Secure Trust Bank (STB) Q4 2024 earnings summary

Executive summary

• Achieved 8.8% net lending growth to £3.6bn, with 13% deposit growth to £3.2bn and improved cost-to-income ratio by 3.1pp to 50.9%.

• Profit before tax pre-impairments rose 18% to £101m, but statutory PBT fell to £29.2m due to higher impairments and exceptional items, including provisions for motor finance commissions.

• Net interest margin stable at 5.4% for the year, with H2 improvement to 5.5%; operating income up 10.4% year-over-year.

• Strategic initiatives, including Project Fusion, delivered £5m cost savings in 2024, with a further £3m targeted for 2025.

• Group-wide review underway to set new growth and return targets beyond the 14%-16% ROAE post-£4bn net loan book.

Financial highlights

• Net lending reached £3.6bn (+8.8% YoY); retail deposits at £3.2bn (+13.0% YoY).

• Adjusted profit before tax pre-impairments: £100.9m (+18.0% YoY); after impairments: £39.1m (-8.2% YoY).

• Cost-to-income ratio improved to 50.9% (48.4% in H2); statutory cost income ratio at 55.8%.

• Return on average equity at 8.0%, impacted by elevated cost of risk; basic EPS declined 20.2% to 103.4p.

• Total dividend for the year increased by 5% to 33.8p per share.

Outlook and guidance

• Confident in achieving £4bn net loan book and 14%-16% ROAE in the near term, with NIM expected to expand in 2025 as cost of retail funding peaks.

• Cost of risk expected to normalize in 2025 as Vehicle Finance defaults return to pre-BiFD levels.

• Legal and regulatory clarity on motor finance commissions expected in 2025.

• Cautious optimism for UK economic growth, but concerns remain over government policy, interest rates, and geopolitical uncertainty.

• Group-wide review to enhance returns beyond current medium-term goals.