LONDON (Alliance News) - Secure Trust Bank PLC said Friday it expects its full-year results for 2016 to be in line with market expectations.
Secure Trust said it had a "very busy and productive final quarter" in 2016, with trading in line with management expectations.
The mid-cap retail bank said the combined effects of its disposal of its Everyday Loans business and the performance of its continuing operations means it expects a return on required equity "in the region of 30%".
However, Secure Trust noted its total return on equity will appear reduced due to the capital boost from the Everyday Loans disposal, until the capital is re-deployed.
Secure Trust said during the final quarter of 2016 it tightened credit underwriting standards and increased pricing in consumer finance, against the dangers of weaker economic conditions and higher inflation. However, the bank said it continued to grow net balances in consumer and small & medium business lending.
The bank also said it intends to cease originating new unsecured personal loans, saying the dynamics of increasing loans at lower interest rates are "unsustainable". Secure Trust said it will re-enter this market "once the risk adjusted yields available become more attractive", and said the decision will not have a material impact on its 2017 earnings.
Secure Trust also noted that while it had delayed the launch of its residential owner-occupied mortgage product ahead of expected reforms to regulatory capital from the Basel Committee on Banking Supervision, it intends to launch the product in the first quarter of 2017.
"Following the successful completion of a number of complex projects in 2016 including the divestment of the subprime unsecured personal loan business of Everyday Loans, the closure of the current account product and the step up from AIM to the main market, STB enters 2017 well placed to pursue its strategic priorities through developing its business model organically and pursuing M&A opportunities," said the bank.
Secure Trust Bank will release its full 2016 result on March 23.
By Adam Clark; adamclark@alliancenews.com
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Secure Trust (STB)