Secure Trust Bank sees new business lending reach record £2.1bn in 2022

This was a record for the lender although it said it was “proactively tightening lending criteria” over the year. 

Secure Trust Bank put this down to its “strong loan book growth” and “careful management” of its net interest margin. 

Its total lending balances rose by 15.3 per cent to £2.19bn as the group described itself as “agile and responsive” to changing market conditions over the year. Its net interest margin fell by 0.4 per cent to 5.7 per cent. 

It said the decrease in its net interest margin reflected the higher interest rate environment amid a shift towards better yielding, but better quality, prime interest-free lending for retail customers and a drop in higher yielding development loans in real estate finance. 

The group reported a 21.4 per cent decline in its profit before tax from £56m in 2021 to £44m in 2022. Before impairment charges, its profit before tax came to £76.1m, a 28.1 per cent annual growth. It said this was because its profits in 2021 benefitted from impairment releases while in 2022 impairment charges “normalised”. 

Its net impairment charge rose significantly from £5m to £38.2m last year following releases of Covid-driven provisions in the prior year.  

Lord Forsyth, chairman of Secure Trust Bank, said it was expected that last year’s profits would be impacted by this. 

Real estate confidence 

Secure Trust Bank’s real estate finance business which provides loans to landlords and investors against residential properties saw new lending rise by 2.2 per cent to £384.5m. The division’s revenue increased by 5.3 per cent to £57.7m.  

The group said the pipeline of business opportunities in real estate finance had started to rise again. Secure Trust Bank said it was confident its real estate finance business would deliver another strong performance despite uncertainty in the market and economy. 

It said the higher revenue was a result of a rise in average lending balances, increased interest rates and one-off fees. This was offset by a “lower mix of development lending”. 

New business lending for its real estate finance business also reached a record level due to a strong first half of 2022. 

Some 85 per cent of its loan book was for residential investment, including £144.6m of its Greener Homes Scheme loans. The average loan to value (LTV) of its book came to 57.7 per cent, up from 56 per cent in 2021. It said this reduced its exposed risk to credit losses. 

David McCreadie, chief executive of Secure Trust Bank, said: “I am delighted with our positive operational performance and strong cost discipline during the year. The Group has grown lending balances prudently, having tightened credit criteria through the year, and has delivered significant operational efficiency improvements.  

“With significant growth potential in our attractive, specialist lending markets we are well placed to realise our ambitions. We will continue to consider potential merger and acquisition opportunities which can complement our core markets. We remain confident about the future as we make further progress towards our medium-term targets.” 

Chairman retirement 

The retirement of Lord Forsyth was announced alongside the results. 

He will step down from the business at its annual general meeting in 2024 which will make it the 10th year of him serving on the board. Lord Forsyth joined the business in 2014 as an independent non-executive director and was appointed chairman in 2016. 

The process for his successor has begun.