Arbuthnot Latham, the private banking arm of UK-listed Arbuthnot Banking Group, logged a rise in pre-tax profits in 2012, rising to £2.1 million ($3.18 million) from £2.0 million in 2011.

Arbuthnot Latham, the private banking arm of UK-listed Arbuthnot Banking Group, logged a rise in pre-tax profits in 2012, rising to £2.1 million ($3.18 million) from £2.0 million in 2011, it said today.

“Arbuthnot Latham maintained the momentum it has developed in its lending business.  Despite being cautious and selective in its underwriting process, the bank grew its lending balances by £51.1 million to £289.3 million, a 21 per cent growth over 2011. Credit losses remained below 1 per cent of the asset book,” it said in a statement.

The parent firm, Arbuthnot Banking Group, said it made a profit before tax of £12.6 million (2011: £5.1 million) for the year ended 31 December 2012. “This result reflects the good progress being made across the whole group. A milestone has been achieved in that the group exceeded total assets of £1 billion for the first time,” it said.

At the private bank, which funds itself entirely from retail deposits, customer deposit balances grew from £421.7 million to £495.7 million, a 17 per cent year-on-year increase. As a result, the loan-to-deposit ratio was 59 per cent (2011: 57 per cent) at the year-end.

Arbuthnot Latham said much of the bank’s deposit raising activity took place in the first half of the year when the retail market was at its most competitive. After the UK government announced the Funding for Lending Scheme in the third quarter of last year, retail deposit rates began to fall.  This resulted in a compression of margins in the business, which Arbuthnot Latham expects to reverse as a number of its deposits begin to mature.

Henry Angest, chairman of the banking group, called for policymakers to ensure that relatively small banks such as Arbuthnot could compete on an even basis with bulge-bracket firms, singling out the plethora of regulations being unveiled for criticism.

“The UK has 234 banks, not including the building societies and overseas banks. It is obvious that we do not require more banks, what we really need is an environment in which banks can compete on level terms. Much of the imbalance preventing competition is caused by the restrictive regulatory environment in which small banks are forced to operate,” Angest said.

“I have also argued in the past that we do not need more banking regulations but what is required is a more judgemental regulatory regime. Regulations have become blunt instruments applied to all banks alike and usually 'gold plated' for good measure, mostly to the detriment of small banks,” he said.