Lender boosts cost savings plan on mission to £4bn order book
Specialist lender Secure Trust Bank (STB) has increased its cost savings target from £5m to £8m after redesigning the organisation.
The Solihull-headquartered lender says the cost optimisation programme ‘Project Fusion’ has reorganised the business, completed IT development work and made changes to a new digital savings app.
STB has made further progress towards its £4bn loan book target, with a 3.2% increase in net lending during the first half of 2024, with a 7.3% rise in its Consumer Finance division.
It saw a 14% increase in total profit before tax, reaching £17.1m, up from £15m during the same period last year.
However, the bank also encountered challenges, including a £28.2m impairment charge, up from £23m last year due to the riskier environment.
Following a review by the Financial Conduct Authority (FCA), STB temporarily paused vehicle finance collections.
The suspension led to an increase in loan defaults and delays in asset recovery, prompting the bank to raise its coverage for potential losses in this area to 10.7%, with the risk cost rising to 8.8%.
The Group expects that the recent Bank of England rate cut and an improved inflation outlook will stimulate demand across its business areas.
David McCreadie, chief executive officer, said: “Secure Trust Bank continues to make progress towards its medium-term targets and strategic priorities. In the first half, we have delivered solid loan book growth and managed cost increases through our cost optimisation programme, Project Fusion. Today we are upgrading our cost savings target for Project Fusion from £5m to £8m.
“The business has delivered a double-digit increase in our adjusted profit before tax pre-impairments. We have continued to grow our loan book towards the £4 billion target, at which we expect to deliver an adjusted return on average equity of 14-16%. As such, we remain confident in achieving our medium-term targets.”
