Arbuthnot Banking Group profit surges on higher lending

By Aashika Jain

(Reuters) - Arbuthnot Banking Group's (ARBB.L) full-year profit jumped 43 percent after the British company's lending to customers rose to a record high of 1.1 billion pounds ($1.6 billion).

The group comprises private banking business Arbuthnot Latham & Co Limited and retail banking arm Secure Trust Bank (STBS.L). It is one of the smaller players among lenders trying to break the dominance of the "Big Five" in British banking.

Arbuthnot said a reduction in overall lending to small and medium businesses was creating space for more challenger banks to expand.

Britain's newest and most powerful financial regulator has pledged to introduce meaningful change this year to help new banks claim market share from the five leading players.

"Our focus is on identifying areas where we believe where we have strong core competencies and have key points of differentiation that enable us not to have to compete on head-to-head with the big banks," Arbuthnot Banking Group's COO Andrew Salmon said.

Arbuthnot, which has its roots in the 181-year-old private bank and wealth manager Arbuthnot Latham, reported a rise in net interest income to 98 million pounds in 2014 from 73 million pounds earlier.

Pretax profit increased to 22.5 million pounds from 15.7 million pounds.

The bank said it would pay a total dividend of 27 pence compared with 44 pence, which included an 18 pence special dividend a year earlier.

The stock was trading 3 percent down on slim volumes at 1398 pence at 1235 GMT.

(Reporting by Aashika Jain in Bengaluru; Editing by Anupama Dwivedi and Keith Weir)