Pre-Close Trading Update

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 2023. The Group continues to trade in line with management expectations, with a significant increase to year-on-year underlying profits before tax and impairments.

Highlights

• Net lending grew by 13.6% in the year to £3.3bn, a significant step towards our £4bn ambition as presented at our November 2023 Capital Markets Day.
• All four specialist lending businesses delivered record levels of new lending in 2023. Net interest margin was in line with H1 2023.
• The strong loan book growth led to an improvement in the cost income ratio.
• We remain on track to deliver £5m in total annualised savings from our cost optimisation programme in 2024.

Net lending

The customer loan book grew by 3.2% in the quarter and 13.6% compared to Q4 2022. All business areas recorded growth in the fourth quarter, notably with Real Estate Finance growing by 3.1% following a flat third quarter and by 11.5% compared to Q4 2022. Consumer Lending grew by 3.2% in the quarter and by 18.4% compared to Q4 2022.

New business

Total new business lending was broadly flat in the quarter and increased 30.3% compared to Q4 2022. Business Finance saw a 13.6% reduction on Q3 2023, following a very strong third quarter for Commercial Finance, but still 287% growth on Q4 2022. Consumer Finance recorded new business lending volumes of £0.4bn in the quarter which reflects a 7.1% increase on Q3 2023 and a 2.3% increase on Q4 2022.

Deposits

The Group has continued to attract deposits from a price competitive market. Customer deposits were 5.5% higher at the end of the quarter and 14.0% higher than Q4 2022.

Regulatory initiatives - Vehicle Finance

We note the FCA's recent announcement about discretionary motor finance commissions. We operated some discretionary commission arrangements until 2017. From 2014 to 2017, a mid-single digit proportion of our new vehicle finance loans included such arrangements. The FCA plans to set out its next steps in Q3 2024, when the implications for the industry should become clearer. We will provide further information to the market on these developments as appropriate.

Separately, during H2 2023 we engaged in formal discussions with the FCA about our collections processes, procedures and policies in Vehicle Finance. This follows the FCA's review of Borrowers in Financial Difficulty (BiFD) across the industry. We have engaged external support to assist us with this review and, where necessary, are enhancing our approach. We currently expect the review to conclude by the end of H1 2024.

David McCreadie, Chief Executive Officer, said:

"We have delivered another strong underlying performance in 2023 with excellent progress made in growing our net lending balances and delivering cost efficiency improvements. We have been operating in a challenging economic environment for a prolonged period. Our business model has proven to be resilient, and we have continued to make significant progress in delivering our strategic plans.

"I am cautiously optimistic that inflation will continue to fall and that stable lower interest rates will follow leading to a less volatile trading environment. We remain focused on delivering positive outcomes for all of our customers and delivering products and services that meet their needs."