Secure Trust Bank rounds off excellent year with 110% profit growth
SOLIHULL-based Secure Trust Bank has crowned what it describes as “an excellent year” by announcing a 110% increase in underlying pre-tax profit, based on a 65% rise in operating income.
Operating income grew to £47m (2011: £28.5m), while the underlying pre-tax profit was £16.6m (2011: £7.9m). The bank’s loan to deposit ratio was 75% (2011: 57%) and underlying earnings per share increased to 89.2p (2011: 55.6p).
Paul Lynam, Chief Executive Officer, said: “2012 was an excellent year for Secure Trust Bank. We have made significant progress against our strategic plan and delivered a very strong underlying financial performance.
“We are open for business and doing exactly what the UK Government has been calling for banks to do. The potential for positive actions by the regulator and the combination of strong on-going organic demand, a healthy pipeline of business opportunities and the medium term prospects for the recently acquired businesses make us confident about the current year and the future of Secure Trust Bank.”
The bank, now in its 60th year in business, increased its customer lending balances by 93%, which it said positioned it well in relation to challenger banks. It said its banking philosophy appealed strongly to customers who believed they were underserved by larger banks with customer numbers rising by 60% to 231,713.
The acquisition of Everyday Loans in June 2012 was also a positive factor on the results, generating a value adjustment of £9.8m. The bank said the amortisation of this fair value reduced income by £1.2m and also increased expenses by £0.7m in the year. Additionally, £1.7m, including employer’s national insurance, has also been accrued in relation to management bonuses as agreed at the time of the acquisition.
An additional £12.5m of operating income was generated for the group during the period of ownership. Organic growth was achieved through increased levels of activity in the lending business, which has three main product areas: asset finance, personal lending and acquired portfolios. Income from motor finance increased by over 70%, while income from retail finance increased by 61%.
The bank said it intended to create diversified and balanced growth in its lending books which would serve the business well when the market became more competitive.
Income from the current account with a prepaid card increased by 34%, and it said this would offset the expected decline in the OneBill account following its closure to new accounts in 2009. The current account closed this year with 20,962 open accounts (2011: 17,178), and OneBill ended the year with 26,154 open accounts (2011: 28,698).
Net operating expenses were said to have increased, in line with expectations, as a result of the Everyday Loans acquisition as well as the organic growth of the business.
Henry Angest, chairman, added: “The results announced today evidence that Secure Trust Bank has had another successful year. Our strong balance sheet gives us the potential to contribute even more to the UK economic recovery if decisive steps are taken to make the competitive playing field less biased towards the large banks.”
