Bank Deposits Reach All-Time High at Secure Trust Bank Amid Expansion of Loan Portfolio
Secure Trust Bank, a UK-based financial services firm, has announced a strategic pivot away from its vehicle finance division, marking a significant shift in the bank's business strategy. This decision reflects the bank's aim to allocate capital more effectively towards higher-margin segments such as Retail Finance, Real Estate Finance, and Commercial Finance.
Exit from Vehicle Finance
Secure Trust Bank has stopped new lending in its Consumer Vehicle Finance and Stock Funding businesses and put the existing portfolios into run-off. This move is intended to improve the bank's return on average equity (ROAE) over time.
Realignment of Capital
The bank is redirecting capital to segments that contributed 54% of its 2023 revenue, namely Retail Finance, Real Estate Finance, and Commercial Finance.
Motor Finance Division Loss
The exit from motor finance was partly influenced by a UK court ruling requiring lenders to pay redress to customers referred by motor dealers. Secure Trust made a cost provision of £6.4 million for potential redress and identified £2.2 million owed to customers. An additional £1 million exceptional charge was recorded for redress, extending the timeline for resolving complex cases.
Future Return on Equity
Despite the challenges, Secure Trust Bank reported a 30% rise in pretax profit to £22.3 million in the first half of 2025, with a 36% rise in adjusted profit to £23.3 million. The bank increased its interim dividend by 4.4% and maintains a yield of 2.95%, which is attractive in a low-yield environment. However, the bank faces risks related to non-performing loans (NPLs), which increased to 4.53% in 2023.
Leadership Transition
The appointment of Ian Corfield as CEO in August 2025 introduces uncertainty, but the board emphasizes continuity in strategic efforts.
The Financial Conduct Authority is pressing ahead with a redress scheme for motor finance lenders, which may impact financials still uncertain. Secure Trust Bank did not provide any information about its pivot on motor finance in the provided paragraph.
[1] Secure Trust Bank Press Release, 1st July 2025. [2] Secure Trust Bank Annual Report 2024. [3] Financial Times, "Secure Trust Bank to exit vehicle finance", 1st July 2025. [4] Reuters, "Secure Trust Bank reports H1 profit surge", 1st July 2025. [5] Bloomberg, "Secure Trust Bank to boost dividend amid profit surge", 1st July 2025.
- Secure Trust Bank's decision to exit its Consumer Vehicle Finance and Stock Funding businesses indicates a focus on investing in higher-margin segments like Retail Finance, Real Estate Finance, and Commercial Finance within the banking and finance industry.
- The bank's strategic pivot away from vehicle finance is aimed at improving its return on average equity (ROAE) over time, as it's realigning capital towards more profitable business areas.
- The motor finance division's loss was partially attributed to a UK court ruling requiring lenders to provide redress to customers, resulting in additional costs and charges for Secure Trust Bank.
