Secure Trust Bank (STB) is to expand its motor finance products in the prime end of the market.

In a pre-close trading update, the company disclosed that the bank is to reposition itself towards lower-risk lending, with its legacy subprime motor portfolio run-down to ‘immaterial’ levels.

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Citing heightened political and economic uncertainty, STB also reiterated that it will instead offer a broader range of products in the prime motor finance market. STB’s also announced the discontinuation of new mortgage lending, again citing market pressures for that decision.

A statement from the report read: “The strategic repositioning of the STB Group towards lower risk lending across a focused group of attractive market segments continued to drive profit growth and improve the credit quality of new customer loan originations…  The Group’s lending portfolio is appropriately positioned for the current conditions and the short duration nature of the asset portfolio means the Group can react quickly to both opportunities and threats.”

In 2018 Secure Trust Bank announced a 31.3% year-on-year increase in Group profit before tax to £15.1m for the six months to 30 June 2018. Emphasis was on ‘the repositioning of the business model towards lower risk lending in attractive market segments’. STB claimed the cost of risk was 20% lower year-on-year.

The bank stated that its lending criteria explained the reduced figures in asset finance: “Some lenders are offering loans up to or exceeding 100% of open market value on asset finance at extremely low margins, by historical standards.

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“We are not prepared to compromise on risk or price simply to achieve short-term net balance sheet growth, and as matters stand expect this part of the lending portfolio to continue to contract. We will revisit our appetite for recommencing new lending in light of market developments in this scale part of the UK SME lending market.”

Secure Trust Bank has its head office in Solihull, and has been trading for 66 years. It had 831 employees as of 30 June 2018. The bank’s loans and advances to customers totalled £1.8bn, customer deposits totalled £1.6bn and the Group’s total customer base was over one million.