REG - Secure Trust BankPLC - Trading Update

Secure Trust BankAnnouncement

01/11/2024 07:00

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RNS Number : 5077K  Secure Trust Bank PLC  01 November 2024

PRESS RELEASE

Secure Trust Bank PLC

LEI: 213800CXIBLC2TMIGI76

1 November 2024

For immediate release

SECURE TRUST BANK PLC

 

Trading Update

 

Secure Trust Bank PLC ("STB" or the "Group"), a leading specialist lender,
announces a trading update for the financial year ending 31 December 2024
(FY24) and details for the third quarter ended 30 September 2024 (Q3).

 

The Group delivered further growth in new business volumes in Q3, and
year-on-year growth in net lending balances, with the net loan book growing by
0.5% in the quarter and continuing the journey to our £4 billion target.
 Following changes to our organisation design, the Group remains on track to
deliver £5m of Project Fusion savings by the end of the year and a further
£3m of cost savings in 2025, bringing total annualised cost savings to £8m
by the end of next year, as previously communicated.

 

As indicated in the Group's interim results announcement on 14 August 2024,
the pausing of collections activity following the FCA's Borrowers in Financial
Difficulty ('BIFD') review led to a higher volume of Vehicle Finance loans
reaching default status. The Group has restored collections activity to normal
levels and early arrears in Vehicle Finance are at the lowest level for three
years.

 

Activities are in progress to recover value from the excess level of defaulted
balances in this financial year, although the timing of doing so is uncertain
and taking longer than we expected, meaning some value recovery is now likely
to extend into 2025.

 

As a result, the Board now expects the Group's underlying, continuing profit
before tax for FY24 to fall materially below market expectations by between
£10m and £15m. The reduced level of profit before tax is due to the
performance of the Vehicle Finance business. The Group's other businesses are
performing in line with management's expectations.

 

Q3 Trading Update

 

              Q3'24      Q2'24      Change  Q3'23      Change

£'m
£'m
£'m
 Net lending  £3,439.2   £3,421.6   0.5%    £3,212.2   7.1%
 Deposits     £3,141.4   £3,042.7   3.2%    £2,717.1   15.6%

 

Net lending

The net loan book grew by 0.5% in the quarter and 7.1% compared to Q3 2023.
Commercial Finance net lending grew by 3.1% in the quarter, despite evidence
of some clients divesting ahead of the Government's October budget. Vehicle
Finance balances increased by 7.5% in the quarter and passed £0.5 billion for
the first time. Net lending in Retail Finance and Real Estate Finance were
marginally lower in the quarter.

 

Despite continued macro-economic uncertainties, new business lending of £577
million in the quarter was at its highest for the year and broadly in line
with Q3 2023.

 

Deposits

Customer deposits grew by 3.2% in the quarter to support our lending
objectives and were 15.6% higher than compared to Q3 2023. The Group made
further early repayments of TFSME funding (the Bank of England's Term Funding
Scheme with additional incentives for SMEs) ahead of contractual maturity.
Total early repayments to the end of Q3 totalled £105m, c27% of initial
drawings. A further early repayment of £15m of TFSME funding was made in
October 2024.

 

Legal and Regulatory Matters

Following the recent Court of Appeal's decisions, the Group paused new
consumer lending in Vehicle Finance to consider the implications of the ruling
and we are now commencing new business once again.

 

David McCreadie, Chief Executive Officer, said:

"The Group has continued to grow net lending in the quarter, albeit at a lower
rate in what remained a challenging economic environment. We continued to
manage lending growth prudently within our prudent risk management parameters.

The implementation of the organisation design changes required to complete
delivery of the initial £5m of Project Fusion cost savings by the end of this
year continued. As a result, we are on track to deliver an additional £3m of
cost savings in 2025.

We are disappointed that it will take longer than expected to recover value
from the excess level of defaulted Vehicle Finance balances, and the recent
Court of Appeal decisions have added additional uncertainty on the benefits to
be realised in 2024.

Notwithstanding the near-term impacts of the excess defaults in Vehicle
Finance, we have seen arrears in Vehicle Finance fall to the lowest level
since 2021, have continued to grow total net lending, continued to optimise
our cost base, made good progress on early repayments of TFSME funding, and
see continued growth opportunities ahead of us."

 

Enquiries:

Secure Trust Bank PLC

David McCreadie, Chief Executive Officer

Rachel Lawrence, Chief Financial Officer

Phil Clark, Investor Relations

Tel: 0121 693 9100

 

Investec Bank plc (Joint Broker)

Chris Baird

David Anderson

Maria Gomez de Olea

Tel: +44 (0)20 7597 5970

 

Shore Capital Stockbrokers (Joint Broker)

Mark Percy (Corporate Advisory)

Guy Wiehahn (Corporate Broking)

Tel: +44 (0)20 7408 4090

 

Camarco

Ed Gascoigne-Pees, Geoffrey Pelham-Lane, Sean Palmer

securetrustbank@camarco.co.uk (mailto:securetrustbank@camarco.co.uk)

Tel: 07591 760844

 

This announcement contains inside information. The person responsible for the
release of this announcement on behalf of STB is Lisa Daniels, Company
Secretary.

 

Forward looking statements

This announcement 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 economic and business conditions, risks from failure of clients,
customers and counterparties, market related risks including interest rate
risk, risks regarding market conditions outside STB's control, expected credit
losses in certain scenarios involving forward looking data, operational risks,
legal, regulatory, or governmental developments, and other factors. The
forward-looking statements contained in this announcement are made as of the
date of this announcement, and (except as required by law or regulation) STB
undertakes no obligation to update any of its forward-looking statements.

 

About STB

Secure Trust Bank is an established, well‐funded and capitalised UK retail
bank with over 70‐years of trading history. Secure Trust Bank operates
principally from its head office in Solihull, West Midlands, and has 897
employees (full‐time equivalent) as at 30 September 2024. 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, Yorke House, Arleston Way, Solihull, B90 4LH.

 

 

 

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