RNS Number : 1877N

Secure Trust Bank PLC

19 January 2023


Secure Trust Bank PLC


19 January 2023

For embargoed release at 07.00 am


Pre Close Trading Update

Strong progress towards strategic goals

Secure Trust Bank PLC ("Secure Trust Bank", "STB" or the "Group"), a leading specialist lender, is pleased to announce its pre close trading update for the fourth quarter ended 31 December 2022.

The Group continues to trade in line with management expectations, with a significant increase in continuing profit before tax and impairments as the cost income ratio improved markedly and net interest margin was in line with H1 2022. Net lending continued to grow in Q4 2022, albeit with management taking prudent action to manage a lower rate of lending growth, proactively tightening credit criteria to reflect macroeconomic uncertainty and manage the overall risk profile of the lending book. At year-end, arrears in Retail Finance remained below pre-pandemic levels at historical lows, and arrears in Vehicle Finance were in line with pre-pandemic levels.


                          Q4 '22         Q4 '21         Change   Q3 '22        Change 
 Net Lending - 
  Core*                   GBP2,919.6m    GBP2,451.0m    19.1%    GBP2,813.4m   3.8% 
                         -------------  -------------  -------  ------------  ------- 
 New Business Lending*    GBP444.6m      GBP470.2m      -5.4%    GBP502.1m     -11.4% 
                         -------------  -------------  -------  ------------  ------- 
 Deposits                 GBP2,514.6m    GBP2,103.2m    19.6%    GBP2,349.2m   7.0% 
                         -------------  -------------  -------  ------------  ------- 

Net lending - Core*

The Core net loan book grew by 19.1% compared to Q4 2021 and by 3.8% compared to Q3 2022. Year-on-year growth remained particularly strong in Consumer finance. Business finance growth was more modest. The Real Estate Finance loan book grew marginally, having been impacted by the sharp increase in interest rates. Loan to value is below 60% across the Real Estate Finance loan book.

New Business Lending*

Total new business lending remained healthy year-on-year with market share gains across our Consumer businesses reflecting a recovery from COVID and continued investment in our highly rated customer experience. Given the current macroeconomic environment, the Group took a proactive approach to tighten credit criteria, as reflected in the reduction of new business lending by 11.4% compared to Q3 2022.


Customer deposits were 7.0% higher at the end of the quarter compared to Q3 2022 to support the growth in the loan book. The Group continues to focus on the management of funding costs in a rising rate environment and preservation of net interest margin (NIM). NIM for H2 2022 was in line with the 5.7% for H1 2022.

Tier 2 bond refinancing

The Group has two Tier 2 bonds of GBP25m each, with maturities of July and October 2028 respectively. Both bonds have call options after five years, in July and October 2023 respectively. The Group now has initial regulatory approval to redeem the bonds at its discretion. Beyond the call date, the bonds automatically roll, the coupons on the two bonds will reset to margins of 5.7% and 5.6% over UK 5-year gilts, and the bonds' regulatory capital eligibility will reduce on a straight-line basis to final maturity.

The Group's annual results announcement for the year ended 31 December 2022 is scheduled for 30 March 2023.

David McCreadie, Chief Executive Officer, said:

"We delivered a strong performance in 2022 including a significant increase in continuing profit before tax and impairments. We have benefitted from delivering several cost initiatives and the actions taken to simplify the Group and saw a material improvement in our cost income ratio.

We continued to see our loan book grow during the second half of the year, with Core net lending in Q4 up 19.1% on the prior year, demonstrating our capability to capture the significant growth opportunities across our diversified specialist lending businesses.

I would like to thank all my colleagues for continuing to help our customers fulfil their ambitions in 2022. We will continue to manage our risk exposures appropriately during this period of uncertainty and remain confident in delivering our growth ambitions and medium-term targets."

*Following the simplification of our lending activities, 'Core' excludes the Asset Finance and Consumer Mortgages loan books which were disposed of in July 2021 and the Debt Managers' loan portfolio disposed of in May 2022.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018.


Secure Trust Bank PLC

David McCreadie, Chief Executive Officer

Rachel Lawrence, Chief Financial Officer

Phil Clark, Investor Relations

Tel: 0121 693 9100

Stifel Nicolaus Europe Limited (Joint Broker)

Robin Mann

Stewart Wallace

Tel: 020 7710 7600

Canaccord Genuity Limited (Joint Broker)

Emma Gabriel Tel: 020 7523 8309

Forward looking statements

This document contains forward looking statements about the business, strategy and plans of STB and its current objectives, targets and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about STB's or management's beliefs and expectations, are forward looking statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. STB's actual future results may differ materially from the results expressed or implied in these forward looking statements as a result of a variety of factors. These include UK domestic and global economic and business conditions, risks concerning borrower credit quality, market related risks including interest rate risk, inherent risks regarding market conditions and similar contingencies outside STB's control, the COVID--19 pandemic, expected credit losses in certain scenarios involving forward looking data, any adverse experience in inherent operational risks, any unexpected developments in regulation or regulatory, and other factors. The forward looking statements contained in this document are made as of the date of this document, and (except as required by law or regulation) STB undertakes no obligation to update any of its forward looking statements.

About the Company:

Secure Trust Bank is an established, well--funded and capitalised UK retail bank with a 70--year trading track record. Secure Trust Bank operates principally from its head office in Solihull, West Midlands, and had 833 employees (full-- time equivalent) as at 31 December 2022. The Group's diversified lending portfolio currently focuses on two sectors:

(i) Business finance through its Real Estate Finance and Commercial Finance divisions, and

   (ii)           Consumer finance through its Vehicle Finance and Retail Finance divisions. 

Secure Trust Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Secure Trust Bank PLC, One Arleston Way, Solihull, B90 4LH.

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January 19, 2023 02:00 ET (07:00 GMT)

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