Secure Trust Bank profits rise as it works to maintain flexibility

The London-listed firm said its adjusted profit before tax rose 13.9% year-on-year for the six months ended 30 June, to £18.8m, adding that it saw “continued improvement” in its loan book quality, reducing the cost of risk to 1.7% from 1.9%.

It reported a “healthy” common equity tier 1 ratio of 12.8%, down from 13.8%, which the board said supported the “strong growth” it saw in the loan portfolios.

The company’s total capital ratio was 15.2%, compared to 13.8% year-on-year, while its operating income rose 12.3% to £81.4m.

Basic earnings per share improved 15% to 79.0p, and adjusted earnings per share were ahead 10.2% at 82.3p.

Secure Trust Bank reported an adjusted return on average equity of 12.7%, compared to 12.3% a year ago.

The board recommended an interim dividend of 20p per share, up from 19p year-on-year, to be paid in September.

Total assets were £2.61bn at period end, up 6.7% from year-end and ahead 19.2% from the same point last year.

On the operational front, Secure Trust Bank said total customer numbers increased 31.9% to 1.45 million during the period, with its FEEFO customer satisfaction scores continuing to be in the 90%-to-95% range.

It launched a new cash ISA products in April, as well as the V12 Vehicle Finance brand and the first phase of its motor transformation plan.

The company’s overall loan book was £2.28bn at period end, up 12.3% from year-end in December and ahead 23.9% from the same point last year.

Total consumer finance balances now exceeded £1bn, with retail finance balances growing by 12.5% since December to £671.7m, while total business finance balances rose to £1.14bn following “continued strong growth” in the real estate finance and commercial finance balances.

The firm said its commercial finance invoice financing operation had now funded more than £3bn of customer invoices since its inception in 2014.

Customer deposits increased 20.8% to £2bn.

“The positive financial results for the first half of 2019 bode well for the remainder of the year, assuming an orderly Brexit,” said Secure Trust Bank chief executive officer Paul Lynam.

“The group has delivered on a number of strategic objectives, with the launch of our cash ISA product and completion of the first phase of our motor transformation plan.”

Lynam said the company’s capital and liquidity positions remained “healthy”, and had enabled the firm to take advantage of market opportunities in the first half of the year, while retaining the flexibility it needed to manage economic uncertainty.

“Our customer numbers grew by more than 30% from June last year and I am very grateful to our employees who continually strive to deliver positive outcomes with great customer service.”