Secure Trust Bank H1 Earnings Call Highlights

Key Points

• First-half results improved: Customer lending reached £3.5 billion, adjusted profit before tax rose 9.4% to £31.3 million, and return on required equity was 14.5%. The CET1 ratio stood at 14.3%, supporting an increased interim dividend and a £10 million share buyback.
• Growth is focused on three businesses: Secure Trust Bank completed its exit from Vehicle Finance and is expanding Retail Finance, Business Finance and savings. New initiatives include home-improvement point-of-sale partnerships, a Speciality Finance pipeline worth £35 million and a savings distribution partnership with Hargreaves Lansdown.
• Management is prioritizing profitable growth and efficiency: The bank is targeting roughly 10% annual lending growth while protecting pricing discipline and pursuing a return on average equity above 16%. Cost and technology initiatives have generated or committed about £15 million of annualized savings toward a £25 million target by the end of 2028.

Secure Trust Bank LON: STB said its first-half 2026 performance reflected progress toward higher returns as it completed its exit from Vehicle Finance, expanded products and partnerships, and advanced a cost-reduction program.

Chief Executive Officer Ian Corfield said the bank is now focused on three complementary businesses: Retail Finance, Business Finance and savings. He said the completed Vehicle Finance exit removed complexity, released capital and enabled management to concentrate on continuing growth operations.

“Growth, profitability, and return on required equity are all consistent with our guidance,” Corfield said during the company’s investor presentation.

First-half performance and capital

Customer lending rose to £3.5 billion in the first half, supported by growth in Retail Finance and Business Finance. Adjusted profit before tax increased 9.4% to £31.3 million, while risk-adjusted margins remained stable and the cost of risk improved, according to Corfield.

The bank reported a common equity tier 1, or CET1, ratio of 14.3%, above its stated 13% ambition. Corfield said the capital position provides flexibility to support lending growth and shareholder distributions.

Secure Trust Bank increased its interim dividend and has begun a £10 million share buyback program. The company has completed the first tranche of the program and plans to complete the remaining £5 million tranche from September onward, Corfield said.

Corfield said the first-half return on required equity was 14.5%. The bank’s medium-term objective is a return on average equity above 16%, supported by lending growth, disciplined pricing and underwriting, a broadly consistent risk-weighted asset mix and operating leverage.

The company is targeting annual lending growth of around 10% and a medium-term cost-to-income ratio of 35% to 40%. Corfield said the group expects revenue growth to outpace cost growth as it scales because much of its infrastructure is already in place.

Product expansion and distribution

Secure Trust Bank outlined a series of product and distribution initiatives across its businesses. In Retail Finance, it has secured partnerships with Magnet and Centrica British Gas as part of its move into point-of-sale credit for home improvements.

Corfield said the bank has 19 home-improvement retailers onboarded, with further opportunities in its pipeline. He said the company can technically integrate with a new partner rapidly, while typical timing from signing a partner to launch is around six weeks. Lending volumes can then ramp as customers become aware of the financing proposition, although demand may vary by retailer and seasonality.

Retail Finance serves about 1.3 million customers, Corfield said. The business has approximately a 17% share in the markets it currently targets, while its share in home-improvement point-of-sale lending starts from zero, leaving room for expansion, he added.

In Business Finance, the group expanded its bridging proposition and launched Speciality Finance. Corfield referred to a £35 million Speciality Finance pipeline and said the bank had added capabilities to assess and underwrite deals, with a focus on established, quality borrowers.

Chief Financial Officer Rachel Lawrence said returns in Speciality Finance were attractive and broadly comparable with those generated by the bank’s wider asset-based lending business. However, she said the company would enter the area “carefully and slowly” while ensuring it understood the risks and had the appropriate processes in place.

Corfield said Business Finance has less than a 2% share of a £90 billion market. In savings, the bank has more than £3 billion of customer deposits in what he described as a £2 trillion market. It has also broadened its deposit distribution through its first aggregator partnership with Hargreaves Lansdown.

Technology and cost actions

The bank said customer usage of its V12 app has risen to more than 666,000 users. Its bridging portal is now live, while management is simplifying the technology architecture to improve efficiency and scalability.

Secure Trust Bank has taken actions expected to generate about £15 million in annualized run-rate savings, against a £25 million target by the end of 2028. Corfield said a substantial share of the targeted savings had either already been delivered or was contractually committed.

The CEO said the company’s priorities for the second half are to continue growth through existing and recently launched products, deliver the next phase of its cost and technology-simplification programs, and finish the remaining buyback tranche.

Growth tempered by return discipline

Responding to investor questions on competition and pricing, Corfield said management would not materially compromise pricing discipline to achieve its 8% to 10% lending-growth target. He said the return-on-equity objective remains the more important metric.

“If we can get to 16%+ with less than 8% growth, then I am very relaxed about that,” Corfield said.

Corfield acknowledged an uncertain macroeconomic environment but said the bank believes it is positioned to navigate it. He cited the quality of its Retail Finance customer base, the secured nature of the Business Finance portfolio and the stability and diversification of its savings franchise.

He said the company’s focus is on selecting growth opportunities that are accretive to overall returns rather than pursuing growth for its own sake.

About Secure Trust Bank (LON:STB)

Secure Trust Bank is an established, well‐funded and capitalised UK retail bank with over 70‐years of trading history. Secure Trust Bank operates principally from its head office in Solihull, West Midlands. The Group's diversified lending portfolio currently focuses on two sectors: • Business finance through its Real Estate Finance and Commercial Finance divisions, and • Consumer finance through its Vehicle Finance and Retail Finance divisions. Secure Trust Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Secure Trust Bank PLC, Yorke House, Arleston Way, Solihull, B90 4LH.

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