Secure Trust Bank (STB) CMD 2024 summary

Strategic priorities and financial targets

• Targets £4bn in net lending, a 14%-16% return on average equity, and a CET1 ratio above 12%.

• Net interest margin is expected to remain at or above 5.5%, with a cost-income ratio between 44%-46%.

• Project Fusion aims for £5m annualized cost savings by year-end.

• Operational efficiencies and scalable growth are sought in large addressable markets.

• Focuses on profitable lending growth underpinned by strong risk management.

Real estate finance business overview

• Real estate finance net lending reached £1.24bn at end-2023, up 18% since 2020, representing 37.5% of group net lending.

• Portfolio is 84% residential investment, with a focus on professional landlords and developers.

• Lending is relationship-driven, with loans secured on UK assets and terms up to 5 years.

• Addressable market includes £2.5tn in private and social rental housing; currently funds about 6,000 housing units.

• National reach with a strong presence in London and the Southeast, and plans for further geographic expansion.

Risk management and underwriting approach

• Maintains a through-the-cycle, relationship-led underwriting model, lending only against first legal mortgages on UK collateral.

• Loan-to-value ratios are stable (56%-59%), with maximums of 60% for development and 70% for term investment.

• Avoids high-risk sectors such as speculative development, high street retail, and city offices.

• Credit team has deep experience across cycles, supporting agile and expert risk management.

• Interest coverage and debt serviceability have improved post-rate increases; 72% of the loan book is on fixed rates.