Secure Trust Bank Regulatory News (STB)

PRESS RELEASE

Secure Trust Bank PLC

LEI: 213800CXIBLC2TMIGI76

24 June 2020

For immediate release

SECURE TRUST BANK PLC

2020 Annual General Meeting Trading Update

Following the Annual General Meeting of Secure Trust Bank PLC (the 'Bank' or 'STB' or 'Group') held earlier today, the Board of STB provides an update on trading in the first five months of the year, which follows the first quarter update provided with the 2019 Annual Results on 7 May 2020. 

Having entered 2020 aspiring to deliver double digit profit growth for the third successive year, the Group was on track to deliver this objective until the onset of the COVID-19 outbreak and UK lockdown in late March.

In response to the outbreak, the Group swiftly implemented contingency plans focussed on the wellbeing of its workforce, supporting its customers and business partners, managing risks, safeguarding capital and maintaining operations. Despite the significant challenges created by lockdown, the Group has continued to operate effectively throughout the period. The Board would like to thank the whole STB team for their resilience and dedication during this difficult time.

While the Group has continued to trade profitably during the period, the lockdown has led to significantly reduced new lending volumes written in April and May, particularly in motor finance, invoice finance and real estate finance. Noting the majority of our retail finance business is online the Group is well placed to continue supporting existing retailer relationships, with volumes running around 50% of normal levels. Support has also been provided to SME customers, where appropriate, via government loan schemes. As a result, and as previously disclosed, the Bank's short duration balance sheet has been contracting since April and the Group expects this to continue for the foreseeable future. This contraction, and the Group's profitable trading during the first five months of 2020, have resulted in stronger capital and liquidity ratios relative to the position at the end of 2019.

The recent partial easing of the lockdown has resulted in increased demand for consumer finance in recent weeks, particularly in motor finance where used car prices appear to have hardened. Whether this is due to pent up demand or a more sustained trend remains to be seen and the volume of motor finance business written by the Group remains low. Activity levels in retail finance have risen and will rise due to the relaxation of the social distancing requirements and the imminent launch of 2020-2021 season ticket sales by Premier League clubs. Demand for SME lending is subdued, which may be linked to take up of the government loan schemes.

The Government, Bank of England and financial regulators are supporting the economy to an unprecedented degree. This is supporting the credit quality of UK consumers and businesses but it will take time for the longer term effects of this to emerge, especially given there are very clear risks of a marked increase in unemployment and business insolvencies as support schemes close. These factors will be important considerations influencing the IFRS9 impairment charge at the half year which will incorporate more subjectivity than in normal conditions. The Group remains focused on stringent cost management given reduced levels of activity in some parts of the business. The heightened levels of uncertainty are also informing the Group's credit risk appetite, which is expected to remain cautious for some time.

Despite the prevailing uncertainty, the Group's healthy capital and liquidity positions, flexible business model and short duration loan portfolio make it well placed to navigate the current crisis.

‐ENDS-

Enquiries:

Secure Trust Bank PLC

Paul Lynam, Chief Executive Officer

Tel: 0121 693 9100

About the Company:

Secure Trust Bank is an established, well‐funded and capitalised UK retail bank with a 68 year trading track record. Secure Trust Bank operates principally from its head office in Solihull, West Midlands, and had 1,017 employees (full‐ time equivalent) as at 31 December 2019. The Group's diversified lending portfolio currently focuses on two sectors:

(i) Business Finance through its Real Estate Finance, Asset Finance and Commercial Finance divisions,

(ii) Consumer Finance through its Motor Finance, Retail Finance, Debt Management and Consumer Mortgages divisions

As at 31 December 2019 the Group's loans and advances to customers totalled £2,450.1 million, customer deposits totalled £2,020.3 million and the Group's total customer base was well over 1.5 million.

Secure Trust Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Secure Trust Bank, PLC, One Arleston Way, Solihull, B90 4LH.