Secure Trust Bank: Deposits hit record high as loan book swells
Specialist lender Secure Trust Bank posted a bumper first half of the year after customer deposits smashed a record high and lending balances swelled.
The firm recorded a 8.2 per cent increase in deposits to £3.5bn whilst net landing balances grew 6.1 per cent to £3.8bn.
This helped drive an over 30 per cent jump in pre-tax profit to £3.5bn.
Secure Trust’s net interest margin (NIM) – a key indicator of a bank’s profitability from lending – edged up marginally to 5.4 per cent with the firm citing lower cost of funds and better margins in its retail finance arm.
Chief executive David McCreadie is set to stop down from his role in the Summer with ex-Treasury director Ian Corfield taking his post.
Corfield, who was tied to Labour’s cronyism scandal last year, spent nearly a decade as chief commercial officer of financial services firm New Day.
Secure Trust pivots on motor finance
Secure Trust announced a “strategic pivot” away from its motor finance division in a bid to boost returns earlier this year.
The group said it will pause new lending within its vehicle finance division and “run off” its existing book, meaning it will manage its current portfolio until it naturally winds down.
It comes after motor finance lenders faced a year of turmoil following the Court of Appeal’s ruling that it was unlawful for banks to pay a commission to a car dealer without the customer’s informed consent.
Lenders successfully overturned the verdict with the Supreme Court siding with the banks last month, which Secure Trust cited as “positive for the motor finance industry”.
But following the Financial Conduct Authority pressing ahead with a redress scheme financial impacts still remain uncertain.
Secure Trust’s vehicle finance business generated a loss of £21.8m in 2024. Net lending balances were £558.3m at the end of the year. The division took a chunk out of the firm’s bottom line, amounting to nearly 30 per cent of operating costs.
The group projects an 800 basis point increase in return on average equity once the runoff is completed.