REG - Secure Trust BankPLC - FY2025 Trading Update and Sale of Vehicle Finance

Secure Trust BankAnnouncement

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RNS Number : 7820R  Secure Trust Bank PLC  05 February 2026

PRESS RELEASE

Secure Trust Bank PLC

5 February 2026

For immediate release

 

 

SECURE TRUST BANK PLC

FY 2025 trading update

and

Update on sale of Consumer Vehicle Finance business

 

Highlights

 * Adjusted profit before tax in line with consensus(1) of £51.1 million,
representing an increase of over 30% year-on-year

 * Total net lending increased to £3.7 billion(2) in Q4 with 8.1% growth across
continuing(3) businesses

 * CET1 ratio of 12.9%(2) representing 60 bps capital accretion in the year

 * Sale of Consumer Vehicle Finance business(4) progressing; expecting to
generate net gain on sale of £9.0 million(5) and further improves pro forma
2025 CET1 ratio by 180bps to 14.7%(6)

 * Full year results and investor update on strategy and new medium-term targets
on 12 March 2026

Secure Trust Bank PLC ("STB" or the "Group"), a leading specialist lender,
announces a trading update for the financial year ended 31 December 2025, and
an update on the sale of the Consumer Vehicle Finance business(4) (the
"Sale"). Financial information relating to FY 2025 and FY 2026 is unaudited.

Business Performance

The Group delivered adjusted profit before tax in line with consensus of
£51.1 million(1).

                              Q4 2025  Q3 2025  QoQ % Change  Q4 2024  YoY % Change

                              £m(2)    £m(2)                  £m
 Net lending - continuing(3)  £3,296   £3,202   2.9%          £3,050   8.1%
 Net lending - discontinued   £391     £469     -16.6%        £558     -29.9%
 Total net lending            £3,687   £3,671   0.4%          £3,609   2.2%
 Deposits                     £3,510   £3,449   1.8%          £3,245   8.2%

 

Net lending

The continuing loan book grew 2.9% in the quarter, up 8.1% compared to Q4
2024. This increase was driven by strong growth in Retail Finance in the year
at 8.0%, and Real Estate Finance at 9.4%. Commercial Finance saw continued
momentum in net lending, with a 3.2% increase compared to year-end 2024, and
record levels of new business within the year.

The discontinued Vehicle Finance loan book decreased by 16.6% in the quarter
and 29.9% year-on-year, as the book continues to run-down following the
decision to exit the business, announced in July 2025.

Deposits

Customer deposits were 8.2% higher year-on-year to support growth in the
lending book, and remained stable compared to the half-year position, with the
run-down of the Vehicle Finance portfolio reducing the overall need for
increased funding in the second half of the year.

Capital

The Group was capital accretive in the year, increasing its CET1 ratio from
12.3% to 12.9%. This reflects a 1.0% reduction in risk weighted assets
("RWAs"), which at year-end stood at £2,827.5 million, retained earnings for
the year and an expected final dividend (subject to Board recommendation and
shareholder approval).  The CET1 ratio includes a £21 million total
provision for motor finance redress and costs based on the FCA consultation
proposals and expected final outcomes, as announced on 20 October 2025.

Sale of Vehicle Finance business

On 24 December 2025 STB announced the sale of its Consumer Vehicle Finance
business(4) to funds managed by LCM Partners, following the previous decision
announced on 2 July 2025 to exit Vehicle Finance, to focus on higher returning
continuing businesses and improve Return on Average Equity ("ROAE") over time.
The estimated consideration for the Sale remains at £458.6 million(7), with
an expected net gain on sale of £9.0 million(5), after accounting for
applicable transaction costs and accounting adjustments. On completion,
expected in Q1 2026, the reduction in RWAs associated with the loan portfolio
will significantly improve the Group's capital ratios. On a pro forma basis,
reflecting the Sale, STB's CET1 ratio as at 31 December 2025 would increase by
180bps to 14.7%(6).

The Group will remain responsible for administering, and retains liability
for, payments due to customers under the motor finance redress scheme (when
finalised) for any relevant loans in the Sale portfolio that meet the criteria
for redress.

The completion of the Sale will unlock capital to reinvest into higher
returning continuing businesses, increase market penetration to support
long‐ term growth ambitions, and to consider further shareholder
distributions.

The Group will undertake servicing of the loan portfolio on behalf of the
purchaser post completion until a target migration date of 30 May 2026.  The
Group will continue to incur operational costs to undertake this service and
will receive fee income from the purchaser at a commercial rate until
migration is completed.

The Vehicle Finance business will be treated as a discontinued activity in the
FY 2025 Annual Report and Accounts.

Further information on the details of the Sale can be found in the Appendix to
this announcement.

Notice of Results and Investor Update

The Company will announce its results for the year ended 31 December 2025
together with an update on the Group's strategic plans, including its capital
allocation strategy, and updated medium‐term targets, on 12 March 2026.

CEO Ian Corfield said:

"I am delighted with our 2025 strategic progress, and the strong financial
performance of the Group. We have made the right decisions to reposition the
Group for growth and higher returns, enabling us to deliver value to customers
and shareholders. I look forward to expanding further on our full year trading
performance, updated strategic ambitions and medium-term targets in March."

 

 

 

 

Footnotes:

1. Consensus comprises the average of analyst financial forecasts published by
Shore Capital, Investec and Progressive Research as updated in October 2025.
 

2. Q3 and Q4 2025 figures are unaudited.

3. The continuing Group includes Retail Finance, Real Estate Finance,
Commercial Finance and central operations.

4. The Consumer Vehicle Finance business includes the debt portfolio of hire
purchase and personal contract purchase loans, and certain other associated
assets, including the Moneyway brand and customer related intellectual
property.

5. The expected net gain on sale comprises:

 

                                                                                        £'m
 Gross gain on sale (adjusted consideration less portfolio net lending balance)  16.8
 Transaction costs                                                               (1.7)
 Onerous contracts                                                               (1.1)
 Accelerated amortisation of intangible assets                                   (0.3)
 Macro hedge accounting amortisation adjustments                                 (3.9)
 Migration costs                                                                 (0.8)
 Net gain on sale                                                                9.0

 

Transaction costs of £0.6 million will be recognised in the FY 2025 Income
Statement, and macro hedge accounting amortisation adjustments are expected to
be recognised in the Income Statement over the financial years 2026 to 2028.
The remaining net gain on sale will be recognised in Q1 2026.  Onerous
contracts cost is in addition to amounts recognised in the FY 2025 accounts.

6. The revised pro forma CET1 ratio at 31 December 2025 reflects 1) the
Consumer Vehicle Finance portfolio had credit RWAs of £293.2 million at that
time and 2) the Sale is expected to generate a one-off net gain on sale on
completion which will increase CET1.

7. The consideration for the Consumer Vehicle Finance business is based on a
30 September 2025 balance sheet valuation, which is adjusted to the date of
completion (the locked box mechanism) for cash collections on the portfolio,
changes in a benchmark index, servicing expenses, funding costs and servicing
fees. The final adjusted consideration will only be known at completion.

 

Enquiries:

Secure Trust Bank PLC

Ian Corfield, Chief Executive Officer

Rachel Lawrence, Chief Financial Officer

Phil Deakin, Strategy and Corporate Development Director

Tel: +44 (0)121 693 9100

 

Investec Bank plc (Joint Broker)

Christopher Baird

David Anderson

Maria Gomez de Olea

Tel: +44 (0)20 7597 5970

 

Shore Capital Stockbrokers (Joint Broker)

Mark Percy / Sophie Collins (Corporate Advisory)

Oliver Jackson / Ansh Batura (Corporate Broking)

Tel: +44 (0)20 7408 4090

 

Camarco

Geoffrey Pelham-Lane, Amrith Uppuluri

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

Tel: +44 (0) 7733 124 226, +44 (0) 7763 083 058

 

About STB

STB is an established, well‐funded and capitalised UK retail bank with a
more than 70‐year trading track record. STB operates principally from its
head office in Solihull, West Midlands. 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 V12 Retail Finance division.

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.

Further Information regarding the Sale

About the Consumer Vehicle Finance business

The Consumer Vehicle Finance business provides fixed rate, fixed term consumer
lending products secured against the second-hand vehicle being financed.
Finance is provided in the form of hire purchase or personal contract purchase
to prime and near-prime customers. This lending was originated via UK motor
dealers and brokers.

Appendix 1

Disclosure relating to the terms of Sale of the Consumer Vehicle Finance
business

The terms of the Sale are contained in a business sale agreement ("BSA") dated
24 December 2025 between STB and funds managed by LCM Partners ("Buyer"). In
addition to the commercial terms of the Sale outlined above, the BSA includes
certain customary provisions summarised below.

Conditions/Completion/Migration/Servicing

There are no material conditions to completion of the Sale (due to occur in Q1
2026) outside the control of STB. STB has agreed with the Buyer a migration
plan to transfer the relevant customer accounts and to work together to
achieve this migration by 30 May 2026 (and at the latest within 6 months after
completion). Prior to the migration, STB has agreed to continue to administer
the accounts and collect payments on them, in accordance with regulatory
requirements, for a servicing fee from the Buyer.

Warranties and indemnities

STB has given the Buyer customary fundamental and commercial warranties,
principally relating to the portfolio of loans (and related vehicles) within
the business being sold, and certain of which will be repeated at completion.
The Buyer has also given STB customary warranties relating to its capacity to
enter into and perform the BSA.

STB remains responsible for implementing the FCA's motor commission redress
scheme (when finalised), including communicating with customers and paying
them redress where due. STB has agreed to indemnify the Buyer if STB fails to
pay the redress due under the Scheme, certain FOS fees/awards and litigation
claims/costs for unfair relationships involving a discretionary, high or tied
arrangement commission, and certain other costs, limited overall by amount and
time. The Buyer has agreed to provide information to STB, and STB and the
Buyer must cooperate with each other to meet their respective regulatory
obligations, relating to the Scheme.   The BSA contains a customary
employee-related indemnity from STB to the Buyer.

Financial Information relating to the Consumer Vehicle Finance business

Basis of Preparation

The unaudited historical financial information relating to the Consumer
Vehicle Finance business has been extracted without material adjustment from
the management account schedules that support the audited consolidated
information of the Group as at and for the two financial years ended 31
December 2024, and the unaudited consolidated information of the Group for the
six months ended 30 June 2025. There have been no changes to the accounting
policies applicable to this information in those periods.

The extracted income statement and balance sheet do not directly correspond to
the previously reported audited consolidated segmental information for the two
financial years ended 31 December 2024, and the unaudited consolidated
segmental information for the six months ended 30 June 2025. This is because
the Consumer Vehicle Finance business was reported within a larger Vehicle
Finance segment.

The Consumer Vehicle Finance business is not managed as a separate legal
entity, and the extracted balance sheet is derived from the associated cost
centres and product codes relating to the Consumer Vehicle Finance business
from the underlying management accounting records relating to the
consolidation schedules. This balance sheet does not reflect internal
management reporting for the financial position of this business. The figures
do not include cost accruals and prepayments, treasury assets or fixed assets
managed centrally. The capital figure reflects CET1 allocated to the Consumer
Vehicle Finance business by applying the Group CET1 ratio to the RWAs of this
business at that date.  The Funding figure reflects an approximation of
funding associated with the Consumer Vehicle Finance business.

The Sale relates only to loans and advances to customers in the Group's
consolidated balance sheet, which will be derecognised on completion;
remaining items on the balance sheet will remain a part of the continuing
Group's accounts.

1.   Extracted income statement

                                                           HY 2025  FY 2024  FY 2023

                                                           £'m      £'m      £'m
 Net interest income                                       23.0     43.5     41.7
 Net fee and commission income                             0.3      0.3      0.4
 Operating income                                          23.3     43.8     42.1
 Net impairment charge on loans and advances to customers  (15.5)   (37.5)   (13.7)
 Operating expenses                                        (12.4)   (26.1)   (23.3)
 Profit/(loss) before income tax before exceptional items  (4.6)    (19.8)   5.1
 Exceptional items                                         (1.0)    (8.4)    (4.8)
 Profit / (loss) before income tax                         (5.6)    (28.2)   0.3

2.   Extracted balance sheet

                                  HY 2025  FY 2024

                                  £'m      £'m
 Cash                             0.7      3.7
 Loans and advances to customers  501.3    515.9
 Other assets                     4.3      5.3
 Total assets                     506.3    524.9
 Funding                          (442.1)  (458.2)
 Other                            (1.4)    (1.6)
 Provisions                       (7.0)    (9.1)
 Total liabilities                (450.6)  (468.9)
 Net assets                       55.8     56.0

 Capital                          55.8     56.0

 

Additional Information

Risk Factors

STB shareholders should consider, alongside all other information in this
announcement, the specific factors and risks outlined below.

1.   Risks relating to the Sale

1.1.  The accounting treatment of hedging may result in timing differences in
the income statement

As a result of the interest rate component of the purchase price, the Sale
consideration may be reduced by increases in interest rates. STB has made
hedging arrangements to protect itself but the accounting off-set from this
may occur in different time periods, impacting the recognition of the total
net gain on sale.

 

1.2.  The Group may incur liability under the BSA

The BSA contains warranties and indemnities provided by the Group. The
warranties are subject to customary vendor protection provisions including
limitations on the amount and time period. The indemnities relating to the
motor commission redress scheme (when finalised) and to employees are also
subject to customary limitations including on the amount and time period. The
indemnities largely relate to failures (if arising) by STB to deal with
matters within its control, in particular STB's own compliance with the Scheme
rules and implementation by it of already anticipated redundancies.
However, there is a risk that not all such matters are within its control
and/or the limitations on liability for these warranties and indemnities will
not apply in all scenarios and any liability to make a payment arising from a
successful claim by the Buyer under them could reduce the consideration and,
although STB does not currently expect this, could have an adverse effect on
STB's continuing business, results of operations, prospects and financial
condition.

 

1.3.  Migration is not achieved on a timely basis

The migration of customer accounts is a complex process and there is an
inherent risk of delay. While STB continues to service the portfolio, it
remains responsible for regulatory compliance and the proper treatment of
customers and will incur continuing operational costs. Under the BSA, the
Buyer pays STB a monthly servicing fee (which can step up each month that
migration is delayed beyond the agreed longstop date of six months from
completion), but there is a risk that this servicing fee does not fully cover
STB's continuing operational costs and which would be for its own account.

 

2.   Risks relating to the Continuing Group

2.1.  Ability to restore risk adjusted income in the short term

STB plans to deploy the excess capital generated as a result of the Sale into
higher returning opportunities, including growth opportunities in continuing
businesses or considering enhanced distributions to shareholders. There is a
risk that the redeployment may take time to execute or may not generate
returns in the timeframe currently expected. As a result, the Group may not be
able to restore its risk adjusted income in the short term.

 

2.2.  Inability to remove costs associated with Consumer Vehicle Finance
business proportionately or in a timely manner

The Consumer Vehicle Finance Business currently benefits from shared central
functions provided by the continuing Group. Following completion, the
continuing Group will lose the contribution from the Consumer Vehicle Finance
business towards these costs. There is a risk that the continuing Group may
not be able to remove or reallocate these costs in a timely or proportionate
manner, which could impact profitably in the short-term.

Material Contracts

Save for the BSA, there have been no material contracts entered into (other
than contracts entered into in the ordinary course of business) in respect of
the continuing Group for the two years immediately before the date of this
announcement that shareholders would reasonably require for the purpose of
making a properly informed assessment of the Sale.

Save for the BSA, there have been no material contracts entered into (other
than contracts entered into in the ordinary course of business) in respect of
the Consumer Vehicle Finance Business for the two years immediately before the
date of this announcement that shareholders would reasonably require for the
purpose of making a properly informed assessment of the Sale.

Governmental, Legal or Arbitration Proceedings

Save as previously announced by STB about its motor finance commission
provision,  there are no governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which the
Group is aware) during the period covering the previous 12 months preceding
the date of this announcement which may have, or have had in the recent past,
a significant effect on the financial position or profitability of the
continuing Group.

Save as previously announced by STB about its motor finance commission
provision,  there are no governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which the
Group is aware) during the period covering the previous 12 months preceding
the date of this announcement which may have, or have had in the recent past,
a significant effect on the financial position or profitability of the
Consumer Vehicle Finance Business.

Significant changes

Save as previously announced by STB about stopping new lending within its
Vehicle Finance Business and putting the existing book into run‐off and
about the Sale,  its motor finance commission provision, and as otherwise
disclosed in this announcement (including its Appendix ), there has been no
significant change in the financial position or financial performance of the
continuing Group since 31 December 2024, being the end of the last financial
period for which audited financial statements have been published.

Save as previously announced by STB about stopping new lending within its
Vehicle Finance Business and putting the existing book into run‐off and
about the Sale, its motor finance commission provision, and as otherwise
disclosed in this announcement (including its Appendix), there has been no
significant change in the financial position or financial performance of the
Consumer Vehicle Finance business since 31 December 2024, being the end of the
last financial period for which audited financial statements have been
published.

Related Party Transactions

The Group has not entered into any related party transactions since 31
December 2024, being the end of the last financial period for which audited
financial statements have been published.

The Consumer Vehicle Finance business has not entered into any related party
transactions since 31 December 2024, being the end of the last financial
period for which audited financial statements have been published.

Important Notice

Forward-looking statements

This document contains forward looking statements about the business, strategy
and plans of the Group and its current objectives, targets and expectations
relating to its future financial condition and performance. Statements that
are not historical facts, including statements about the Group'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. The Group'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 the Group's control, 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 announcement. Except as required by
law or regulation, the Group undertakes no obligation to update or revise any
forward-looking statements.

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