Secure Trust Bank to exit vehicle finance market

(Sharecast News) - Secure Trust Bank announced on Wednesday that it will exit the vehicle finance market as part of a strategic overhaul designed to improve returns and simplify the business. The London-listed specialist lender said it would cease new lending in vehicle finance and run off its existing loan book, citing the division's underperformance and sub-scale nature relative to other parts of the group.

It said the decision was expected to deliver a significant boost to its financial metrics.

On a pro forma basis, Secure Trust estimated that adjusted profit before tax would rise to £56.6m from £39.1m, with a corresponding 800 basis point uplift in return on average equity (ROAE) before redeploying the released capital.

Vehicle finance generated a pre-exceptional loss before tax of £21.8m in 2024, with net lending balances of £558.3m at the end of December.

The business also accounted for around 30% of the group's adjusted operating costs last year.

As the loan book runs down, the bank expects to strip out more than £25m of operating costs by 2030.

The board said the restructure would result in up to 284 job losses by 2030, including 78 this year.

It said it anticipated restructuring charges of around £5m.

Vehicle finance would be classified as a non-core activity from the 2025 results onwards.

Chief executive David McCreadie described the move as a key milestone in the bank's growth strategy.

"We have made the difficult decision to stop new lending in vehicle finance, our lowest return business line, and to redeploy capital to our three higher returning businesses of retail finance, real estate finance and commercial finance," he said.

"This pivot will allow the Group to prioritise these established specialist businesses and achieve further simplification of the Group combined with the removal of a significant level of costs.

"These measures will have a material positive impact on ROAE for the group and will position the group to be capital accretive."

Secure Trust said it traded in line with expectations in the first half of 2025, adding that it remained on track to hit its £4bn net lending target.

A further update was due alongside interim results on 14 August, with more details on revised targets expected at a capital markets event later in the year.

At 0915 BST, shares in Secure Trust Bank were up 6.02% at 846p.

Reporting by Josh White for Sharecast.com.