Client Assets climb

Arbuthnot Banking Group's third-quarter trading update, published on 22 October 2026, put funds under management and administration at £3.1bn at 30 September, up 21% from £2.5bn a year earlier. Much of the attention on the statement went to the board's raised profit outlook, but the Wealth figures point to a shift in the mix of the group's Earnings that is easy to overlook in a Business usually analysed as a deposit-funded lender.

About the group

Arbuthnot Banking Group is a private and commercial banking group. Its principal subsidiary, Arbuthnot Latham, serves private clients and businesses, and the group also operates specialist lending businesses, including Arbuthnot Commercial Asset Based Lending and Renaissance Asset Finance, as well as a Wealth Management and planning operation. Like many smaller UK banks, it funds its lending mainly through customer deposits, which stood at £4.9bn at 30 September.

Analysts usually follow banks of this type through net interest margin, Loan growth and Credit quality. The wealth figures in the third-quarter update add a second lens, because fee-earning assets can steady income when interest rates move.

What drove the growth

Funds under management and administration rose 15% during 2026 to date, helped by new money and Investment performance. Gross inflows were £458m, equivalent to annualised growth of 23%. The wealth planning arm, which earns fees and commission for advising clients, generated about two-thirds of this year's inflows.

The same report said the wealth management business returned to a net profit in the quarter. That is significant because wealth income is largely fee-based, giving the group a Revenue stream that is less directly tied to the level of interest rates than its banking margin.

The wider group

Arbuthnot (LSE:ARBB) is a private and commercial banking group whose main Subsidiary is Arbuthnot Latham, alongside specialist lending businesses. Customer loans and leased assets rose 12% year on year to £2.5bn at the end of September, while customer deposits increased 10% to £4.9bn. The specialist subsidiaries grew by a combined 26% over 12 months, with LSE:ARBB Commercial Asset Based Lending and Renaissance Asset Finance each expanding by more than 40%. ACABL's loan book reached £305.6m, up 39% since the start of the year after a small decline in 2025, with new clients accounting for 82% of the growth and more deals backed by private Capital sponsors. Deposits of £4.9bn comfortably exceed customer loans, suggesting funding is not constraining lending growth.

The board said it now expected 2026 profit before tax to be ahead of prior expectations, citing loan growth, continued momentum in wealth management and Base Rate stability across 2026 so far. It did not provide a numerical profit figure.

How to read the contribution

The update did not disclose revenue or profit by division, so the precise share of group earnings coming from wealth management cannot be calculated from the third-quarter material alone. What can be said is that the business has moved from a loss-making position back into profit, that its asset base is growing faster than the loan book, and that fee income from advice is leading inflows. Over time, a larger fee-earning base would reduce the group's sensitivity to Interest Rate cuts, a theme that has featured heavily in analysis of deposit-rich lenders.

For context, Brooks Macdonald reported broadly flat funds of £21.8bn at 30 September, while Rathbones reported a 10.7% annual rise to £120.7bn at 30 June. LSE:ARBB's base is far smaller, which makes percentage growth easier to achieve.

Why fee income changes the earnings profile

Net interest income depends on the gap between what a bank earns on loans and pays on deposits, and that gap moves with the Bank Rate. Fee income from advice and asset management moves instead with the value of client assets and the Volume of new money. A group that earns both is exposed to two different sets of economic conditions, which can reduce the swings in total profit.

Funds under management and administration of £3.1bn are small beside the £4.9bn deposit base, so wealth management remains a minor contributor by scale. The growth rate is nonetheless notable: 21% over twelve months, with gross inflows of £458m, equal to annualised growth of 23%. If that pace were sustained, the wealth business would become a larger share of the group over time, though the company has not provided a target.

The lending side in more detail

Customer loans and leased assets of £2.5bn grew 12%, slower than the 26% combined growth of the specialist subsidiaries, which means the specialist businesses are taking a larger share of the loan book. ACABL's loan book of £305.6m, up 39% since the start of the year, was driven by new clients, who accounted for 82% of that growth. A loan book with a high proportion of new clients is typically less seasoned, so the quality of Underwriting and the pattern of repayments become important markers as the book matures.

The deposit figure of £4.9bn against £2.5bn of loans means the group holds substantially more in customer funds than it lends out. That gives it flexibility to expand lending without needing wholesale funding, though it also means that part of the Balance Sheet earns lower returns until deployed.

What the raised outlook does and does not say

The board's statement that 2026 profit before tax would be ahead of prior expectations is directional rather than numerical. It cites three drivers: loan growth, momentum in wealth management and base rate stability. The mention of base rate stability is a reminder that the group's income remains sensitive to monetary policy, and that a shift in rates could alter the balance. Without divisional profit data, the extent to which each driver contributed cannot be measured, which is why the final results, with their segmental breakdown, will carry the most information.

Risks and next steps

Wealth assets are exposed to market falls, which would reduce fee income regardless of client inflows. Returning to profit after a period of losses also leaves little track record to judge sustainability, and continued investment in advisers and systems could weigh on margins. On the banking side, rapid growth in asset-based and asset finance lending raises the importance of credit discipline if economic conditions weaken.

The next scheduled disclosure is the audited final results for 2026, which the group published in late March this year for 2025. Those results should provide the divisional breakdown needed to measure how much wealth management now adds to group profit.