Secure Trust Bank: New loans surge as lender eyes expansion
Secure Trust Bank recorded a significant increase in lending in the first half of the year as it sets its sights on continued expansion over the next few years.
The specialist bank reported lending growth of 8.2 per cent in the first half of the year, bringing its lending balances to £3.2bn.
Three of the bank’s four divisions – retail, motor finance and real estate – recorded double digit growth, which helped to offset a 16 per cent drop in commercial finance.
Chief executive David McCreadie told Morning Wire “the growth in the first half of the year has been delivered despite us taking action to tighten our credit criteria given the volatility in the market“.
In 2021 the bank set a target of growing its lending book by 15 per cent per year until around 2025 to prove it could grow organically post-pandemic. Since 2021 it has grown its lending balances by 45 per cent and its deposits by 33 per cent.
“We’ve got a relatively low market shares in quite large markets, so there’s plenty of opportunity to continue growing,” he continued.
McCreadie did not rule out making acquisitions to further enhance the business’s growth, pointing out that many non-bank lenders face a more difficult funding environment with interest rates rising.
“We don’t need to do any transactions to medium term targets, because there’s strong organic growth,” McCreadie said. “However, we will always consider when opportunities arise.”
Although Secure Trust Bank saw strong lending growth, its pretax profit fell nearly 40 per cent on last year, mainly due to a “material impairment” of £7.2m relating to a “long-running problem debt case” in its commercial finance division.
McCreadie said the write-off was a “one-off event…the circumstances that led to that write-off don’t exist in any other client relationship”.
Pretax profit pre-impairment increased 14.6 per cent year-on-year to hit £39.3m and the bank said it expects “significant improvement in profitability” in the second half of the year.
Analysts were impressed with the results, with Shore Capital expects predicting upgrades to profit in 2024 and 2025 “given the flow through to future income from better than expected loan book growth”.