Secure Trust Bank warns on profits, points to vehicle finance division

(Sharecast News) - Secure Trust Bank tumbled on Thursday as it warned on profits due to the performance of its non-core vehicle finance division, but insisted the core business continues to trade in line with expectations. In an update for the year to the end of December, the company said its net lending book declined by 4.1% in the third quarter as the run-off of the non-core vehicle finance book quickened, combined with a small drop in the core business.

As a result of the performance in the vehicle finance segment, the company now expects group underlying pre-tax profit for FY25 to fall below market expectations by up to £9m.

However, it remains confident of around 30% year-on-year growth in underlying pre-tax profit.

The company announced in June that was pivoting away from vehicle finance and that over time, the move was expected to improve its return on average equity (ROAE). As a result, it stopped new lending within its vehicle finance business in the third quarter and put the existing book into run‐off.

Secure Trust said year-on-year the core business net lending balance grew by 10.3%, with all businesses contributing to the strong performance. Retail Finance saw a 9.1% jump and Real Estate Finance a 12.6% increase.

Secure Trust also said it expects the exit from vehicle finance to require additional provisions for onerous supplier contracts associated with new business originations, which would be treated as exceptional costs. Further details will be provided in the 2025 annual report.

At 0915 BST, the shares were down 17.5% at 998p.