Q2 2026 Secure Trust Bank PLC Earnings Call

August 13, 2026

Operator: Secure Trust Bank interim results presentation. The presentation will commence shortly. After the presentation, we will conduct a Q&A session. If you wish to ask a question, you will be able to ask either through the Zoom webinar link provided separately or by submitting written questions using the Ask a Question button on the SparkLive Webcast page. Please note, this call is being live-streamed to a webcast for a wider audience and will be recorded. I would now like to hand over to Ian Corfield, Chief Executive Officer, to open the presentation. Please go ahead.

Speaker #1: SECURE TRUST BANK Interim Results Presentation. The presentation will commence shortly. After the presentation, we will conduct a Q&A session. If you wish to ask a question, you will be able to do so either through the Zoom webinar link provided separately or by submitting written questions using the Ask a Question button on the Spark Live webcast page.

Speaker #1: Please note this call is being livestreamed to a webcast for a wider audience and will be recorded. I would now like to hand over to Ian Corfield, Chief Executive Officer, to open the presentation.

Speaker #1: Please go ahead.

Speaker #2: Good morning, everyone, and thank you for joining us. There is a slide on reporting basis in the pack, but for the avoidance of doubt, unless otherwise flagged, Rachel and I will be commenting on continuing adjusted numbers and metrics.

Ian Corfield: Good morning, everyone, and thank you for joining us. There is a slide on reporting basis in the pack, but for the avoidance of doubt, unless otherwise flagged, Rachel and I will be commenting on continuing adjusted numbers and metrics. During the presentation, the 2 of us will cover key strategic and financial highlights, along with the outlook for the balance of the year before taking your questions. The H1 2026 has been an important period for Secure Trust Bank. We have delivered strong financial performance, completed the exit from vehicle finance, continued to make progress against our cost management program, and maintained lending momentum across retail finance and business finance. Most importantly, the business is doing what we said it would do.

Speaker #2: During the presentation, the two of us will cover key strategic and financial highlights, along with the outlook for the balance of the year, before taking your questions.

Speaker #2: The first half of 2026 has been an important period for Secure Trust Bank. We've delivered strong financial performance, completed the exit from vehicle finance, continued to make progress against our cost management program, and maintained lending momentum across retail finance and business finance.

Speaker #2: Most importantly, the business is doing what we said it would do. We're executing against the strategic plan we set out, and the results today demonstrate that we remain firmly on track for our 2026 guidance and our medium-term targets.

Ian Corfield: We are executing against the strategic plan we set out, and the results today demonstrate that we remain firmly on track for our 2026 guidance and our medium-term targets. Before Rachel takes you through the financial detail, I want to focus on why we believe Secure Trust Bank represents an increasingly attractive investment proposition and how the progress we are making translates into future returns for shareholders. In short, targeted growth for higher returns. There are 5 specifics that underpin the investment case for Secure Trust Bank. First, we are operating in large and attractive markets where we have genuine specialist expertise and clear opportunities for growth. Across retail finance, business finance, and savings, the addressable markets available to us are all substantial. Secondly, our model has significant operating leverage. Much of the infrastructure required to support future growth is already in place.

Speaker #2: Before Rachel takes you through the financial detail, I want to focus on why we believe Secure Trust Bank represents an increasingly attractive investment proposition, and how the progress we are making translates into future returns for shareholders.

Speaker #2: In short, targeted growth for higher returns. There are five specifics that underpin the investment case for Secure Trust Bank. First, we're operating in large and attractive markets where we have genuine specialist expertise and clear opportunities for growth.

Speaker #2: Across retail finance, business finance, and savings, the addressable markets available to us are all substantial. Secondly, our model has significant operating leverage. Much of the infrastructure acquired to support future growth is already in place.

Speaker #2: As we continue to scale, we expect revenue growth to outpace cost growth, supporting our goal of reducing the cost-to-income ratio to between 35% and 40% in the medium term.

Ian Corfield: As we continue to scale, we expect revenue growth to outpace cost growth, supporting our goal of reducing cost-to-income ratio to between 35% and 40% in the medium term. Thirdly, growth and cost efficiencies together create a clear pathway to higher returns. This is not dependent on one transformational initiative. It is the cumulative impact of multiple actions that are already underway. As Rachel will demonstrate, our cost program is already gaining real traction. Fourthly, we are now operating with a reduced cost of risk. Credit discipline remains central to how we run the business, and we are seeing the benefits of improved portfolio quality and disciplined underwriting. Finally, we are well capitalized. That gives us flexibility both to support growth and to increase shareholder distributions. With our GBP 10 million buyback program already underway. These strengths have been further enhanced by our performance and actions in the H1.

Speaker #2: Thirdly, growth and cost efficiencies together create a clear pathway to higher returns. This isn't dependent on one transformational initiative; it's the cumulative impact of multiple actions that are already underway.

Speaker #2: As Rachel will demonstrate, our cost program is already gaining real traction. Fourthly, we're now operating with a reduced cost of risk. Credit discipline remains central to how we run the business, and we're seeing the benefits of improved portfolio quality and disciplined underwriting.

Speaker #2: And finally, we are well-capitalized. That gives us flexibility both to support growth and to increase shareholder distributions, with our £10 million buyback program already underway.

Speaker #2: These strengths have been further enhanced by our performance and actions in the first half. Growth, profitability, and return on acquired equity are all consistent with guidance.

Ian Corfield: Growth, profitability, and return on required equity are all consistent with guidance. The vehicle finance exit is now complete. This has been a major strategic program for the group, and completing it successfully removes complexity, releases capital, and allows management to focus entirely on our continuing growth businesses. The investments we have made in product development are beginning to generate tangible results. We have launched new products, entered new partnerships, and broadened distribution channels across the group. We have executed strongly on cost reduction. Importantly, this is not just a plan on paper. A substantial proportion of the targeted savings are already delivered or contractually committed. Taken together, these developments reinforce our confidence in both our near-term guidance and our longer-term ambitions. The group has been materially simplified, and we operate three complementary businesses. Retail Finance provides point-of-sale finance solutions through long-standing relationship partners and serves around 1.3 million customers.

Speaker #2: The vehicle finance exit is now complete. This has been a major strategic program for the Group, and completing it successfully removes complexity, releases capital, and allows management to focus entirely on our continuing growth businesses.

Speaker #2: The investments we've made in product development are beginning to generate tangible results. We've launched new products, entered new partnerships, and broadened distribution channels across the group.

Speaker #2: And finally, we've executed strongly on cost reduction. Importantly, this is not just a plan on paper. A substantial proportion of the targeted savings are already delivered or contractually committed.

Speaker #2: Taken together, these developments reinforce our confidence in both our near-term guidance and our longer-term ambitions. The Group has been materially simplified, and we operate three complementary businesses.

Speaker #2: Retail Finance provides point-of-sale finance solutions through long-standing relationship partners and serves around 1.3 million customers. Business Finance provides specialist secured lending to UK SMEs and property investors.

Ian Corfield: Business Finance provides specialist secured lending to UK SMEs and property investors. Our Savings franchise provides a stable and scalable funding base with more than GBP 3 billion of customer deposits. Each business has a clear right to win. Retail Finance combines bank balance sheet strength with fintech capability. Business Finance benefits from specialist expertise and deep customer relationships. Savings utilizes digital technology to unlock a loyal customer base and diversified funding. What is particularly attractive, though, is how these businesses work together. They create a diversified earning profile, funding stability, and multiple opportunities for disciplined growth. Our strategy also remains straightforward. We are focusing on driving targeted growth for higher returns through three priorities. The first is product expansion. We have added products, capabilities, and distribution channels where we see attractive risk-adjusted returns. The second is digital capability.

Speaker #2: And our savings franchise provides a stable and scalable funding base with more than $3 billion of customer deposits. Each business has a clear right to win.

Speaker #2: Retail finance combines bank balance sheet strength with fintech capability. Business finance benefits from specialist expertise and deep customer relationships. And Savings utilizes digital technology to unlock a loyal customer base and diversified funding.

Speaker #2: What's particularly attractive, though, is how these businesses work together. They create a diversified earnings profile, funding stability, and multiple opportunities for disciplined growth. Our strategy also remains straightforward.

Speaker #2: We're focusing on driving targeted growth for higher returns through three priorities. The first is product expansion. We've added product capabilities and distribution channels where we see attractive, risk-adjusted returns.

Speaker #2: The second is digital capability. Better technology improves the customer experience, increases efficiency, and strengthens scalability. The third is capital discipline. Every investment decision is assessed against its ability to create shareholder value.

Ian Corfield: Better technology improves the customer experience, increases efficiency, and strengthens scalability. The third is capital discipline. Every investment decision is assessed against its ability to create shareholder value. These priorities support our medium-term targets of around 10% annual lending growth and our North Star goal, return on average equity above 16%. Investors sometimes ask what gives us confidence in achieving returns above 16%. Our confidence is built on the fact that delivering this doesn't require a substantive step change or a material investment paying off. There are just four key drivers. Firstly, continuing business growth at around 10% annually. That is in line with the group's historic growth rates. Secondly, maintaining risk-adjusted margins through disciplined pricing and underwriting. Thirdly, keeping a risk-weighted asset mix consistent with today. Fourthly, leveraging our operating platform so that costs grow much more slowly than revenues. We have already made meaningful progress.

Speaker #2: These priorities support our medium-term targets of around 10% annual lending growth and our North Star goal: return on average equity above 16%. Investors sometimes ask what gives us confidence in achieving returns above 16%.

Speaker #2: Our confidence is built on the fact that delivering this doesn't require a substantive set change or a material investment paying off. There are just four key drivers.

Speaker #2: Firstly, continuing business growth at around 10% annually. That's in line with the group's historic growth rates. Secondly, maintaining risk-adjusted margins through disciplined pricing and underwriting.

Speaker #2: Thirdly, keeping a risk-weighted asset mix consistent with today. And fourthly, leveraging our operating platform so that costs grow much more slowly than revenues. We've already made meaningful progress.

Speaker #2: Our return on required equity in the first half was 14.5% and reflects a business that is transitioning from restructuring into growth. As cost savings flow through and capital is deployed into new opportunities, we see a clear path for further improvement.

Ian Corfield: Our return on required equity in the H1 was 14.5% and reflects a business that is transitioning from restructuring into growth. As cost savings flow through and capital is deployed into new opportunities, we see a clear path for further improvement. Our H1 performance followed this trajectory to higher returns. Customer lending increased to GBP 3.5 billion, reflecting continued growth in both Retail Finance and Business Finance. Adjusted profit before tax increased by 9.4% to GBP 31.3 million. Risk-adjusted margins remained stable and cost of risk improved. Our CET1 ratio increased to 14.3%, providing substantial capital flexibility while remaining comfortably above our 13% ambition. We have also begun returning that capital to shareholders through both an increased interim dividend and our share buyback program. Overall, this is a set of results that demonstrates balance. We are growing, we are improving returns, we are managing risk carefully, and we are returning capital.

Speaker #2: Our first-half performance followed this trajectory to higher returns. Customer lending increased to £3.5 billion, reflecting continued growth in both retail finance and business finance.

Speaker #2: Adjusted profit before tax increased by 9.4% to 31.3 million. Risk-adjusted margins remained stable and cost of risk improved. Our CET1 ratio increased to 14.3%, providing substantial capital flexibility while remaining comfortably above our 13% ambition.

Speaker #2: We've also begun returning capital to shareholders through both an increased interim dividend and our share buyback program. Overall, this is a set of results that demonstrates balance.

Speaker #2: We're growing, we're improving returns, we're managing risk carefully, and we're returning capital. That is the combination of outcomes we want to deliver. I'd now like to turn to how our strategy is being translated into actions.

Ian Corfield: That is the combination of outcomes we want to deliver. I would now like to turn to how our strategy is being translated into actions. On product expansion, we have secured exciting new partnerships with Magnet and Centrica British Gas. These scale relationships will strongly underpin our previously announced push into point-of-sale credit for home improvements. In business finance, we have grown our bridging proposition and launched speciality finance. Our deposit business has broadened its distribution by launching our first aggregator partnership via the number one player, Hargreaves Lansdown. On digital delivery, customer adoption of our V12 app continues to increase, now at over 660,000 users. Our bridging portal is live, and we are simplifying our technology architecture to improve both efficiency and scalability. On capital discipline, we have completed the first tranche of the buyback program while taking actions that deliver approximately GBP 15 million of annualized run rate savings.

Speaker #2: On product expansion, we've secured exciting new partnerships with Magna and Centrica, British Gas. These scaled relationships will strongly underpin our previously announced push into point-of-sale credit for home improvements.

Speaker #2: In Business Finance, we've grown our bridging proposition and launched Specialty Finance. Our deposit business has broadened its distribution by launching our first aggregator partnership via the number one player, Hargreaves Lansdown.

Speaker #2: On digital delivery, customer adoption of our V12 app continues to increase, now at over 660,000 users. Our bridging portal is live, and we are simplifying our technology architecture to improve both efficiency and scalability.

Speaker #2: And on capital discipline, we've completed the first tranche of the buyback program, while taking actions that deliver approximately $15 million of annualized run-rate savings.

Speaker #2: The common theme across all three areas is execution. Rather than focusing on aspirations or intentions, the business is demonstrating measurable progress. That's the excitement for us.

Ian Corfield: The common theme across all three areas is execution. Rather than focusing on aspirations or intentions, the business is demonstrating measurable progress. That is the excitement for us, moving the company from strategy into delivery. The H1 has shown that we can make that shift, and I will return later on to our priorities in H2. I am now delighted to hand over to Rachel to review our financial performance in more detail.

Speaker #2: Moving the company from strategy into delivery—the first half has shown that we can make that shift, and we'll return later on to our priorities in H2.

Speaker #2: I'm now delighted to hand over to Rachel to review our financial performance in more detail.

Speaker #1: Thank you, Ian. I'll now take you through the financial performance for the first half of 2026. Overall, this was a strong first half, with profit growth, continued balance sheet expansion, lower credit losses, and a significantly strengthened capital position following the completion of the vehicle finance exit.

Rachel Lawrence: Thank you, Ian. I will now take you through the financial performance for the H1 2026. Overall, this was a strong H1, with profit growth, continued balance sheet expansion, lower credit losses, and a significantly strengthened capital position following the completion of the vehicle finance exit. These results leave us firmly on track to deliver our 2026 guidance and demonstrate clear progress towards our medium-term targets. Starting with the income statement, adjusted profit before tax increased by 9.4% to GBP 31.3 million. That was mainly driven by 7% growth in average lending balances, while risk-adjusted margins held steady at 4.2%. Adjusted operating expenses increased by 8.8% to GBP 39.5 million. This reflects the transitional impact of reallocating centrally managed costs following the vehicle finance exit, together with selective investment in growth initiatives. Importantly, the vehicle finance exit delivered GBP 5.5 million of cost savings in the H1.

Speaker #1: These results leave us firmly on track to deliver our 2026 guidance and demonstrate clear progress towards our medium-term targets. Starting with the income statement, adjusted profit before tax increased by 9.4% to £31.3 million.

Speaker #1: That was mainly driven by a 7% growth in average lending balances, while risk-adjusted margins held steady at 4.2%. Adjusted operating expenses increased by 8.8% to £39.5 million.

Speaker #1: This reflects the transitional impact of reallocating centrally managed costs following the vehicle finance exit, together with selective investment in growth initiatives. Importantly, the vehicle finance exit delivered £5.5 million of cost savings in the first half.

Speaker #1: Credit performance remained strong. The impairment charge was broadly stable at £14.7 million across a larger lending portfolio, reducing the cost of risk by 10 basis points to 0.9%.

Rachel Lawrence: Credit performance remained strong. The impairment charge was broadly stable at GBP 14.7 million across a larger lending portfolio, reducing the cost of risk by 10 basis points to 0.9%. Adjusted return on required equity increased by 60 basis points to 14.5%. This measure normalizes equity to the group's 13% CET1 medium-term ambition and therefore removes the distorting effect of surplus capital. Adjusted return on average equity was 13.1%, 110 basis points lower year-on-year, principally because average reported equity was higher following capital generation and the vehicle finance exit. Total earnings per share increased to 126.4 pence compared with 87.6 pence in the prior period. On a statutory basis, total profit before tax increased by 40.8% to GBP 31.4 million, helped by the vehicle finance disposal gain.

Speaker #1: Adjusted return on required equity increased by 60 basis points to 14.5%. This measure normalizes equity to the group's 13% CET1 medium-term ambition, and therefore removes the distorting effect of surplus capital.

Speaker #1: Adjusted return on average equity was 13.1%, 110 basis points lower year on year, principally because average reported equity was higher following capital generation and the vehicle finance exit.

Speaker #1: Total earnings per share increased to 126.4 pence, compared with 87.6 pence in the prior period. And on a statutory basis, total profit before tax increased by 40.8% to £31.4 million, helped by the vehicle finance disposal gain.

Speaker #1: Turning to margin, group net interest margin remained stable at 4.7%, despite the lower interest rate environment. This reflects active management of both asset pricing and funding costs.

Rachel Lawrence: Turning to margin, group net interest margin remained stable at 4.7%, despite the lower interest rate environment, and this reflects active management of both asset pricing and funding costs. Within retail finance, NIM did reduce by 30 basis points to 6.7%. This primarily reflected the repricing of retained higher volume retailer contracts and the flatter yield curve. Those pricing decisions were deliberate and considered within our overall approach to growth, risk, and returns. Business finance NIM improved by 40 basis points to 2.9%, benefiting from repricing of past due loans and early repayment charges. However, net revenue margin increased only by 10 basis points to 3.3%, as lower fee income partly offset the improvement in NIM. At a group level, gross yield reduced from 9.6% to 9.0%, while the cost of funds improved from 4.9% to 4.2%. The broadly matched movement demonstrates disciplined repricing across assets and liabilities.

Speaker #1: Within retail finance, NIM did reduce by 30 basis points to 6.7%. This primarily reflected the repricing of retained higher-volume retailer contracts and the flatter yield curve.

Speaker #1: Those pricing decisions were deliberate and considered within our overall approach to growth, risk, and returns. Business Finance NIM improved by 40 basis points to 2.9%, benefiting from the repricing of past due loans and early repayment charges.

Speaker #1: However, net revenue margin increased only by 10 basis points to 3.3%, as lower fee income partly offset the improvement in NIM. At a group level, gross yield reduced from 9.6%–9.0%, while the cost of funds improved from 4.9% to 4.2%.

Speaker #1: The broadly matched movement demonstrates disciplined repricing across assets and liabilities. The key point is that the diversified business mix and active balance sheet management enabled us to protect group NIM and maintain risk-adjusted margin at 4.2%.

Rachel Lawrence: The key point is that the diversified business mix and active balance sheet management enabled us to protect group NIM and maintain risk-adjusted margin at 4.2%. On costs, adjusted operating expenses increased by 8.8% to GBP 39.5 million. However, that movement should be viewed in the context of the vehicle finance exit and the transition to a simpler operating model. Following the exit, some centrally managed previously allocated to vehicle finance are now borne by the continuing businesses. We have also invested GBP 0.4 million in product expansion initiatives, primarily through recruitment of specialist capability. As mentioned, the vehicle finance exit did deliver GBP 5.5 million of cost savings in the H1. The adjusted cost-to-income ratio increased by 100 basis points to 46.5%, which is consistent with our guidance of approximately 47% for 2026. I will provide some further details on our cost program on the next slide.

Speaker #1: On costs, adjusted operating expenses increased by 8.8% to £39.5 million. However, that movement should be viewed in the context of the vehicle finance exit and the transition to a simpler operating model.

Speaker #1: Following the exit, some centrally managed costs previously allocated to vehicle finance are now borne by the continuing businesses. We have also invested £0.4 million in product expansion initiatives, primarily through recruitment of specialist capability.

Speaker #1: As mentioned, the vehicle finance exit did deliver £5.5 million of cost savings in the first half. The adjusted cost-income ratio increased by 100 basis points to 46.5%, which is consistent with our guidance of approximately 47% for 2026.

Speaker #1: I'll provide some further details on our cost program on the next slide. Following the vehicle finance exit, we identified a £25 million cost reduction opportunity to be delivered by 2028, measured against that business's annual run-rate cost base of approximately £30 million.

Rachel Lawrence: Following the vehicle finance exit, we identified a GBP 25 million cost reduction opportunity to be delivered by 2028, measured against that business' annual run rate cost base of approximately GBP 30 million. Actions completed by 1 July are expected to deliver approximately GBP 15 million of annualized run rate savings, representing 60% of the target. We recognize the GBP 5.5 million of savings in the H1, and we expect approximately GBP 13.5 million to be recognized across the full year 2026. Total costs to achieve the program are expected to be approximately GBP 17 million. Of this, GBP 5 million were incurred in 2025, and a further GBP 12 million is expected between 2026 and 2028. Within that GBP 12 million, GBP 1.8 million was incurred in the H1 of 2026. The program remains a central component of our route to improve operating leverage and our medium-term ambitions.

Speaker #1: Actions completed by the 1st of July are expected to deliver approximately £15 million of annualized run-rate savings, representing 60% of the target. We recognized £5.5 million of savings in the first half, and we expect approximately £13.5 million to be recognized across the full year 2026.

Speaker #1: Total costs to achieve the program are expected to be approximately £17 million. Of this, £5 million were incurred in 2025, and a further £1.8 million is expected. £12 million is expected between 2026 and 2028.

Speaker #1: Within that £12 million, £1.8 million was incurred in the first half of 2026. The program remains a central component of our route to improve operating leverage and our medium-term ambitions.

Speaker #1: The remaining work includes further simplification and efficiency actions, and we remain on track to deliver the £25 million target by 2028. On credit, the headline is encouraging.

Rachel Lawrence: The remaining work includes further simplification and efficiency actions, and we remain on track to deliver the GBP 25 million target by 2028. On credit, the headline is encouraging. Cost of risk reduced by 10 basis points to 0.9%, with resilient performance across both our principal lending businesses. Retail finance cost of risk remained stable at 1.4%, reflecting resilient customer performance and continued high-quality origination. Business finance cost of risk improved by 10 basis points to 0.5%, reflecting improved asset quality and lower stage 3 provisions. The business finance impairment charge was primarily attributable to one legacy case, and provision coverage increased modestly to 1.5%. This reflects prudent provisioning for that case, as well as a more cautious macroeconomic outlook.

Speaker #1: Cost of risk reduced by 10 basis points to 0.9%, with resilient performance across both our principal lending businesses. Retail finance cost of risk remained stable at 1.4%, reflecting resilient customer performance and continued high-quality origination.

Speaker #1: Business finance cost of risk improved by 10 basis points to 0.5%, reflecting improved asset quality and lower Stage 3 provisions. The business finance impairment charge was primarily attributed to one legacy case, and provision coverage increased modestly to 1.5%.

Speaker #1: This reflects prudent provisioning for that case, as well as a more cautious macroeconomic outlook. Our expected loss scenario ratings were unchanged from December 2025, although peak unemployment assumptions increased and house price assumptions were weakened.

Rachel Lawrence: Our expected loss scenario ratings were unchanged from December 2025, although peak unemployment assumptions increased and house price assumptions were weakened, resulting in an additional GBP 1.7 million of IFRS 9 provisions in the period. Overall, portfolio performance remains supportive of stable risk-adjusted margins, while our provisioning reflects the more cautious macroeconomic assumptions. Moving to the balance sheet, total assets reduced to GBP 3.95 billion. That mainly reflects the completion of the vehicle finance exit and the normalization of the elevated cash balances we had at year-end. We used surplus liquidity to purchase GBP 100 million of gilts, maintaining a high-quality liquid asset portfolio to support balance sheet resilience. Customer deposits reduced by 7.9% to GBP 3.23 billion, reflecting the lower funding requirement after the disposal rather than a constraint on access to retail funding. The loan-to-deposit ratio increased to 107% from 105% at year-end.

Speaker #1: Resulting in an additional £1.7 million of our FRS9 provisions in the period. Overall, portfolio performance remained supportive of stable risk-adjusted margins, while our provisioning reflects the more cautious macroeconomic assumptions.

Speaker #1: Moving to the balance sheet, total assets reduced to £3.95 billion. That mainly reflects the completion of the vehicle finance exit and the normalization of the elevated cash balances we had at year-end.

Speaker #1: We used surplus liquidity to purchase £100 million of gilts, maintaining a high-quality liquid asset portfolio to support balance sheet resilience. Customer deposits reduced by 7.9% to £3.23 billion, reflecting the lower funding requirement after the disposal.

Speaker #1: Rather than a constraint on access to retail funding, the loan-to-deposit ratio increased to 107% from 105% at year-end. Shareholder equity increased by 4% to £389.1 million, and importantly, tangible book value per share increased by 3.6% to £20.45.

Rachel Lawrence: Shareholder equity increased by 4% to GBP 389.1 million, and importantly, tangible book value per share increased by 3.6% to GBP 20.45. On to lending growth. Continuing loans and advances increased by 4.9% to GBP 3.5 billion, with growth across both retail and business finance. Retail finance was supported by the established national retail partnerships and newer product initiatives. Business finance benefited from strong activity in residential investment and continued development of the bridging proposition. Portfolio mix remained stable, with business finance representing 56% of lending and retail finance 44%. The group's CET1 ratio increased by 148 basis points from 12.9% to 14.3%. The gain on sale and release of vehicle finance risk-weighted assets contributed approximately 148 basis points, while maintaining vehicle finance servicing operations to the point of migration consumed 30 basis points of capital.

Speaker #1: Onto lending growth. Continuing loans and advances increased by 4.9% to £3.5 billion, with growth across both retail and business finance. Retail finance was supported by the established national retail partnerships and newer product initiatives.

Speaker #1: Business finance benefited from strong activity in residential investment and continued development of the bridging proposition. Portfolio mix remained stable, with business finance representing 56% of lending and retail finance 44%.

Speaker #1: The group's CET1 ratio increased by 148 basis points, from 12.9% to 14.3%. The gain on sale and release of vehicle finance risk-weighted assets contributed approximately 148 basis points, while maintaining vehicle finance servicing operations to the point of migration consumed 30 basis points of capital.

Speaker #1: The continuing businesses were capital generative during the period, and the interim dividend and the initial £5 million share buyback tranche together returned approximately 30 basis points of capital to shareholders.

Rachel Lawrence: The continuing businesses were capital generative during the period, and the interim dividend and the initial GBP 5 million share buyback tranche together returned approximately 30 basis points of capital to shareholders. The first GBP 5 million share buyback tranche is now complete and reduced shares in issue by approximately 323,000, and the second GBP 5 million tranche will launch in September and is expected to reduce CET1 by approximately 20 basis points. At 14.3% CET1, this is 130 basis points above our medium-term ambition of 13%. Total capital was at 16.6%, and the leverage ratio at 10.3%. The group therefore remains capitalized to support continuing growth and shareholder distributions. The strategic sequence is clear. The vehicle finance exit released capital and reduced risk. The continuing businesses are generating capital, and we are allocating capacity between attractive growth opportunities and shareholder returns within our capital framework.

Speaker #1: The first £5 million share buyback tranche is now complete and reduced shares in issue by approximately 323,000. The second £5 million tranche will launch in September and is expected to reduce CET1 by approximately 20 basis points.

Speaker #1: At 14.3% CET1, this is 130 basis points above our medium-term ambition of 13%. Total capital was at 16.6%, and the leverage ratio was at 10.3%.

Speaker #1: The group, therefore, remains capitalized to support continuing growth and shareholder distributions. The strategic sequence is clear. The vehicle finance exit released capital and reduced risk.

Speaker #1: The continuing businesses are generating capital, and we are allocating capacity between attractive growth opportunities and shareholder returns within our capital framework. Customer deposits accounted for 92.1% of total funding, underscoring the strength of our retail funding model.

Rachel Lawrence: Customer deposits accounted for 92.1% of total funding, underscoring the strength of our retail funding model, and the deposit mix remained broadly stable, with term deposits representing 80% of deposits and access deposits representing 20%. FSCS coverage remained high at 97.6%. Liquidity is also strong, with an average liquidity coverage ratio of 208.6%, and our savings franchise continues to give us funding flexibility for planned growth. New products, automation, and wider distribution, including the deposit aggregator partnership launched in July, further strengthens that capability. Finally, our full year 2026 guidance is unchanged. We still expect net lending growth of 8% to 10%, around 10 basis point improvement in our risk-adjusted margin, a cost-income ratio of around 47%, and a CET1 ratio of approximately 13.5%. The H1 gives us a solid base for delivery.

Speaker #1: And the deposit mix remained broadly stable, with term deposits representing 80% of deposits and access deposits representing 20%. FSCS coverage remained high, at 97.6%.

Speaker #1: Liquidity is also strong, with an average liquidity coverage ratio of 208.6%, and our savings franchise continues to give us funding flexibility for planned growth.

Speaker #1: New products, automation, and wider distribution, including the deposit aggregator partnership launched in July, further strengthen that capability. Finally, our full-year 2026 guidance is unchanged.

Speaker #1: We still expect net lending growth of 8% to 10%, around a 10 basis point improvement in our risk-adjusted margin, a cost-income ratio of around 47%, and a CET1 ratio of approximately 13.5%.

Speaker #1: The first half gives us a solid base for delivery. Lending growth is progressing. NIM is stable. Credit performance has improved. Cost actions are in place, and capital remains strong.

Rachel Lawrence: Lending growth is progressing, NIM is stable, credit performance has improved, cost actions are in place, and capital remains strong. Our focus remains the same: targeted growth, stable risk-adjusted margins, better cost efficiency, and disciplined capital allocation. Together, these support our ambition to deliver return on average equity of more than 16% by 2028. Thank you, and I will now hand back to Ian, who will cover the outlook.

Speaker #1: So, our focus remains the same: targeted growth, stable risk-adjusted margins, better cost-efficiency, and disciplined capital allocation. Together, these support our ambition to deliver a return on average equity of more than 16% by 2028.

Speaker #1: Thank you, and I will now hand back to Ian, who will cover the outlook.

Speaker #2: Thanks, Rachel. Now we've covered the first half performance, I'll turn to our outlook for the remainder of the year. The key message is straightforward.

Ian Corfield: Thanks, Rachel. Now we've covered the H1 performance, I'll turn to our outlook for the remainder of the year. The key message is straightforward. We remain on track for our 2026 guidance and continue to see a clear pathway towards our medium-term targets. Equally, as we move into the H2, our priorities are clear. First, we will continue to grow through both existing and newly launched products. Secondly, we will deliver the next phase of our cost program and technology simplification agenda. And third, we will complete the remaining GBP 5 million tranche of the buyback program from September onwards. While the macroeconomic outlook remains uncertain, we believe Secure Trust Bank is well-positioned. Our retail finance customer base are high quality, middle class borrowers. Our business finance portfolio is well secured, and our savings franchise provides stable and diversified funding.

Speaker #2: We remain on track for our 2026 guidance and continue to see a clear pathway towards our medium-term targets. Equally, as we move into the second half, our priorities are clear.

Speaker #2: First, we will continue to grow through both existing and newly launched products. Secondly, we will deliver the next phase of our cost program and technology simplification agenda.

Speaker #2: And third, we will complete the remaining £5 million tranche of the buyback program from September onwards. While the macroeconomic outlook remains uncertain, we believe Secure Trust Bank is well positioned.

Speaker #2: Our retail finance customer base comprises high-quality, middle-class borrowers. Our business finance portfolio is well secured, and our savings franchise provides stable and diversified funding.

Speaker #2: The business model has proven resilient through different economic cycles, and we believe we are well-placed to benefit from any stability or improvement in the broader environment.

Ian Corfield: The business model has proven resilient through different economic cycles, and we believe we are well placed to benefit from any stability or improvement in the broader environment. Let me close with the investment case. Secure Trust Bank today is a simpler, more focused, and better capitalized business. We operate in attractive specialist markets. We have multiple opportunities to grow. We're reducing costs and increasing efficiency. Credit performance remains resilient, and we have the capital strength to both support growth and increase returns to shareholders. While there remains work to do in ensuring delivery in an unstable macro environment, the H1 demonstrates that our strategy is working. We've delivered strong performance, completed a major strategic transition, and made meaningful progress towards our medium-term goals. Thank you for your continued support, and I'll now hand over for your questions.

Speaker #2: So let me close with the investment case. Secure Trust Bank today is a simpler, more focused, and better-capitalized business. We operate in attractive specialist markets.

Speaker #2: We have multiple opportunities to grow. We're reducing costs and increasing efficiency. Credit performance remains resilient, and we have the capital strength to both support growth and increase returns to shareholders.

Speaker #2: While there remains work to do in ensuring delivery in an unstable macro environment, the first half demonstrates that our strategy is working. We've delivered strong performance, completed a major strategic transition, and made meaningful progress towards our medium-term goals.

Speaker #2: Thank you for your continued support. I'll now hand over for your questions.

Speaker #3: We will now begin the Q&A session. If you wish to ask a question, please use the Raise Hand function at the bottom of your Zoom screen, or use the Ask a Question button on the Spark Live page.

Operator: We will now begin the Q&A session. If you wish to ask a question, please use the raise hand function at the bottom of your Zoom screen or use the ask a question button on the SparkLive page. We'll take our first question from Gary Greenwood of Shore Capital. Please go ahead.

Speaker #3: We'll take our first question from Gary Greenwood of Shore Capital. Please go ahead.

Speaker #4: Oh, hi. Thanks for taking my questions. I've got three, if I can. So, the first one was on costs. I think you've indicated you'll get to sort of £13.5 million this year.

Gary Greenwood: Oh, hi. Thanks for taking my questions. I have three, if I can. The first one was on costs. I think you have indicated you will get to 13.5 million this year. I think your original plan was to be at 10 million this year. Is that you executing faster, or is it you executing more than you previously expected? Also, why are you not upgrading your guidance, or are you just being conservative at this part of the year? That is the first one. The second one was just on the retail finance repricing that you mentioned impacted on NIM. If you could just elaborate a little bit on what is going on there. The third one was on deposits.

Speaker #4: I think your original plan was to be at £10 million this year. So is that you executing faster, or is it you executing more than you previously expected?

Speaker #4: And then also, why aren't you upgrading your guidance given that costs are ahead? Or are you just being sort of conservative at this part of the year?

Speaker #4: So that's the first one. The second one was just on the retail finance repricing that you mentioned impacted NIM. If you could just elaborate a little bit on what's going on there?

Speaker #4: And then the third one was on deposits. Obviously, you were sort of out of the market in the first half of the year, as you saw in the vehicle finance business.

Gary Greenwood: Obviously, you were out of the market in the H1 of the year as you sold the vehicle finance business. I am guessing deposits will start to grow again now. Just maybe talk a little bit about that in the context of what seems to be quite a competitive market at the moment and how you navigate that. Thanks.

Speaker #4: I'm guessing deposits will start to grow again now, so perhaps you could talk a little bit about that in the context of what seems to be quite a competitive market at the moment, and how you navigate that.

Speaker #4: Thanks.

Speaker #2: Thanks, Gary. Appreciate the questions. I think what I'll do is let Rachel address the NIM question in a second. I'll deal with cost and then come on to reflect on deposits.

Ian Corfield: Thanks, Gary. Appreciate the questions. I think what I will do is, I will let Rachel address the NIM question in a second. I will deal with cost and then come on to reflect on deposits. I think just in terms of cost, to answer your question directly, this is us executing faster. We now have a bottom-up plan essentially that addresses the GBP 25 million. So we are clear where that is going to come from, over the course of this year into 2027 and a little bit in 2028. We are getting there at a pace that was ahead of our initial projections. But the reason we are not upgrading our guidance in that respect is that ultimately, we are now moving into the phase of that cost reduction program that gets a bit trickier.

Speaker #2: I think just, in terms of cost, to answer your question directly, this is executing faster. We now have a bottom-up plan, essentially, that addresses the £25 million.

Speaker #2: So we're clear where that's going to come from over the course of this year, into 2027, and a little bit in 2028. We're getting there at a pace that is ahead of our initial projections.

Speaker #2: But the reason we're not upgrading our guidance in that respect is that, ultimately, we're now moving into the phase of that cost reduction program that gets a bit trickier.

Speaker #2: We've obviously closed a part of the business, and the people who were running that business have left. We've also started to exit a number of technology platforms.

Ian Corfield: We have obviously closed a part of the business and the people who were running that business have left, and we have started to exit a number of technology platforms. But the simplification across the broader business, which we are now focused on, will of course, be more challenging by its nature because it relies on technology deployment into different parts of the business. That does not mean we are not confident in delivering it. We are, and I think you can see the progress that we have made in getting to a fifteen point five million run rate already. But as I say, the reason we are not upgrading that guidance is we think we can get there more rapidly, but ultimately, delivering that full GBP 25 million is still our goal. So hopefully that addresses your question.

Speaker #2: But the simplification across the broader business, which we are now focused on, will, of course, be more challenging by its nature because it relies on technology deployment into different parts of the business.

Speaker #2: That doesn't mean we're not confident in delivering it. We are, and I think you can see the progress that we've made in getting to a £15.5 million run rate already.

Speaker #2: But as I say, the reason we're not upgrading that guidance is we think we can get there more rapidly, but ultimately, delivering that full £25 million is still our goal.

Speaker #2: So, hopefully that addresses your question. We remain confident in that cost program, but we know we've got more wood to chop as we get into the second half and then into 2027.

Ian Corfield: We remain confident in that cost program, but we know we've got more wood to chop as we get into the H2 and then into 2027. Rachel, do you want to just reflect on margins?

Speaker #2: Rachel, do you want to just reflect on margins?

Speaker #5: Yeah. So Gary, there's probably two parts to that, to the answer on retail NIM. One is the yield curve. As it's come down in terms of Bank of England rate, then that does have a timing lag, with the furniture and now home improvements having sort of a back book that takes a while to actually execute, in terms of pipeline.

Rachel Lawrence: Yeah. Gary, there's probably two parts to that, to the answer on retail NIM. One is the yield curve. As it's come down in terms of Bank of England rate, then that does have a timing lag with the furniture and now home improvements having a backfoot that takes a while to actually execute in terms of pipeline. The second part is there is competition out there, and we are trying to ensure that our major retailers, that we take more of a share from them. That involves us having to look at our pricing. It's a competitive environment, but we believe that the returns that we get, even at that slightly lower margin, is still a very good return in terms of that business.

Speaker #5: The second part is, there is competition out there, and we are trying to ensure that with our major retailers, we take more of a share from them. That involves us having to look at our pricing.

Speaker #5: It's a competitive environment, but we believe that the returns we get, even at that slightly lower margin, are still a very good return in terms of that business.

Speaker #5: So we're happy to make those decisions to retain those large retailers at sometimes a little bit tighter margins than we might have seen in the past.

Rachel Lawrence: We're happy to make those decisions to retain those large retailers at sometimes a little bit tighter margins than we might have seen in the past.

Speaker #2: Thanks, Rachel. And Gary, just in terms of deposits—again, you're right. We definitely benefited in the first half, particularly the first quarter, from the funds that we got from the sale of vehicle finance.

Ian Corfield: Thanks, Rachel. Gary, just in terms of deposits, again, you're right, we definitely benefited in the H1, particularly the Q1 from the funds that we got from the sale of vehicle finance. Obviously, that meant that we had less of a liquidity requirement during that period of time. That said, we are still a relatively small player in a GBP 2 trillion market. What we're finding is that whilst, obviously the macro remains unstable and there are periods of time where swap rates are well advanced relative to the Bank of England rate, we are still finding opportunities to go into the market and to be booking liquidity at the sort of margins we want to see it in. Certainly, there is no challenge in terms of the overall availability of liquidity.

Speaker #2: Obviously, that meant that we had less of a liquidity requirement during that period of time. That said, we are still a relatively small player in a $2 trillion market, and what we're finding is that whilst obviously the macro remains unstable, and there are periods of time where swap rates are well advanced relative to the Bank of England rate, we are still finding opportunities to go into the market and to be booking liquidity at the sort of margins we want to see it in.

Speaker #2: And certainly, there is no challenge in terms of the overall availability of liquidity. I guess, though, that's also why we continue to be focused on expanding both our product range and our distribution for our deposits franchise.

Ian Corfield: I guess, though, that is also why we continue to be focused on expanding both our product range and our distribution for our deposits franchise. I think moving on to Hargreaves Lansdown is one step forward, but of course, there are a number of other aggregators that we will now be focused on as other sources of distribution. And we have continued to expand our product set in the H1 as well. So look, it is an unstable macro as you know, but I remain confident in our ability both to attract funds and to come in and out of the market in timing that reflects the sort of margins we want to be booking it at.

Speaker #2: I think moving on to Hargreaves Lansdown is one step forward. But of course, there are a number of other aggregators that will now be focused on as other sources of distribution.

Speaker #2: And we've continued to expand our product set in the first half as well. So, look, it's an unstable macro, as you know. But I remain confident in our ability both to attract funds and to come in and out of the market in timing that reflects the sort of margins we want to be booking at.

Speaker #4: Great. Thank you very much.

Gary Greenwood: Great. Thank you very much.

Operator: Thank you. As a reminder, if you would like to ask a question, please use the raise hand function at the bottom of your Zoom screen or use the ask a question button on the SparkLive webcast page. Our next question is a written question from Piers Brown with Investec. You have announced good progress building out new products and partnerships. For example, home improvements and bridging finance. What are your priorities for H2?

Speaker #1: Thank you. As a reminder, if you'd like to ask a question, please use the raise hand function at the bottom of your Zoom screen, or use the Ask a Question button on the Spark Live webcast page.

Speaker #1: Our next question is a written question from Piers Brown with Investec. You've announced good progress building out new products and partnerships—for example, home improvements and bridging finance.

Speaker #1: What are your priorities for the second half?

Speaker #2: Thanks for the question, Piers. Look, our priority, as I outlined in the second half, particularly from a growth and partnership perspective, is that we maintain the growth that we saw in the first half.

Ian Corfield: Thanks for the question, Piers. Look, our priority, as I outlined in the H2, particularly from a growth and partnership perspective, is that we maintain that growth that we saw in the H1. We are still looking to deliver that 8% to 10% growth in assets across the period. We continue in retail finance to sign new partnerships all the time. However, I do think that Magnet and Centrica British Gas are going to be two big cornerstone partnerships. I would not expect that to be repeated in the H2. More our focus will be on launching those partnerships and making sure that we are booking strong volumes through them. So, that focus on growth is there across the business.

Speaker #2: We are still looking to deliver that 8% to 10% growth in assets across the period. We continue, in Retail Finance, to sign new partnerships all the time.

Speaker #2: However, I do think that Magna and Centrica British Gas are going to be two big cornerstone partnerships. I wouldn't expect that to be repeated in the second half.

Speaker #2: Our focus will be on launching those partnerships and making sure that we're booking strong volumes through them. So, that focus on growth is there across the business.

Speaker #2: But the assigned bit for me remains that now we've got a much broader product set, we can take that growth in places where we see accretive opportunities for the business.

Ian Corfield: But the exciting bit for me remains that now that we've got a much broader product set, we can take that growth in places that we see accretive opportunities for the business. We're not just taking any growth that happens to be passing. We're focused on making sure that we're booking growth at margins that we think are strong and positive for the business. That's going to be our focus in the H2, alongside, of course, continuing to execute against both our cost program and our share buyback program.

Speaker #2: We're not just taking any growth that happens to be passing. We're focused on making sure that we're booking growth at margins that we think are strong and positive for the business.

Speaker #2: So that's going to be our focus in the second half. Alongside this, of course, we'll continue to execute against both our cost program and our share buyback program.

Speaker #1: Thank you. We have a follow-up from Piers, saying: "Are there any P&L items currently booked in discontinued operations that will migrate back to continuing?"

Operator: Thank you. We have a follow-up from Pearce saying, "Are there any P&L items currently booked in discontinued operations that will migrate back to continuing? Example, the GBP 9.2 million of H1 discontinued OPEX.

Operator: Thank you. We have a follow-up from Piers saying, "Are there any P&L items currently booked in discontinued operations that will migrate back to continuing? Example, the GBP 9.2 million of H1 discontinued OPEX.

Speaker #1: For example, the £9.2 million of 1H discontinued OPEX.

Speaker #2: That's an excellent question. I think Rachel should answer.

Ian Corfield: That's an excellent question, and I think Rachel should answer.

Speaker #5: Thanks, thanks. So, as you can see from the accounts, discontinued is a separate entity. What we've done, and why our cost-income ratio has gone up slightly in the first half, is because those stranded costs that related to vehicle finance are now back into the continuing business.

Rachel Lawrence: Thanks. So as you can see from the accounts, discontinued is a separate entity. What we've done and why our cost-to-income ratio has gone up slightly in the H1 is because those stranded costs that related to vehicle finance are now back into the continuing business. So we don't expect too much more to go through discontinued other than some future hedging unwinds that will continue to go through discontinued. The rest of the cost base will be firmly within continuing, which is why our cost management program needs to go into the second phase of removing those centrally managed stranded costs that weren't directly easy to be taken out in terms of stopping the business within vehicle finance. So, there won't be anything left really in discontinued much into the H2, and certainly not really a lot into 2027.

Speaker #5: So, we don't expect too much more to go through discontinued, other than some future hedging unwinds that will continue to go through discontinued. The rest of the cost base will be firmly within continuing, which is why our cost management program needs to go into the second phase of removing those centrally managed, sort of stranded costs that weren't directly easy to be taken out in terms of stopping the business within vehicle finance.

Speaker #5: So there won't be anything left, really, in discontinued much into the second half, and certainly not really a lot into 2027.

Speaker #1: Thank you. Going over the questions, I'll now hand over to management for closing remarks.

Operator: Thank you. There are no further questions. I will now hand over to management for closing remarks.

Speaker #2: Well, thanks ever so much. And thank you for giving us your time. I hope what you've heard is that Secure Trust Bank is a business that's doing what it said it would do.

Ian Corfield: Well, thanks ever so much, and thank you for giving us your time. I hope what you have heard is that Secure Trust Bank is a business that is doing what it said it would do. We have continued to grow, to generate further additional profits, and to make sure that we are driving returns that take us on track to our medium-term target of 16% return on average equity. Ultimately, those things continue to be our focus in the H2, and we are excited to crack on with that delivery program. Thanks for your support, and we look forward to seeing you all at the full year. Thank you.

Speaker #2: We've continued to grow, to generate further additional profits, and to make sure that we are driving returns that take us on track to our medium-term target of 16% return on average equity.

Speaker #2: Ultimately, those things continue to be our focus in the second half, and we're excited to crack on with that delivery program. Thanks for your support.

Speaker #2: And we look forward to seeing you all at the full-year. Thank you.

Speaker #5: Thank you.

Rachel Lawrence: Thank you.

Operator: Thank you for joining. That concludes today's call. Have a nice day.

Browse all earnings call transcripts

Q2 2026 Secure Trust Bank PLC Earnings Call

Request TrialDemo

Secure Trust Bank

Earnings