Secure Trust Bank interim results 2026: profits rise as £10 million buyback progresses

Secure Trust Bank PLC has reported a stronger first half, with lending growth supporting higher underlying profit and the disposal of Vehicle Finance providing an additional boost to statutory results.

The specialist lender maintained its full-year guidance, increased the interim dividend by 5.1% and confirmed that the first half of its £10 million share buyback programme has been completed.

There is plenty here for shareholders to welcome. However, operating costs rose faster than income, overall new business volumes slipped and the stable risk-adjusted margin means some of the promised full-year improvement still needs to arrive during the second half.

Secure Trust Bank's key first-half figures

Metric	H1 2026	H1 2025	Change
Adjusted profit before tax	£31.3 million	£28.6 million	9.4%
Total profit before tax	£31.4 million	£22.3 million	40.8%
Adjusted return on required equity	14.5%	13.9%	60 basis points
Total return on average equity	12.3%	9.2%	310 basis points
Risk-adjusted margin	4.2%	4.2%	No change
Adjusted cost-income ratio	46.5%	45.5%	100 basis points higher
Basic earnings per share	126.4p	87.6p	44.3%
Interim dividend per share	12.4p	11.8p	5.1%

Net lending balances reached £3.5 billion at 30 June 2026, up 4.9% from £3.3 billion at the end of 2025. The Common Equity Tier 1 ratio, a key measure of a bank's financial strength, increased from 12.9% to 14.3%.

The complete figures are available in the original company announcement.

Underlying profit growth looks respectable

Adjusted profit before tax increased by 9.4% to £31.3 million. This is arguably the cleaner measure of ongoing performance because it excludes £1.4 million of adjusting costs connected to the cost-management programme and senior leadership changes.

Continuing operating income rose by 6.5% to £84.9 million, while net interest income increased by 7.9% to £78.8 million. Average lending balances grew by 5.3%, and the net interest margin was maintained at 4.7%.

That combination matters. Secure Trust Bank expanded its loan book without sacrificing its overall lending margin, suggesting that growth was not simply purchased through aggressive pricing.

The cost of risk also improved from 1.0% to 0.9%. Cost of risk measures impairment charges as a proportion of lending and gives investors an indication of how much credit losses are consuming the bank's income.

The statutory profit increase needs context

Total profit before tax jumped by 40.8% to £31.4 million, but the improvement was not entirely generated by the continuing business.

Secure Trust Bank recognised an £11.9 million profit from selling its Consumer Vehicle Finance portfolio. Discontinued operations consequently contributed a modest £1.5 million profit before tax, compared with a £5.5 million loss a year earlier.

Exiting Vehicle Finance has simplified the group, reduced risk-weighted assets and released capital. It has also removed a loss-making operation from the comparison. These are genuine benefits, but investors should not treat the entire 40.8% increase as a repeatable rate of underlying profit growth.

The 9.4% rise in adjusted profit before tax provides a more measured picture of progress.

Lending growth is broad, but new business was mixed

Retail Finance lending increased by 4.3% to £1.53 billion, helped by demand from strategic retail partners and expansion into home improvements. New Retail Finance business rose by 6.2% to £751.9 million.

The company has secured partnerships with Magnet and Centrica British Gas, alongside 19 smaller home-improvement retailers. Its Retail Finance app now has more than 660,000 registered users, up from more than 475,000 at the end of 2025.

Business Finance balances grew by 5.3% to £1.93 billion, supported by Residential Investment and the newer Bridging proposition. Around £40 million of Bridging loans were originated during the period.

However, new Business Finance volumes fell by 16.2% to £314.3 million. As a result, total new lending across the continuing businesses declined by 1.6% to £1.07 billion.

The expanding loan book is encouraging, although that reduction in new business means the second-half pipeline will be worth watching closely.

Costs remain the awkward part of the story

Continuing operating expenses increased by 10.2% to £40.9 million, partly because some central costs were reallocated after the Vehicle Finance exit and because Secure Trust Bank continued investing in growth projects.

The adjusted cost-income ratio worsened from 45.5% to 46.5%. A lower ratio is preferable because it means the bank is spending less to generate each pound of income.

Management says £5.5 million of savings were delivered during the first half. Following a reduction in full-time employees from around 845 to around 650, annualised run-rate savings are approximately £15 million from July 2026.

The group is targeting total savings of £25 million by 2028 and a medium-term cost-income ratio of 35% to 40%. That offers meaningful upside if delivered, but it also sets a demanding execution test. The benefits must eventually outweigh restructuring charges and ongoing investment.

Capital returns are becoming more important

The disposal of Vehicle Finance released £293.9 million of risk-weighted assets and helped lift the CET1 capital ratio to 14.3%. This is above the group's approximately 13.5% guidance for the end of 2026.

Secure Trust Bank has completed the first £5 million tranche of its £10 million buyback programme. The second £5 million tranche is planned for the second half.

The interim dividend was also increased from 11.8p to 12.4p per share. It is due to be paid on 24 September 2026 to shareholders on the register at the close of business on 28 August.

Stronger capital gives management room to fund lending growth while returning surplus funds to shareholders. The balance is important, particularly for a specialist lender operating against an uncertain economic backdrop.

Guidance is unchanged, but H2 still matters

Secure Trust Bank continues to expect net lending growth of 8% to 10% for 2026, an approximately 10 basis-point improvement in risk-adjusted margin and a cost-income ratio of around 47%.

The 4.9% lending increase achieved during the first half represents solid progress towards the annual target. The 46.5% adjusted cost-income ratio is also consistent with guidance.

Risk-adjusted margin, however, remained unchanged at 4.2%. The company therefore needs an improvement during the second half to meet its full-year objective.

Longer term, management is targeting annual net lending growth of around 10% and return on average equity above 16% by 2028. The first-half return on average equity of 12.3% shows progress, but also highlights the distance still to travel.

What investors should watch next

These results suggest that Secure Trust Bank's repositioning is beginning to work. Lending grew, underlying profit improved, credit costs remained controlled and surplus capital is being returned through dividends and buybacks.

The main questions now concern execution. Investors will want to see the £15 million annualised savings feed into reported efficiency, the new lending products maintain momentum and risk-adjusted margin improve as guided.

The unresolved motor finance compensation process also remains a risk. Secure Trust Bank made no change to its existing provision and believes it is adequately provided if the proposed scheme is implemented in full, but legal challenges mean the timing and final outcome remain uncertain.

For now, the bank appears on track for its 2026 targets. The second half needs to demonstrate that loan growth, cost reductions and capital returns can translate into the sustained improvement in shareholder returns promised for 2028.