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
£'m
|
Q2'24
£'m
|
Change
|
Q3'23
£'m
|
Change
|
|
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
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.
