ARBB.L WACC - Weighted Average Cost of Capital
The WACC of Arbuthnot Banking Group PLC (ARBB.L) is 6.5%.
| Range | Selected | |
| Cost of equity | 6.9% - 9.4% | 8.15% |
| Tax rate | 22.2% - 26.6% | 24.4% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.8% - 7.2% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.49 | 0.63 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.9% | 9.4% |
| Tax rate | 22.2% | 26.6% |
| Debt/Equity ratio | 0.61 | 0.61 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.8% | 7.2% |
| Selected WACC | 6.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ARBB.L | Arbuthnot Banking Group PLC | 0.61 | 0.23 | 0.16 |
| BST.MI | Banca Sistema SpA | 29.53 | 1.11 | 0.05 |
| KOMP.OL | Komplett Bank ASA | 0.08 | 1.88 | 1.77 |
| LASP.CO | Laan & Spar Bank A/S | 0.4 | 0.18 | 0.14 |
| MIL.WA | Bank Millennium SA | 0.43 | 1.41 | 1.07 |
| PARB.OL | Pareto Bank ASA | 1.26 | 0.47 | 0.24 |
| SAB1L.VS | Siauliu Bankas AB | 0.82 | 1.35 | 0.83 |
| SPKSJF.CO | Sparekassen Sjaelland-Fyn A/S | 0.22 | 0.19 | 0.16 |
| SPOG.OL | Sparebanken Ost | 14.95 | 0.5 | 0.04 |
| TFBANK.ST | TF Bank AB | 0.02 | 0.4 | 0.4 |
| Low | High | |
| Unlevered beta | 0.16 | 0.3 |
| Relevered beta | 0.24 | 0.45 |
| Adjusted relevered beta | 0.49 | 0.63 |
ARBB.L's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for ARBB.L:
cost_of_equity (8.15%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.49) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.