Secure Trust Bank (STB) Investor Update summary

Strategic focus and business overview

• Commercial Finance has grown lending by 65% since 2020, reaching £381m in 2023, with a strong, experienced team and a collaborative, relationship-led model focused on UK SMEs.

• Facilities typically range from £5m–£50m, with a focus on asset-based lending and tailored working capital solutions backed by receivables and other assets.

• The business has become a top five provider of ABL lines outside the main banks, providing nearly £20bn of funding to over 250 UK businesses in the past decade.

• The operating model is scalable and cost-efficient, supported by regional offices and a specialist team with a proven track record.

• Growth is underpinned by maximizing new business, minimizing client attrition, maximizing recurring income, and minimizing impairments.

Financial performance and growth drivers

• Net lending in Commercial Finance grew 3.1% in Q3, with average facility size increasing by 102% to £21.5m and average income per deal up 184% to £764,000.

• 65% of new business is sourced from private equity, with 50% of the portfolio PE-backed, and 30% of business from advisory networks.

• The business operates a low-cost acquisition model, focusing on advisory networks and repeat referrals rather than brokers.

• There is significant opportunity to increase market share in the £21bn addressable UK ABL market, with capacity to double penetration in the target segment.

• Income split is evenly between fees and interest, with a full product offering including receivables, real estate, plant & machinery, inventory, and cashflow solutions.

Risk management and client relationship model

• Robust credit processes, specialist underwriting, and daily monitoring ensure early identification and management of risk.

• The average client relationship lasts five years, with high satisfaction (up to 97%) and staff engagement (97%).

• Losses are event-driven (facility no longer required, business sale, or insolvency), not due to competition or service issues.

• The cost of risk has averaged 0.49% over 10 years, reflecting strong structures, cash control, and deep relationships.

• Climate change risk assessments are conducted for every client, updated annually.