Secure Trust Bank Regulatory News (STB)

PRESS RELEASE

Secure Trust Bank PLC

LEI: 213800CXIBLC2TMIGI76

22 October 2020

07.00am Embargo

SECURE TRUST BANK PLC

Q3 2020 Trading Update

Secure Trust Bank PLC and its subsidiaries ("Secure Trust Bank", "STB" or the "Group") provide a trading update in relation to the third quarter ended 30 September 2020.

As expected, the easing of the lockdown restrictions in June 2020 has resulted in a strong rebound in demand for the Group's lending products. STB operated efficiently and effectively during the third quarter, delivering high quality service to its customers whilst continuing to trade profitably. Capital and Liquidity positions remained strong with the Group benefitting from the low rate environment by replacing maturing higher margin term deposits with materially lower cost deposits. STB continued to pursue its strategic objectives during the quarter and remains confident in the significant opportunities in its chosen markets.

The Group is extremely grateful for the professionalism shown by its staff during these continued trying circumstances and remains committed to protecting staff and supporting customers and business partners through the crisis.

Lending

The pickup in lending has been particularly evident in Retail Finance where new business volumes are at near pre COVID levels, notwithstanding the significant tightening of credit criteria implemented during the first half of 2020. The Group is committed to supporting its SME customers which is reflected in a circa 10% increase in Invoice Finance lending balances compared to the position as at 30 June 2020. Demand for the Group's Motor Finance products has been strong during the third quarter: used car prices have also held up well. The Group sees considerable opportunities to grow its Motor Finance business. The prime Motor Finance proposition for consumers was launched on 1 October 2020.

Repayment holidays in Motor Finance peaked mid-summer at 19.3% of the customer base. As at 30 September only 0.9% of Motor Finance customers had an active repayment holiday. Repayment holidays in Retail Finance peaked at 2.6% of the customer base. As at 30 September only 0.7% of Retail Finance customers had an active repayment holiday. Overall, the Group's lending portfolio is performing in line with management's expectations. Given the current and prospective uncertainties the Group will continue to take a cautious approach to lending.

Outlook and strategy

The resilient operating and financial performance over the first three quarters of 2020 means the Group is currently trading significantly ahead of consensus profit before tax. As at 21 October 2020, the Group's compiled Full Year 2020 consensus was £2.2m ranging from (£14.8) million to £9.7 million. As a result the Group is well placed to navigate the remainder of the year and beyond.

The short term focus of minimising COVID-19 related damage, maximising the financial performance of the business and preserving capital is unchanged. The Board is pleased with the performance to date with Q3 performance being much stronger than expected. This has been supported by a slowing in the rate of balance sheet contraction and a faster reduction in the number of customers on active payment holidays. While the Board is therefore encouraged by current trading, it recognises that the continued impact of Covid-19 on the UK economy generates potential uncertainty in the near term and, as set out in the Company's interim results, continues to review forward looking scenarios and appropriate IFRS 9 provisioning. The group is unable to resume market guidance due to the continuing uncertainty.

Longer-term, the Group remains focused on its key strategic priorities of organic growth in responsible lending across a diverse portfolio of attractive segments, continued investment in broadening our product offerings to customers, pursuing M&A activity in line with our strategy, optimising our capital and liquidity strategies and continuing to target delivery of profit growth in the medium term to create shareholder value. The Board believes that the changing competitive landscape and the material fall in funding costs will create favourable conditions for growth for STB as a well-capitalised and funded bank during the post-COVID economic recovery, as was the case after the global financial crisis.

Enquiries:

Secure Trust Bank PLC

Paul Lynam, Chief Executive Officer

Rachel Lawrence, Chief Financial Officer

Tel: 0121 693 9100

Stifel Nicolaus Europe Limited (Joint Broker)

Robin Mann

Gareth Hunt

Tel: 020 7710 7600

Canaccord Genuity Limited (Joint Broker)

David Tyrell

Tel: 020 7523 8000

Forward looking statements

This document contains forward looking statements with respect to the business, strategy and plans of Secure Trust Bank PLC ("Secure Trust Bank", "STB" or the "Group") and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about Secure Trust Bank or management's beliefs and expectations, are forward looking statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Secure Trust Bank's actual future results may differ materially from the results expressed or implied in these forward looking statements as a result of a variety of factors. These include UK domestic and global economic and business conditions, risks concerning borrower credit quality, market related risks including interest rate risk, inherent risks regarding market conditions and similar contingencies outside Secure Trust Bank's control, any adverse experience in inherent operational risks, any unexpected developments in regulation or regulatory and other factors. The forward looking statements contained in this document are made as of the date hereof, and Secure Trust Bank undertakes no obligation to update any of its forward looking statements.

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 972 employees (full‐ time equivalent) as at 30 June 2020. 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 Collection and Consumer Mortgages divisions

As at 30 June 2020 the Group's loans and advances to customers totalled £2,377.5 million, customer deposits totalled £1,999.2 million and the Group's total customer base was well over 1.6 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.