Secure Trust Bank has revealed a 31.3% year-on-year increase in group pre-tax profits to £15.1m for the first half of 2018.
Senior executives say a repositioning of its business model towards lower risk lending in attractive market segments, and continued growth in both business finance and consumer finance, have led to income growth and reduced impairment losses.
The business also reported a rise in operating income to £72.5 million, compared to £61.1 million in 2017 and total assets of £2.19 billion, up 34.4% from £1.63 billion for the same period last year.
The bank’s invoice finance business has funded more than £2 billion of customer invoices since inception in 2014, according to the results.
Bank chairman Lord Forsyth said: “I am pleased to report very good progress over the last six months including signing up our one millionth customer and improved profitability.
“This reflects well on the hard work and dedication of all our staff and their commitment to the business. This positive momentum sets us up well for the rest of 2018 and beyond notwithstanding the economic and political uncertainties.”
Paul Lynam, chief executive (pictured), added: “During 2016 and 2017, we repositioned our business away from higher risk, higher income consumer credit activities and reallocated capital to lower risk lending segments across a focused selection of attractive market segments.
“The growth of more than 36% in underlying profits before tax reported today clearly shows the benefits of this decision. Balance sheet and customer numbers have grown strongly in the first six months of 2018 as we have invested our capital.
“We remain well positioned to continue developing our business model in line with our ambitions, creating sustainable value for our consumer and SME customers, our people and our shareholders.”
The bank reported that motor finance balances grew to £272 million compared to £258.4 million at the end of H1 2017.
The bank stopped writing new sub-prime motor loans in January 2017 and has been running this element of its book off and replacing it with lower risk, lower margin loans.
It is currently developing initiatives to enhance its system capabilities to deliver a broader range of products under a new motor lending platform.
The bank also said it was continuing to prioritise retail point of sale finance, with balances growing to £508 million from £394.3 million a year ago.
Secure Trust Bank reported a fall in asset finance lending balances to £87.9 million compared to £111.5 million for the same period last year as it avoids competing in low margin segments.
Lynam added: “Some lenders are offering loans up to or exceeding 100% of open market value on asset finance at extremely low margins, by historical standards.
“We are not prepared to compromise on risk or price simply to achieve short term net balance sheet growth, and as matters stand expect this part of the lending portfolio to continue to contract. We will revisit our appetite for recommencing new lending in light of market developments in this scale part of the UK SME lending market.”
