Secure Trust Bank’s 2025 scorecard in plain English
Secure Trust Bank has posted a steady set of 2025 numbers while unveiling a refreshed strategy and a £10 million share buyback plan. The core bank is growing, margins held firm despite falling rates, and capital moved up a notch.
| Key metric (continuing) | 2025 |
|---|---|
| Profit before tax | £59.3 million (2024: £59.4 million) |
| Return on average equity | 14.3% (2024: 14.6%) |
| Net interest margin | 4.7% (unchanged) |
| Cost income ratio | 45.2% (improved from 47.4%) |
| Net lending balances | £3,295.8 million (up 8.1%) |
| Customer deposits | £3,509.6 million (up 8.2%) |
| CET1 capital ratio | 12.9% (up 60 bps) |
| CET1 pro forma post-sale | 14.7% |
| Total dividend | 35.5p per share (up from 33.8p) |
| Tangible book value per share | £19.73 (up 5.8%) |
The sale of the Consumer Vehicle Finance business completed on 25 February 2026, further boosting capital on a pro forma basis to 14.7%.
Strategy refresh: targeted growth for higher returns
The new mantra is targeted growth for higher returns, built on three planks:
- Product expansion – grow existing businesses and add complementary products.
- Effective digital solutions – scalable tech to lower cost and widen distribution.
- Capital discipline – deploy capital where returns are strongest, return surplus if not needed.
Medium-term targets are punchy: around 10% annual net lending growth and ROAE above 16%. Management also wants the cost income ratio down to 35-40% over time. A simplified structure around Retail Finance and Business Finance, supported by Savings, plus operating leverage and Project Fusion savings of about £8 million a year, should help.
Dividends and the new £10 million buyback
- Total 2025 dividend of 35.5p per share – final dividend 23.7p payable on 21 May 2026 to holders on 24 April 2026.
- Share buyback of £10 million to be delivered in tranches over the next 12 months, subject to regulatory approval and market conditions.
With CET1 of 12.9% at year end and a pro forma 14.7% post the vehicle finance sale, the Group plans to run around 13% CET1 and put surplus capital to work – either in high-return lending or back to shareholders. Notably, the Company points out its year-end share price of £12.45 was materially below tangible book value of £19.73. In that context, buybacks can be accretive if executed sensibly.
How the divisions performed
Retail Finance keeps growing market share
- New business £1,407.0 million, up 9.1%.
- Lending balances £1,466.5 million, up 8.0%.
- Net interest margin 6.9%; risk adjusted margin 5.8%.
- New business market share up to 15.5%.
- Over 475,000 app registrations, supporting lower-cost service and cross-sell.
Retail Finance is a scale engine for STB, benefiting from a deep retail partner network across around 900 retailers and strong digital origination.
Business Finance grows despite a tougher backdrop
Real Estate Finance
- New lending £451.0 million; balances £1,466.9 million (up 9.4%).
- Average LTV 57.3% against a 70% maximum on investment loans.
- Impairments £8.8 million, reflecting two specific cases, largely a legacy development now materially resolved.
Mix tilted further toward lower risk residential investment lending at 92.4% of the book, which compresses margin a touch but supports resilience. Bridging launched to offer full lifecycle funding.
Commercial Finance
- New business £287.5 million (more than double the prior year); balances £362.4 million.
- Risk adjusted margin 5.2% with lower volatile termination fees, pointing to a cleaner earnings profile.
Vehicle Finance: exit executed
STB ceased new lending in 2025 and completed the sale of the Consumer Vehicle Finance business in February 2026. The move simplifies the Group, lifts capital and removes a source of returns volatility. Discontinued activities are guided to break even at the profit before tax level pre-exceptionals in 2026.
Costs, capital and funding
- Cost income ratio improved 220 bps to 45.2%. Excluding £2.5 million of non-recurring leadership changes, it would have been 43.7%.
- Project Fusion has delivered around £8 million of annualised savings. STB reaffirms the plan to remove £25 million of run-rate costs by 2028, incurring additional costs of £12 million.
- Customer deposits rose 8.2% to £3.5 billion; TFSME fully repaid; sale and repurchase funding £201.2 million.
Guidance for 2026 and the near-term shape
Management labels 2026 a transitional year as new products launch and costs are reduced:
- Net lending growth 8-10%.
- Risk adjusted margin c.10 bps improvement.
- Cost income ratio c.47%.
- CET1 c.13.5%.
- Progressive dividend policy plus the intention to commence the £10 million buyback, subject to regulatory approval.
You can watch the Annual Results and Investor Update from 13:00 today, with the strategy session from 14:15, here: STB Investor Update webcast.
Risks and watch-outs
- Motor finance commission redress – the provision increased by £16.4 million in October 2025 after the FCA consultation. As at 31 December 2025, the provision stood at £21.5 million. If the FCA scheme were implemented entirely as proposed, STB would expect to increase the redress provision by a further £6 million.
- Credit cost – cost of risk rose to 1.0% from 0.8%, driven by three specific Business Finance cases and normalisation in Retail Finance after one-off model benefits in 2024.
- 2026 will carry some transition costs, with the cost income ratio guided up to around 47% before the medium-term efficiency gains land.
Why this matters for investors
Three things stand out. First, simplification. Exiting Vehicle Finance removes a drag on group returns and frees capital. Second, capital strength. A pro forma CET1 of 14.7% gives room to grow the book, fund the cost takeout, and return surplus cash through dividends and buybacks. Third, execution momentum. Lending grew 8.1%, NIM held at 4.7%, and the cost income ratio moved the right way even in an inflationary year.
On the flip side, the FCA redress outcome remains the main uncertainty, and 2026 will be a bridge year as investments and restructuring flow through. Still, the medium-term targets – c.10% lending growth and ROAE above 16% with a 35-40% cost income ambition – point to a higher-quality earnings mix if delivered.
My take
This is a tidy reset. The core bank is doing the basics well – disciplined pricing, deposit growth and digital adoption – while shedding complexity. The combination of a higher CET1, a progressive dividend and a £10 million buyback is shareholder friendly, particularly with tangible book value at £19.73 per share and a year-end share price that was materially lower.
Execution now becomes the story. If STB sustains c.10% book growth while holding risk adjusted margins and delivering the cost plan, the >16% ROAE target looks achievable. Keep an eye on the FCA’s final redress rules and 2026 cost trajectory, but the direction of travel is positive.
