable date prior to the publication of this Notice and excluding shares held in Treasury) the Company’s
issued Ordinary share capital consists of 16,186,345 Ordinary Shares carrying one vote each. Therefore, the total voting rights in the Company
as at 25 March 2026 are 16,186,345.
15. There are no service contracts of Directors other than ones which may be terminated on up to 12 months’ notice at any time. Copies of these
service agreements will be available for inspection at the registered office during usual business hours on any weekday (Saturdays, Sundays
and public holidays excepted) from the date of this notice until the date of the Meeting and at the place of the Meeting for 15 minutes prior to
and during the Meeting.
16. Any electronic address provided either in this Notice or in any related documents may not be used to communicate with the Company for any
purposes other than those expressly stated.
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Report & Accounts 2025
Group Address and Registered Office
Arbuthnot Banking Group PLC
Arbuthnot House
20 Finsbury Circus
London EC2M 7EA
T 020 7012 2400
E info@arbuthnotgroup.co.uk
www.arbuthnotgroup.com
Corporate Contacts
London
Arbuthnot Latham & Co., Limited
Arbuthnot House
20 Finsbury Circus
London EC2M 7EA
T 020 7012 2500
E banking@arbuthnot.co.uk
www.arbuthnotlatham.co.uk
Bristol
St Catherine’s Court
3rd Floor
Berkeley Place
Clifton
Bristol BS8 1BQ
T 0117 440 9333
Exeter
The Senate
Ground Floor
Southernhay Gardens
Exeter
Devon EX1 1UG
T 01392 496061
Manchester
8th Floor
82 King Street
Manchester M2 4WQ
T 0161 413 0030
Arbuthnot Commercial Asset Based Lending Limited
The Beehive
City Place
Gatwick RH6 0PA
E abl@arbuthnot.co.uk
Asset Alliance Group Holdings Limited
Edwin House
Boundary Industrial Estate
Stafford Road
Wolverhampton WV10 7EL
T 01902 625330
E enquiries@assetalliancegroup.co.uk
www.assetalliancegroup.co.uk
Renaissance Asset Finance Limited
3rd Floor
Phoenix Place
Christopher Martin Road
Basildon
Essex SS14 3GQ
T 01268 269500
E info@renaissanceaf.com
www.renaissanceaf.com
Advisers
Auditor
Forvis Mazars LLP
Principal Bankers
Barclays Bank PLC
Lloyds Bank PLC
National Westminster Bank PLC
Stockbroker
Shore Capital Stockbrokers Limited
Nominated Adviser and AQSE Corporate Adviser
Grant Thornton UK LLP
Registrars
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds
Yorkshire LS1 4DL
Corporate Contacts
and Advisers
Arbuthnot Banking Group PLC
Arbuthnot House
20 Finsbury Circus
London EC2M 7EA
T 020 7012 2400
E info@arbuthnotgroup.co.uk
www.arbuthnotgroup.com
Registration No. 1954085