Trading Update
Secure Trust Bank PLC announced a trading update for FY25, noting a 4.1% decline in the Group's net lending book during Q3'25 due to the accelerated run-off of the Non-Core Vehicle Finance book and a slight decrease in the Core business. However, the Core business net lending balance grew by 10.3% year-on-year, with Retail Finance increasing by 9.1% and Real Estate Finance by 12.6%. Core balances decreased by 2.2% in Q3'25 to £3,202 million, while Non-Core balances decreased by 15.8% to £469 million. Deposit balances decreased by 1.7% to £3,449 million. The Board now expects the Group's underlying profit before tax for FY25 to fall below market expectations by up to £9 million, but remains confident of approximately 30% year-on-year growth.
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Secure Trust Bank PLC ("STB" or the "Group"), a leading specialist lender, announces a trading update for the financial year ending 31 December 2025 ("FY25") and details for the third quarter ended 30 September 2025 ("Q3'25").
The Group's net lending book declined by 4.1% in the quarter as the run-off of the Non-Core Vehicle Finance book quickened, combined with a small decrease in the Core business. However, year-on-year the Core business net lending balance grew by 10.3% with all businesses contributing to the strong performance. Retail Finance grew by 9.1% and Real Estate Finance by 12.6%.
On 2 July 2025, the Group announced a pivot in its strategy away from Vehicle Finance that, over time, is expected to improve its Return on Average Equity (ROAE). As a result, in Q3'25 it stopped new lending within its Vehicle Finance business and put the existing book into run‐off. As indicated in the Group's interim results in August 2025, the Vehicle Finance business will be reported as a Non-Core activity going forward.
In Q3'25 the Vehicle Finance portfolio reduced at a greater rate than anticipated, reducing expected full year income from that business. The Vehicle Finance business also incurred higher than anticipated impairment charges for the year-to-date with expected improvements in probability of default rates not yet being fully reflected in the IFRS9 accounting models. Underlying arrears and default rates in the portfolio remained stable but have not improved on H1 2025 to the extent anticipated.
Management also expects that the exit from Vehicle Finance may require additional provisions for onerous supplier contracts associated with new business originations, which would be treated as exceptional costs. Further details will be provided in the 2025 Annual Report and Accounts.
The Core business continues to trade in line with management expectations and capital ratios remain strong.
Whilst the Board now expects the Group's underlying profit before tax for FY25 to fall below market expectations by up to £9 million, due to the performance of Vehicle Finance, it remains confident of c. 30% year-on-year growth in underlying profit before tax.
Q3 Trading Update
| Q3'25 £m | Q2'25 £m | QoQ % Change | Q3'24 £m | YoY % Change | |
|---|---|---|---|---|---|
| Net lending - Core | £3,202 | £3,272 | -2.2 | £2,904 | 10.3 |
| Net lending - Non-Core | £469 | £557 | -15.8 | £535 | -12.4 |
| Deposits | £3,449 | £3,510 | -1.7 | £3,141 | 9.8 |
Net lending
Core balances decreased by 2.2% in the quarter but increased by 10.3% year-on-year, with Retail Finance at 9.1% growth and Real Estate Finance performing strongly at 12.6% growth. Core new business in the quarter of £426 million was slightly improved on Q3'24 but at a lower level than Q2'25, reflecting seasonality in the Retail Finance business and a softer quarter for new to bank Commercial Finance deals.
Following the strategic decision on Vehicle Finance, the Non-Core loan book decreased by 15.8% in the quarter and 12.4% year-on-year.
Deposits
Retail Deposit balances have been managed to a broadly flat position as the Non-Core business run-off reduces demand for increased funding.
Motor Finance Consumer Redress Scheme
The Group notes the FCA's recent consultation paper on an industry-wide compensation scheme for motor finance customers who were treated unfairly. Further updates to the market, if necessary, will be provided in due course.
The person responsible for releasing this statement is Lisa Daniels, Group Company Secretary.
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