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LONDON (Alliance News) - Secure Trust Bank PLC on Wednesday said it delivered good progress in its interim results with customer numbers growing and greater profitability, but noted increased competition in the commercial sector a potential stumbling block.
For the six months to 30 June, pretax profit rose 31.3% to GBP15.1 million from GBP11.5 million the previous year. Net revenue however slumped to 8.6% from 9.3% in June 2017.
The company attributed this jump in pretax profit to the company's repositioning away from higher risk unsecured consumer credit and towards lower risk secured lending across a focused group of attractive asset classes.
Given the optimistic results from the first half and having signed up its 1 millionth customer in the first half of this year, the company reiterated that it is committed to growth in the second half and beyond. It does however anticipate challenges within the wider market and predicts that competition in the specialist space will increase as a result.
"We expect the second half to build on the positive trends in the first half. Our long term strategic objective is to be active in Consumer Credit, SME Finance and Mortgage Lending. This enables flexibility to restrict lending in areas which may be overheating and allocate capital for more sustainable returns. Notwithstanding the current uncertain economic outlook, I believe there is scope to pursue our strategic priorities by developing the business model organically and pursuing attractive acquisition opportunities," said Chief Executive Paul Lynam.
The company declared an interim dividend of 19 pence per share, up by 1 pence from the year before.
London-based bank Arbutnot Banking Group is a key example of emerging competition in the commercial banking sector.
In recent years Arbutnot has sought to build a commercial banking business, acquiring Renaissance Asset Finance Ltd and launching an asset based finance business in order to do so.
This poses a conflict of interest for three directors who sit on boards of both banks.
Henry Angest, a director of Secure Trust Bank and chairman between 1982 and 2016 is currently chief executive and chairman of ABG. Angest will step down from his position as director of Secure Trust Bank with immediate effect.
Similarly Andrew Salmon, who has been a director of Secure Trust Bank since 2003 is currently chief operating officer and head of business at ABG. Salmon will also step down from his position as director of Secure Trust Bank with immediate effect.
Secure Trust Banks Chief Executive Officer, Paul Lynam who is also a director at ABG will retire form his position at ABG with immediate effect.
Amid increased competition in the market, Secure Trust Bank affirmed that it was "well placed to serve this market, with the ability to identify, manage and react to market movements and customer risks accordingly".
Shares in Secure Trust Bank were up 0.3% at 1,6200 pence each. Shares in Arbuthnot Banking Group were down 1.16% at 1,532.00 pence each on Wednesday.
