Final Results

About this update from Secure Trust Bank Plc

[{"type":"text","content":"\n \n PRESS RELEASE \n 13 March 2025 \n For immediate release \n LEI: 213800CXIBLC2TMIGI76 \n   \n   \n SECURE TRUST BANK PLC \n Preliminary Results for the 12 months to 31 December 2024 \n Solid growth and improved cost to income ratio \n Tangible book value per share increased to £18.64 \n David McCreadie, Chief Executive, said: \n \"Secure Trust Bank has remained focused on its medium-term targets and strategic priorities, delivering on balance sheet growth, stabilising net interest margin, and delivering cost efficiencies. The business has delivered an 18.0% increase in its adjusted 1 profit before tax pre impairments. We have continued to grow our loan book towards our £4 billion target, at which point we expect to deliver an adjusted 1 return on average equity of 14-16%. As such, we remain confident in achieving our medium-term targets which we will have largely delivered by the end of 2025.\" \n Financial Highlights 2 \n \n \n \n \n • \n \n \n 8.8% growth in lending balances to £3.6 billion (2023: £3.3 billion) driven by record new lending volumes \n \n \n \n \n • \n \n \n Total profit before tax of £29.2 million decreased by 12.6% (2023: £33.4 million) \n \n \n \n \n • \n \n \n Adjusted 1 profit before tax pre impairments up 18.0% to £100.9 million (2023: £85.5 million) \n \n \n \n \n • \n \n \n Adjusted 1 profit before tax of £39.1 million down 8.2% (2023: £42.6 million) \n \n \n \n \n • \n \n \n Net Interest Margin ('NIM') stable at 5.4% (2023: 5.4%) with improvement in H2 2024 (H2 2024: 5.5%; H1 2024: 5.3%) \n \n \n \n \n • \n \n \n \n Adjusted 1 cost income ratio improved by 310 bps to 50.9% (2023: 54.0%) (H2 2024: 48.4%, H1 2024: 53.7%). Statutory cost income ratio at 55.8% (2023: 57.5%) \n \n \n \n \n • \n \n \n Project Fusion delivered the initial target of £5 million 3 of annualised cost savings by the end of 2024, and will deliver a further £3 million 3 of cost savings in 2025 \n \n \n \n \n • \n \n \n Cost of risk increased to 1.8% (2023: 1.4%) impacted by the pause in our collection processes in Vehicle Finance during H2 2023 and collections challenges in H1 2024 \n \n \n \n \n • \n \n \n Tangible book value per share increased 4.7% to £18.64 per share (2023: £17.80 per share) \n \n \n \n \n • \n \n \n \n Exceptional costs of £9.9 million (£6.5 million), includes £6.9 million of potential redress and costs relating to motor commissions \n \n \n \n \n Secure Trust Bank PLC ('Secure Trust Bank', 'STB' or the 'Group') achieved net lending growth of 8.8% (£293.2 million), primarily driven by the Consumer Finance business, which grew by 13.4% (£225.7 million). Business Finance saw growth of 4.2% (£67.5 million), which was driven by the Real Estate Finance business with growth of £97.6 million combined with a small year-on-year reduction in Commercial Finance, which continued to be impacted by a subdued market. This resulted in a stable NIM of 5.4% (2023: 5.4%), reflecting improvement in the second half of the year (H2 2024: 5.5%; H1 2024: 5.3%). \n Customer deposits reached a record level of £3.2 billion (2023: £2.9 billion) through a combination of growth in Access accounts and ISAs. This increase alongside the use of ILTR funding enabled us to repay £160.0 million of TFSME funding in 2024 ahead of maturity. A further £60.0 million of TFSME funding was repaid by the end of February 2025, leaving £170.0 million outstanding. \n Project Fusion, the Group's cost optimisation programme, continued to contribute to our adjusted 1 cost income ratio which improved from 54.0% in 2023 to 50.9%, limiting cost growth to 4.1%. Adjusted 1 cost income ratio was 48.4% for H2 2024, reflecting the ongoing growth of the loan book and tight cost control. \n The impairment charge of £61.9 million (2023: £43.2 million) was significantly impacted by the pause in our collection processes in Vehicle Finance during the second half of 2023 following the FCA's Borrowers in Financial Difficulty ('BiFD') review. Delayed repossession and recovery activities created operational challenges in the first half of 2024 and resulted in an elevated stock of defaulted loans. Strategic initiatives to recover a proportion of these defaults were hampered by the market environment following the Court of Appeal judgment in October 2024. Initiatives to reduce these excess default balances in Vehicle Finance are underway in 2025. The credit quality of new lending in the Vehicle Finance business has improved over time and arrears levels have reduced over the year from 12.2% to 10.0%. Retail Finance cost of risk improved to 1.0% (2023: 1.4%) reflecting the quality of business written and IFRS 9 model enhancements. The impairment charge for the year also reflects a loss of £5.6 million in Commercial Financial due to a client failing through challenges in the market in which it operated. \n On an adjusted 1 basis the Group achieved a profit before tax of £39.1 million (2023: £42.6 million), a decrease of 8.2%. Total profit before tax of £29.2 million (2023: £33.4 million) was impacted by exceptional items (£9.9 million) in 2024 (2023: £6.5 million). The Group achieved an adjusted 1 return on average equity ('ROAE') of 8.0% (2023: 9.6%) and a common equity tier 1 ratio of 12.3% (2024: 12.7%). \n Further information on exceptional items relating to BiFD and motor commissions are detailed below. The remaining costs were for the Group's organisational redesign (£1.5 million) relating to employee redundancies, which will deliver the additional annualised savings under Project Fusion of £3 million 3 to be realised in 2025. \n Capital ratios have reduced in the period by 0.4 percentage points due to the exceptional items impact of 0.3 percentage points and capital generated being utilised to support growth in Risk Weighted Assets ('RWAs') and dividends. \n Financial summary 2 \n \n \n \n \n \n \n \n 2024 \n \n \n 2023 \n \n \n Change 4 \n% \n \n \n \n \n Total statutory profit before tax \n \n \n £29.2m \n \n \n £33.4m \n \n \n  (12.6) \n \n \n \n \n Adjusted 1 profit before tax \n \n \n £39.1m \n \n \n £42.6m \n \n \n  (8.2) \n \n \n \n \n Adjusted 1 profit before tax and pre impairments \n \n \n £100.9m \n \n \n £85.5m \n \n \n  18.0 \n \n \n \n \n Total basic earnings per share \n \n \n 103.4 pence \n \n \n 129.6 pence \n \n \n  (20.2) \n \n \n \n \n Continuing basic earnings per share \n \n \n 103.4 pence \n \n \n 140.8 pence \n \n \n  (26.6) \n \n \n \n \n Total ordinary dividend per share \n \n \n 33.8 pence \n \n \n 32.2 pence \n \n \n 5.0 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total return on average equity \n \n \n 5.5% \n \n \n 7.3% \n \n \n (1.8)pp \n \n \n \n \n Adjusted 1 return on average equity \n \n \n 8.0% \n \n \n 9.6% \n \n \n (1.6)pp \n \n \n \n \n Net interest margin \n \n \n 5.4% \n \n \n 5.4% \n \n \n - \n \n \n \n \n Cost of risk \n \n \n 1.8% \n \n \n 1.4% \n \n \n 0.4pp \n \n \n \n \n Adjusted 1 cost income ratio \n \n \n 50.9% \n \n \n 54.0% \n \n \n (3.1)pp \n \n \n \n \n Cost income ratio \n \n \n 55.8% \n \n \n 57.5% \n \n \n (1.7)pp \n \n \n \n \n Net lending balances \n \n \n £3,608.5m \n \n \n £3,315.3m \n \n \n  8.8 \n \n \n \n \n Customer deposits \n \n \n £3,244.9m \n \n \n £2,871.8m \n \n \n  13.0 \n \n \n \n \n Tangible book value per share \n \n \n £18.64 \n \n \n £17.80 \n \n \n  4.7 \n \n \n \n \n CET 1 ratio \n \n \n 12.3% \n \n \n 12.7% \n \n \n (0.4)pp \n \n \n \n \n Total capital ratio \n \n \n 14.6% \n \n \n 15.0% \n \n \n (0.4)pp \n \n \n \n \n Optimising for Growth: Further strategic progress \n The Group has made good progress against its strategic priorities of Simplify , Enhance Customer Experience and Leverage Networks during the year. This strategic progress has driven our loan book growth and cost efficiency. \n \n \n \n \n • \n \n \n As at the end of 2024 Project Fusion has delivered £5 million of annualised cost savings 3 , and will deliver another £3 million 3 of cost savings in 2025, which has mostly been obtained by the Group's organisational redesign. \n \n \n \n \n • \n \n \n Vehicle Finance will complete its move to a single technology platform, which will facilitate applicants to be matched to our most suitable product offering based on their credit profile. \n \n \n \n \n • \n \n \n Market share gains in 2024 for both Retail Finance and Vehicle Finance, and will maximise the opportunities from their strong networks. \n \n \n \n \n Other highlights \n \n \n \n \n • \n \n \n Customer satisfaction remains high, as measured by Feefo, 4.7 stars (2023: 4.6 stars) \n \n \n \n \n • \n \n \n Listed as an official UK Best Workplace™ for the sixth year running, ranking 26 out of 105 companies (large organisations category) and, in the first year of rankings, for a new category of Development, ranking 26 out of 100 companies (large organisations category). \n \n \n \n \n • \n \n \n We recently became members of Partnership for Carbon Accounting Financial ('PCAF'), which underlines our ongoing commitment to measure and monitor our environmental impacts as part of our Environmental, Social and Governance ('ESG') strategy, which enhanced our Scope 3 emissions reporting. \n \n \n \n \n • \n \n \n Our initiatives in energy efficiency and cost control led to a 55.5% reduction in Scope 1 and Scope 2 CO 2 e emissions. This surpasses our target of a 50% reduction by December 2025, compared to the 2021 baseline. \n \n \n \n \n Regulatory and legal developments \n As highlighted at the end of 2023, we have been working on improving our collections processes, procedures and policies following the FCA's review of BiFD across the industry. The BiFD review resulted in payments to customers for historical distress and inconvenience which were materially provided for in the 2023 accounts. The majority of customer communications have now been distributed, and we expect to complete activities by the middle of 2025. This was a delay on our initial timetable, as we took additional time to ensure the quality and clarity of our correspondence was appropriate for our customers. We incurred an additional £1.5 million of cost (treated as exceptional) during 2024, primarily in relation to managing the programme. \n In light of legal and regulatory developments, including the FCA's ongoing review of the historical discretionary commission arrangements ('DCA') in the motor finance market (January 2024), and the Court of Appeal's judgement (October 2024) which is currently under appeal, the Group has recognised costs of £6. 9 million (£5.2 million potential redress, £1.7 million costs, of which £6.4 million is recognised as a provision) for both DCA and fixed commission structures. \n The Vehicle Finance business sometimes operated DCAs until June 2017, stopping using them well ahead of the FCA banning their use in January 2021. O nly 4% of our Vehicle Finance commission payments had these arrangements . Not all of the fact pattern in the three Court of Appeal cases is the same as how the Group operated. A key feature of their fact pattern was the linked sale by a dealer of the vehicle and the direct introduction of the finance by that same dealer. Sales by a dealer made up only 20% of our motor commission payments. 80% of motor commission was not paid through dealers but through brokers and various other introducers . Due to the uncertain outcomes (including the nature, extent and timing) of the legal and regulatory developments, we have undertaken scenario analysis with a number of different assumptions, which have been probability weighted to estimate a potential exposure. As and when new information becomes available, these assumptions will be updated accordingly and so the provision could be materially higher or lower. Further information can be found in Note 29 to the Financial Statements. \n Dividend \n The Directors are proposing a final dividend of 22.5 pence per share for 2024, which will be payable on 22 May 2025 to shareholders on the register at the close of business on 25 April 2025. The total dividend payable for 2024 is 33.8 pence per share (2023: 32.2 pence per share). This is in line with the Board's decision to move to a progressive dividend policy for the 2024 financial year, reflecting feedback from shareholders. The total dividend pence per share represents a 5% increase against prior year. \n Outlook \n Although 2024 has left us on balance with a more positive economic outlook, the expected stability and optimism for growth that was promised from a change in UK government has not yet materialised. Interest rates have started slowly to come down following a period of stabilised inflation figures, but concerns exist over growth in the UK economy and the perceived adverse impact of the new Chancellor's Budget on the market, businesses and consumer confidence. There has also been additional geopolitical uncertainty due to the change of legislature in the US, notably how new economic policy will influence global markets. \n 2024 has been extremely challenging for specialist banks due to the regulatory and legal developments that have taken place with respect to historical motor finance commissions. We are acutely aware that the perceived risk of these proposed developments is dampening investor sentiment to the sector. We are hopeful that the industry will receive the clarity it needs on motor finance commissions mid 2025, and that we can move forward with confidence and renewed focus on delivering against our strategic objectives. \n Subject to no adverse changes in the economy and trading environment, we expect by the end of 2025 we will be well positioned to have largely delivered against our £4 billion net lending target. \n \n \n \n \n Medium-term targets \n \n \n 2024 \n Actual \n \n \n Target \n \n \n \n \n Net lending balance \n \n \n £3.6bn \n \n \n £4bn \n \n \n \n \n Net interest margin \n \n \n 5.4% \n \n \n >5.5% \n \n \n \n \n Adjusted 1 cost income ratio \n \n \n 50.9% \n \n \n 44-46% \n \n \n \n \n Adjusted 1 return on average equity \n \n \n 8.0% \n \n \n 14% - 16% \n \n \n \n \n CET 1 ratio \n \n \n 12.3% \n \n \n >12.0% \n \n \n \n \n Footnotes: \n 1. Adjusted metrics exclude exceptional items of £9.9 million (2023: £6.5 million). Details can be found in Note 8 to the Financial Statements. \n 2. Performance metrics relate to continuing operations, unless otherwise stated. Further details of the metrics can be found in the Appendix to the 2024 Annual Report and Accounts. \n 3. £5.0 million cost savings relative to operating expenses for the 12 months ended December 2021. The additional £3.0 million cost savings relative to annualised operating expenses for the six months ending 30 June 2024. \n 4. pp represents the percentage point movement. \n Results presentation \n This announcement together with the associated investors' presentation are available on: www.securetrustbank.com/results-reports/results-reports-presentations \n Secure Trust Bank will host a webcast for analysts and investors today, 13 March 2025 at 9:00am, which can be accessed by registering at: https://brrmedia.news/STB_FY24 \n For those wishing to ask a question, please dial into the event by conference call: \n Dial +44 (0)330 551 0200 \n UK Toll Free: 0808 109 0700 \n Confirmation code (if prompted): Secure Trust Bank \n Enquiries:  \n Secure Trust Bank PLC \n David McCreadie, Chief Executive Officer \n Rachel Lawrence, Chief Financial Officer \n Phil Clark, Investor Relations \n Tel: +44 (0) 121 693 9100 \n   \n Investec Bank plc (Joint Broker) \n Chris Baird \n David Anderson \n Maria Gomez de Olea \n Tel: +44 (0) 20 7597 5970 \n   \n Shore Capital Stockbrokers (Joint Broker) \n Mark Percy / Rachel Goldstein (Corporate Advisory) \n Guy Wiehahn (Corporate Broking) \n Tel: +44 (0) 20 7408 4090 \n Camarco \n Ed Gascoigne-Pees, Geoffrey Pelham-Lane, Sean Palmer \n [email protected] \n Tel: +44 (0) 7591 760844 \n Forward looking statements \n This announcement contains forward looking statements about the business, strategy and plans of STB and its current objectives, targets and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about STB's or management's beliefs and expectations, are forward looking statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. STB's actual future results may differ materially from the results expressed or implied in these forward looking statements as a result of a variety of factors. These include economic and business conditions, risks from failure of clients, customers and counterparties, market related risks including interest rate risk, risks regarding market conditions outside STB's control, expected credit losses in certain scenarios involving forward looking data, operational risks, legal, regulatory, or governmental developments, and other factors. The forward looking statements contained in this announcement are made as of the date of this announcement, and (except as required by law or regulation) STB undertakes no obligation to update any of its forward looking statements. \n   \n Group at a glance \n Our strategic progress \n Simplify \n \n \n \n \n ·  \n \n \n Initial Project Fusion target achieved, with £5 million annualised cost savings¹ \n \n \n \n \n ·  \n \n \n Organisational redesign completed with IT and Operations consolidated under a single management structure \n \n \n \n \n ·  \n \n \n New Project Fusion target announced at half year on track to achieve an additional £3 million annualised cost savings 1 in 2025 \n \n \n \n \n ·  \n \n \n Delivered over 50% reduction in Scope 1 and Scope 2 CO 2 target for emissions one year early (since 2021) \n \n \n \n \n ·  \n \n \n Delivering our cost savings target improves our cost income ratio and return on equity \n \n \n \n \n   \n Enhance customer experience \n \n \n \n \n ·  \n \n \n Digital-first approach for Savings, delivering an enhanced online application process \n \n \n \n \n ·  \n \n \n Over 87% self-service adoption in Retail Finance, and app rollout to allow customer self-servicing \n \n \n \n \n ·  \n \n \n Automated savings bond maturity process implemented \n \n \n \n \n ·  \n \n \n Customer Feefo score of 4.7 stars and 4.6 stars for Trustpilot \n \n \n \n \n ·  \n \n \n Delivering cost-efficiency and balance sheet growth by retaining satisfied customers \n \n \n \n \n   \n Leverage networks \n \n \n \n \n ·  \n \n \n Extended contracts with key furniture and jewellery retailers in Retail Finance \n \n \n \n \n ·  \n \n \n Extensive distribution relationships across consumer businesses \n \n \n \n \n ·  \n \n \n Repeat business and client retention within Business Finance from established relationships \n \n \n \n \n ·  \n \n \n Market share gains of new business in both Retail Finance and Vehicle Finance \n \n \n \n \n ·  \n \n \n Driving growth in net lending and net interest margin as our balance sheet mix moves towards consumer lending \n \n \n \n \n   \n Enabled by technology \n \n \n \n \n ·  \n \n \n Vehicle Finance rate for risk platform launched , facilitating applicants to be matched to our products \n \n \n \n \n ·  \n \n \n Use of AI tools and automated data gathering in complaints handling \n \n \n \n \n ·  \n \n \n Savings app enhancements , with more transactional activity and over 30% of customers registered \n \n \n \n \n ·  \n \n \n Platforms proven to be scalable and flexible with increased partner API integrations \n \n \n \n \n ·  \n \n \n A digital-first approach supports cost-efficiencies and growth capacity \n \n \n \n \n 1. £5.0 million cost savings relative to operating expenses for the 12 months ended December 2021. The additional £3.0 million savings will be relative to annualised operating expenses for the six months ended 30 June 2024. \n   \n Chair's statement \n We have delivered a resilient performance in 2024, in a challenging operating environment with elevated inflation, continued high interest rates, a new UK government and slowing economic growth, causing uncertainty across the markets in which we operate. In addition, like many other firms across the sector, we faced significant legal and regulatory headwinds, which have created further uncertainty and disruption. \n Despite these challenges, we have continued to focus on delivering for our customers, which has driven continued lending growth across both our Consumer and Business Finance segments. During the year, we have taken decisions to refocus our Vehicle Finance business, invest in our collections capability and simplify our organisational design, further reducing complexity and costs. \n First impressions \n I joined Secure Trust Bank because I believe in the underlying strength of the business and the strategic growth opportunities available. Since my appointment as Chair in May 2024, I have engaged with many people across the business and visited our key offices, which has served to reinforce my initial views. I have been particularly impressed by the commitment shown by our people, who are dedicated to delivering for our customers and helping them to fulfil their ambitions. This focus on our customers and achieving good outcomes for them, will drive our future success. \n I have welcomed the opportunity to meet with many of our major shareholders and hear their views, on the business and the markets in which we operate. This engagement has been very valuable as I have transitioned into the Chair role. \n In-line with feedback from shareholders, we have enhanced our segmental reporting, providing greater granularity on the performance of each business unit, further information on which can be found in Note 3 of the Financial Statements. \n Business performance \n Adjusted 1 profit before tax for the year ended 31 December 2024 was £39.1 million (2023: £42.6 million) and statutory profit before tax was £29.2 million (2023: £36.1 million). Excluding impairment charges, which were impacted by the FCA's Borrowers in Financial Difficulty ('BiFD') review as explained in the following section, adjusted 1 profit before tax pre-impairments increased 18.0% to £100.9 million (2023: £85.5 million). \n Adjusted 1 return on average equity has decreased to 8.0% from 9.6% in 2023; improving the bank's return on equity across the business units is a key area of focus for the Board and management. \n We have taken several decisions during the year to accelerate the growth in our return on equity, particularly within our Vehicle Finance business, where we have refined our strategy to focus on higher returning segments of the market and made further investments to improve our collections processes. Across the Group we have implemented centralised operating and governance models, which have reduced complexity, improved the consistency of service to clients, delivered cost efficiencies and resulted in a more agile organisation. \n Legal and regulatory developments \n The FCA's BiFD review and subsequent engagement with the regulator meant the Group paused collections processes in our Vehicle Finance business during the second half of 2023. During the year, we have invested in our collections capabilities, to enhance the outcomes for our customers and improve our processes. The reduced collections activity into 2024 resulted in a material increase in our impairment charges in 2024, which impacted our profitability for the year. Collections activity returned to normalised levels during H2 24 and we are considering options to manage the level of defaulted stock. \n Separately, in January 2024 the FCA launched a review of the historic use of discretionary commission arrangements ('DCAs') in the motor finance market. DCAs were prohibited by the FCA in 2021, although the Group ceased these types of arrangements well before in June 2017. \n The Court of Appeal's October 2024 judgment on three motor commission cases led to lending pauses and uncertainty across the motor finance market and is the subject of a Supreme Court appeal. There are important differences in the fact patterns in those cases and our lending model. We also believe that key aspects of the judgment, if upheld, go beyond the regulatory requirements applied by the FCA, and generally understood by market participants, at the time. Further information can be found in Note 29 of the Financial Statements . \n Immediately before the Court of Appeal's judgment, the Company's share price had increased by 18% for the year to October. After this judgment and with the continuing uncertainty in the sector, our share price fell by 48% to £3.62 as at 31 December 2024, significantly below the Group's tangible book value of £18.64. \n Capital management and dividend \n As at 31 December 2024 the Group's Common Equity Tier 1 ratio was 12.3% (2023:12.7%). The optimal deployment of our capital and the returns it generates will be a key area of focus during 2025, as we balance maintaining a healthy capital surplus with investing for growth and returns to shareholders. \n With effect from the 2024 AGM we implemented a new progressive dividend policy, which means dividends will be no less than that of the previous year. Under the policy the Board will consider the Group's capital requirements, liquidity and market expectations in determining the specific amount. In-line with that policy the Board proposes a final dividend of 22.5 pence per share (2023: 16.2 pence per share), which if approved by shareholders at the Company's 2025 AGM, will be paid on 22 May 2025 to those shareholders on the register on 25 April 2025. \n Governance \n There have been a number of changes to the Board during the year. Victoria Stewart, a Non-Executive Director and Chair of the Remuneration Committee, stood down from the Board on 31 December 2024, after entering her ninth year as a Director. I would like to thank Victoria for her stewardship of the Remuneration Committee and her wider contribution to the development of the Group throughout her tenure. \n In October, we welcomed Julie Hopes to the Board, who succeeded Victoria as Chair of the Remuneration Committee with effect from 31 December 2024. Julie has strong experience of Chairing Remuneration Committees, particularly within Financial Services, and brings a strategic mindset, experience of business transformation and a strong focus on consumers. \n In October, we also appointed Victoria Mitchell, an existing Non-Executive Director to our Risk Committee. Victoria previously served as the Chief Risk Officer of Capital One (Europe) plc and her experience further strengthens and broadens the experience of the Risk Committee. \n Outlook \n We have a strong, diversified business and see significant growth opportunities in sectors in which we operate. We believe our customer focus positions us well to capitalise on these opportunities and increase our return on equity. \n As highlighted, there remains significant legal and regulatory uncertainty across the motor finance sector and the wider macroeconomic environment. Supporting the management team to address the potential implications of the Supreme Court's decision is a priority for the Board. \n Throughout this, we will continue to focus on building momentum across our business units, the effective deployment of our capital and increasing our return on equity. \n I would like to sincerely thank our customers for their continued trust and our colleagues for their hard work throughout the year; they have demonstrated their resilience and have remained dedicated to delivering for our customers, shareholders and other stakeholders. \n 1. Adjusted metrics exclude exceptional items of £9.9 million (2023: £6.5 million). Details can be found in Note 8 to the Financial Statements. \n Chief Executive's statement \n There were a number of challenges that presented themselves during the year, and so, I was pleased that while navigating those, we were also able to deliver improvements, particularly in the second half of the year across lending growth, net interest margin and adjusted 1 cost income ratio. This has been achieved with a Common Equity Tier 1 ('CET 1') ratio of 12.3%. Full-year adjusted 1 profit before tax pre impairments increased by 18.0% to £100.9 million (2023: £85.5 million). Statutory profit before tax was £29.2 million (2023: £36.1 million). \n Progress against our medium-term targets has been encouraging. We achieved an 8.8% growth in net lending (2024: £3.6 billion; 2023: £3.3 billion), moving us closer to our £4.0 billion target and stabilised our net interest margin at 5.4% (2023: 5.4%), just below our target of greater than 5.5%, despite incurring higher funding costs. Project Fusion, our cost optimisation programme, prudent cost management and continued income growth contributed to an improvement in our adjusted 1 cost income ratio to 50.9% (2023: 54.0%), a reduction of 310 basis points. Statutory cost income ratio was 55.8% (2023: 57.5%). This is excellent progress towards our target of 44% to 46%. Continued growth in net lending and net interest margin and effective cost management will drive us towards delivering our target return on average equity ('ROAE') of 14% to 16%. \n Although the year saw a reduction in the Bank of England Base Rate, we have operated in a highly competitive interest rate environment for Savings accounts. We continue to offer competitive rates to depositors, attracting significant levels of new funding (£1.6 billion), as well as retaining matured funds (£0.9 billion). Our deposits are entirely from retail customers and more than 95% of deposits are fully covered by the FSCS. We have achieved this, despite the challenges we have faced in 2024, with a high interest rate environment and uncertainty around timing of interest rate cuts, slowing economic growth and political changes. This has impacted demand for credit, particularly in Business Finance. We continued to manage credit exposures in a disciplined way and remained agile in managing our balance sheet. \n Cost of risk increased from 1.4% to 1.8% and was impacted by the secondary impact of the pause in our collection processes in Vehicle Finance during the second half of 2023, which resulted in an elevated stock of defaulted loans (see section on Regulatory and legal interventions), which increased impairment charges for the year. As a consequence, the cost of risk for Vehicle Finance increased from 3.4% in 2023 to 7.7%. Unfortunately, the initiatives we hoped would restore performance of the Vehicle Finance portfolio towards a normal level for year-end, were not possible to fully execute due to the market environment. We continue to pursue strategic options to manage down the stock of historic defaulted balances. Retail Finance cost of risk improved to 1.0% (2023: 1.4%) reflecting the quality of business written and IFRS 9 model enhancements, which resulted in some one-off provision releases. \n As a result, we delivered an adjusted 1 profit before tax of £39.1 million (2023: £42.6 million) in the year, which impacted our adjusted 1 ROAE of 8.0% (2023: 9.6%). Total ROAE was 5.5% (2023: 7.3%). Three of our specialist businesses grew profitability year-on-year. The higher cost of risk in Vehicle Finance impacted our overall results. Further insight is shared in our segmental reporting which can be found in Note 3 to the Financial Statements. \n With our four specialist lending segments all offering compelling propositions in large addressable markets, we have solid foundations in place to make further market share gains. This is demonstrated by our strong track record in recent years. We saw gains in Retail Finance's market share of new business, which grew to 15.3% 2 ; this continues to grow year-on-year (2023: 13.5%). Vehicle Finance's market share of new business was 1.4% 3 increasing its position from 2023 (1.2%). As a result, this contributed to net lending growth in the Consumer Finance businesses of 13.4% (£225.7 million) since 2023. Business Finance increased by £67.5 million, despite a subdued trading environment. \n During the year, we took the opportunity to showcase our Real Estate Finance and Commercial Finance businesses at Capital Markets events held in July and November. Further details can be found on our website www.securetrustbank.com/presentations \n 1. Adjusted metrics exclude exceptional items of £9.9 million (2023: £6.5 million). Details can be found in Note 8 to the Financial Statements. \n 2. Source: Finance & Leasing Association ('FLA'): New business values within retail store and online credit: 2024 15.3% (2023: 13.5%): FLA total and Retail Finance new business of £8,427million (2023: £8,810 million) and £1,289.7 million (2023: £1,185.4 million) respectively. As published at 31 December 2024. \n 3. Source: FLA. Cars bought on finance by consumers through the point of sale: New business values: 2024 1.4% (2023: 1.2%): Used cars: 2024, FLA total and Vehicle Finance total of £21,281 million (2023: £22,082 million) and £294.4 million (2023: £260.0 million) respectively. As published at 31 December 2024. \n Key performance indicators \n The following key performance indicators are the primary measures used by management to assess the performance of the Group. \n Financial \n Loans and advances to customers (bn)              \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 2.2 \n \n \n 2.5 \n \n \n 2.9 \n \n \n 3.3 \n \n \n 3.6 \n \n \n \n \n Why we measure this \n Shows the growth in the Group's lending balances, which generate income \n Net interest margin (%)        \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 6.1 \n \n \n 6.1 \n \n \n 5.7 \n \n \n 5.4 \n \n \n 5.4 \n \n \n \n \n Why we measure this \n Shows the interest margin earned on the Group's lending balances, net of funding costs \n Total return on average equity (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 5.9 \n \n \n 15.9 \n \n \n 10.8 \n \n \n 7.3 \n \n \n 5.5 \n \n \n \n \n Why we measure this \n Measures the Group's ability to generate profit from the equity available to it \n Common Equity Tier 1 ('CET 1') ratio (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 14.0 \n \n \n 14.5 \n \n \n 14.0 \n \n \n 12.7 \n \n \n 12.3 \n \n \n \n \n Why we measure this \n The CET 1 ratio demonstrates the Group's capital strength \n Cost to income ratio (%) \n \n \n \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n Statutory \n \n \n 56.6 \n \n \n 60.0 \n \n \n 55.0 \n \n \n 57.5 \n \n \n 55.8 \n \n \n \n \n Adjusted 1 \n \n \n 56.6 \n \n \n 60.0 \n \n \n 55.0 \n \n \n 54.0 \n \n \n 50.9 \n \n \n \n \n Why we measure this \n Measures how efficiently the Group uses its cost base to produce income \n 1. Adjusted cost to income ratio excludes exceptional items. \n Cost of risk (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 2.0 \n \n \n 0.2 \n \n \n 1.4 \n \n \n 1.4 \n \n \n 1.8 \n \n \n \n \n Why we measure this \n Measures how effectively the Group manages the credit risk of its lending portfolios \n Non-financial \n Customer Feefo ratings (Stars) 2 \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 4.7 \n \n \n 4.6 \n \n \n 4.6 \n \n \n 4.6 \n \n \n 4.7 \n \n \n \n \n Why we measure this \n Indicator of customer satisfaction with the Group's products and services \n 2. Mark out of 5 based on star rating from 1,661 reviews (2023:1,989; 2022: 990; 2021: 937; 2020: 1,466). \n Employee survey trust index score (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 82.0 \n \n \n 80.0 \n \n \n 85.0 \n \n \n 83.0 \n \n \n 74.0 \n \n \n \n \n Why we measure this \n Indicator of employee engagement and satisfaction \n Environmental intensity indicator 3 \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 3.1 \n \n \n 3.0 \n \n \n 2.8 \n \n \n 2.0 \n \n \n 1.5 \n \n \n \n \n 3. Total Scope 1, 2 and certain Scope 3 emissions per £million Group operating income. \n Why we measure this \n Indicator of the Group's impact on the environment \n Certain key performance indicators represent alternative performance measures that are not defined or specified under International Financial Reporting Standards ('IFRS'). \n Definitions of the financial key performance indicators, their calculation and an explanation of the reasons for their use can be found in the Appendix to the 2024 Annual Report and Accounts . \n All key performance indicators are presented on a continuing basis, unless otherwise stated. \n Further information on discontinued operations are included in Note 10 to the Financial Statements. \n Further explanation of the financial key performance indicators is discussed in the narrative of the Financial Review. \n Further explanation of the non-financial key performance indicators is provided in the Managing our Business Responsibly and Climate-Related Financial Disclosures sections. \n The Directors' Remuneration report in the 2024 Annual Report and Accounts, sets out how executive pay is linked to the assessment of key financial and non-financial performance indicators. \n Strategic priorities \n Our strategic priorities are simplifying the Group, enhancing customer experience and leveraging our networks, all enabled by technology. These are the right priorities to Optimise for Growth, and will enable us to progress towards delivering all of our medium-term targets. \n Simplify \n A key initiative of simplification has been Project Fusion, where we achieved the target of £5 million 1 in annualised savings at the end of 2024. This was achieved through a sustained focus on cost discipline and we contained our year-on-year cost growth at 4.1%. We continued with supplier reviews to crystallise cost savings, and implemented technology enhancements. This year, this included migrating the e-signing of lending agreements to use in-house developed technology for our Retail Finance business, eliminating the need to use a third party. \n The update in our Project Fusion target, announced at the half year, to £8 million 1 in annualised savings reflected material cost savings from organisational redesign. In the first half of the year, we consolidated our IT and Operations teams under the Group's Chief Operating Officer, and in the second half of the year this was further refined where we amalgamated product-specific teams under a single management structure. In addition, there were changes within Finance and the Risk Function to ensure they are configured to support the business in the most effective way, this also led to the creation of several new roles. The organisational changes will drive a simpler and more cost-efficient structure, remove duplication and provide clearer career paths and development opportunities. The changes did result in a redundancy programme, which resulted in some colleagues leaving the organisation, at a cost of £1.5 million. I would like to thank all colleagues who have left the business for their hard work and dedication and wish them well for the future. Although not an easy decision to make, these changes position the Group for future success. The organisational changes work was completed in December 2024, and the £3 million cost savings will be fully realised in 2025. \n Combined, these initiatives give us high confidence in driving our cost income ratio to our target of 44 to 46% as we achieve our ambition for net lending of £4 billion. With that in mind, we are currently undertaking a strategic review of our business activities and future opportunities to inform the Group's future ambition and objectives beyond 2025. \n Enhance customer experience \n We are pleased to see that our customers are taking advantage of our digital platforms. During the year, we invested in enhancing our savings application process by simplifying the customer journey on our website. This included making the process a lot more user friendly, and better supporting customers with accessibility needs. \n Over 97.1% of our Savings customers are registered to use online banking (2023: 95.8%). Since the launch of our Savings app in 2023, we have seen further uptake of app registrations, which is now at 30.1% and saw over half of servicing transactions being submitted on the Savings app for Access and Notice accounts. \n More customers than ever (87.4%) have registered with our Retail Finance online account management system (2023: 80.4%). We also re-launched our AppToPay app, which now offers a mobile-based service platform for all our Retail Finance products, allowing customers to self-serve and initiate payments (see below for further details). \n We continue to focus on customer outcomes and improving customer satisfaction, and again we score highly with Feefo, achieving 4.7 (2023: 4.6) for our Consumer Finance businesses. In addition, our Retail Finance business was nominated for Best Consumer Credit Product at the Credit Awards. \n Within Business Finance, our Commercial Finance business was recognised by TheBusinessDesk.com North West Rainmakers Award, and was nominated for the 'Asset- based Lending Team'. In September, the business surpassed this and won the ABL/Non-Bank Lender of the Year award at the Midlands Insider Deal Makers Awards, a great achievement. Internal customer satisfaction reviews showed a 97% satisfaction score, which is a testament to a business that is highly reliant on expertise and relationship management model. In Real Estate Finance, 100% of respondents rated the service they receive from the team as 'Excellent'. \n Leverage networks \n Our relationships with partners, retailers, car dealers, intermediaries, new business originators and advisers support our growth. \n Our Retail Finance net lending balance of £1.4 billion (2023: £1.2 billion) was supported by nearly 1,100 retail partners. 2024 saw the business secure longer-term contracts with a large furniture retailer and a jewellery retailer, and gaining new retailers in the lifestyle sector. Vehicle Finance saw an increase of 19.5% in its net lending balance growing from £0.47 billion to £0.56 billion. \n API integration is a key feature in our offering to our consumer distribution networks. This enables us to work seamlessly with our partners, creating efficient working practices across both partner organisations and internally. This has long been an advantage as part of our Retail Finance offering to retail partners, integrating at speed. \n The power of our relationship model in Real Estate Finance has seen new lending to existing clients increase from 36% in 2021 to 67% in 2024, with reliance on new lending origination from brokers declining from 42% to 13% over the same period. This retention model has the benefit of reduced cost of customer acquisition and provides greater knowledge of customers' risk profiles. \n 1. £5.0 million cost savings relative to operating expenses for the 12 months ended December 2021. The additional £3.0 million savings (of the £8.0 million) will be relative to annualised operating expenses for the six months ending 30 June 2024. \n Enabled by technology \n In October, we rolled-out the enhanced capability of our modern Vehicle Finance origination and loan management platform, which is now capable of hosting all new business across products and risk segments. Importantly, customer applications submitted by intermediaries will cascade through our credit tiers and be matched to the most appropriate product terms, which will enable us to offer loans to more customers. This represents a significant investment made over several years allowing us to move forward with technology designed for the market and allow us to migrate away from legacy high maintenance systems. \n As noted, we re-launched our AppToPay proposition in December. Initial data shows customers taking advantage of making payments through open-banking, which is more convenient for the customer, and more cost-efficient for the Group. The app provides the initial foundations for providing customers and retailers opportunities to access our full Retail Finance product suite. \n Regulatory and legal interventions \n As highlighted at the end of 2023, we were working on improving our collections processes, procedures and policies following the FCA's review of Borrowers in Financial Difficulty ('BiFD') across the industry. Customers are now being offered a wider range of forbearance options to support them through financial difficulties. We have identified that it is appropriate to pay £2.2 million to customers (of which £2.0 million was recognised in 2023) where we could have supported them better due to their individual circumstances. A significant part of the customer communications have now been distributed, and we expect to complete activities by the middle of 2025. This was a delay on our initial timetable, as we took additional time to ensure the quality and clarity of our correspondence was appropriate for our customers. We incurred an additional £1.5 million of costs (treated as exceptional) during 2024, primarily in relation to managing the programme. \n The BiFD review resulted in a larger stock of defaulted loans within our Vehicle Finance business and increased the associated loan impairment provision. The stock of defaulted Vehicle Finance loans has remained elevated throughout the year, and as noted above, market conditions were not conducive to deliver on our strategic plans to normalise the position by year-end. The impairment charges recognised on the defaulted stock is not a reflection of the underlying quality of the business being originated. Collections activities returned to normal as the year progressed and arrears levels have reduced over the year. \n In light of legal and regulatory developments, including the FCA's ongoing review of historical discretionary commission arrangements ('DCA') in the motor finance market, and the Court of Appeal's judgment which is currently under appeal, we have recognised costs of £6.9 million (£5.2 million redress, £1.7 million costs) for both DCA and fixed commission structures. There are important factual differences between those cases and how we operated. Further information can be found in Note 29 to the Financial Statements. \n Environmental, Social and Governance ('ESG') \n We have made progress against all our ESG focus areas during the year and refreshed our strategy to ensure it is reflective of our ESG aspirations moving forwards. \n We were again recognised by UK's Best Workplaces™ by Great Place to Work® for a number of accolades. This is supported by colleagues completing employee opinion surveys at the end of 2023. The Group undertook a survey towards the end of 2024 and achieved a trust index score of 74% (2023: 83%). We had anticipated this fall, with the survey being undertaken during the rollout of our organisational redesign programme, which led to a period of uncertainty for many colleagues and a number of roles ultimately being made redundant. However, the score remained high against similar size organisations, which is positive considering the wide impact of change. I appreciate this time has been very challenging for those impacted as well as those remaining within the organisation. I would like to extend my personal thanks to colleagues for their hard work and commitment while we worked through this period of change. \n Our colleagues continued to work hard to donate their time and efforts to support and raise funds for charity across a number of events, which included a golf day and the Three Peaks Challenge, raising nearly £100,000 for great causes this year. \n As part of our ongoing work on Climate Action, we have become members of the Partnership for Carbon Accounting Financials ('PCAF'). Our membership of PCAF underlines our ongoing commitment to monitor and manage our environmental impacts as part of our ESG strategy. We have enhanced our emission disclosures around Scope 3 (see Climate-related financial disclosures in the 2024 Annual Report and Accounts). We also surpassed our goal to reduce our Scope 1 and 2 emissions by 50% (from 2021) a year early. During 2024, initiatives such as reducing our office footprint have contributed towards this reduction. We continue to look at internal initiatives to also support the impact we have on the environment, having launched a new employee benefit, a green car scheme, that is enabling our colleagues to lease brand new electric or plug-in hybrid vehicles. \n Changes in Executive Committee \n During the year, we saw some changes to our Executive Committee. John Bevan who oversaw the Commercial Finance business retired at the end of the year. John was with the Group for over 10 years, establishing the Commercial Finance business in 2014 and growing it to be a significant player in the asset-based lending market. Geoff Ray, Managing Director of the Real Estate Finance business, will retire in April 2025. Geoff joined the business in its early days and has been an integral part of its leadership team. Both have played a key role in developing their teams and growing their franchises with huge passion for their respective sectors. I would like to thank them both for the valuable contribution and wish them well in their retirement. \n I would like to welcome Luke Jooste, who joined us on 1 March 2025 from Momenta Finance where he was the Chief Executive Officer. Luke has been appointed as Managing Director, Business Finance and will provide a fresh perspective to both Commercial and Real Estate Finance, and be the Executive Committee lead in setting the future strategy for our proposition to business customers. \n Outlook \n On balance, 2024 ended with a more positive economic outlook than 2023 with issues such as COVID and the cost-of-living crisis seeming to be largely behind us. However, the expected stability and optimism for growth that was promised from a change in UK government has not yet materialised. Whilst interest rates have started to slowly come down following a period of stabilised inflation figures, concerns over growth in the UK economy and the perceived adverse impact of the new Chancellor's Budget on the market, businesses and consumer confidence. There has also been additional geopolitical uncertainty due to the change of legislature in the US. \n 2024 has been extremely challenging for specialist banks due to the legal and regulatory developments relating to motor finance commissions. We are hopeful that the industry will receive the clarity it needs in 2025, and that we can move forward with confidence and renewed focus on delivering against our strategic objectives. \n Subject to no adverse changes in the economy and trading environment, we expect by the end of 2025 we will have clear line of sight to delivering against our medium-term targets. With that in mind, we are currently undertaking a Group-wide review of our business activities. We have made an initial decision to re-focus the Vehicle Finance business on higher returning segments. I intend to provide an update on the outcome of this work in our 2025 Interim Report. \n   \n Financial review \n Income statement \n \n \n \n \n \n \n \n 2024 \n £million \n \n \n 2023 \n £million \n \n \n Movement \n% \n \n \n \n \n Continuing operations \n \n \n \n \n \n \n \n \n \n \n \n \n \n Interest income and similar income \n \n \n 366.0 \n \n \n 304.0 \n \n \n 20.4 \n \n \n \n \n Interest expense and similar charges \n \n \n (181.1) \n \n \n (136.5) \n \n \n 32.7 \n \n \n \n \n Net interest income \n \n \n 184.9 \n \n \n 167.5 \n \n \n 10.4 \n \n \n \n \n Fee and commission income \n \n \n 19.2 \n \n \n 17.3 \n \n \n 11.0 \n \n \n \n \n Fee and commission expense \n \n \n (0.2) \n \n \n (0.1) \n \n \n 100.0 \n \n \n \n \n Net fee and commission income \n \n \n 19.0 \n \n \n 17.2 \n \n \n 10.5 \n \n \n \n \n Operating income \n \n \n 203.9 \n \n \n 184.7 \n \n \n 10.4 \n \n \n \n \n Net impairment charge on loans and advances to customers \n \n \n (61.9) \n \n \n (43.2) \n \n \n 43.3 \n \n \n \n \n Other (losses)/gains \n \n \n (0.3) \n \n \n 0.3 \n \n \n (200.0) \n \n \n \n \n Fair value and other gains on financial instruments \n \n \n 1.2 \n \n \n 0.5 \n \n \n 140.0 \n \n \n \n \n Operating expenses \n \n \n (103.8) \n \n \n (99.7) \n \n \n 4.1 \n \n \n \n \n Profit before income tax from continuing operations before exceptional items \n \n \n 39.1 \n \n \n 42.6 \n \n \n (8.2) \n \n \n \n \n Exceptional items \n \n \n (9.9) \n \n \n (6.5) \n \n \n 52.3 \n \n \n \n \n Profit before income tax from continuing operations \n \n \n 29.2 \n \n \n 36.1 \n \n \n (19.1) \n \n \n \n \n Income tax expense \n \n \n (9.5) \n \n \n (9.7) \n \n \n (2.1) \n \n \n \n \n Profit for the year from continuing operations \n \n \n 19.7 \n \n \n 26.4 \n \n \n (25.4) \n \n \n \n \n Discontinued operations \n \n \n \n \n \n \n \n \n \n \n \n \n \n Loss before income tax from discontinued operations \n \n \n - \n \n \n (2.7) \n \n \n (100.0) \n \n \n \n \n Income tax credit \n \n \n - \n \n \n 0.6 \n \n \n (100.0) \n \n \n \n \n Loss for the year from discontinued operations \n \n \n - \n \n \n (2.1) \n \n \n (100.0) \n \n \n \n \n Profit for the year \n \n \n 19.7 \n \n \n 24.3 \n \n \n (18.9) \n \n \n \n \n Basic earnings per share (pence) - Adjusted \n \n \n 150.1 \n \n \n 172.3 \n \n \n (12.9) \n \n \n \n \n Basic earnings per share (pence) - Continuing \n \n \n 103.4 \n \n \n 140.8 \n \n \n (26.6) \n \n \n \n \n Basic earnings per share (pence) - Total \n \n \n 103.4 \n \n \n 129.6 \n \n \n (20.2) \n \n \n \n \n   \n \n \n \n \n Selected key performance indicators and performance metrics \n \n \n 2024 \n % \n \n \n 2023 \n % \n \n \n Percentage point movement \n \n \n \n \n Net interest margin \n \n \n 5.4 \n \n \n 5.4 \n \n \n - \n \n \n \n \n Net revenue margin \n \n \n 6.0 \n \n \n 6.0 \n \n \n - \n \n \n \n \n Adjusted cost to income ratio \n \n \n 50.9 \n \n \n 54.0 \n \n \n (3.1) \n \n \n \n \n Statutory cost to income ratio \n \n \n 55.8 \n \n \n 57.5 \n \n \n (1.7) \n \n \n \n \n Cost of risk \n \n \n 1.8 \n \n \n 1.4 \n \n \n 0.4 \n \n \n \n \n Adjusted return on average equity \n \n \n 8.0 \n \n \n 9.6 \n \n \n (1.6) \n \n \n \n \n Total return on average equity \n \n \n 5.5 \n \n \n 7.3 \n \n \n (1.8) \n \n \n \n \n Common Equity Tier 1 ratio \n \n \n 12.3 \n \n \n 12.7 \n \n \n (0.4) \n \n \n \n \n Total capital ratio \n \n \n 14.6 \n \n \n 15.0 \n \n \n (0.4) \n \n \n \n \n   \n Certain key performance indicators and performance metrics represent alternative performance measures that are not defined or specified under International Financial Reporting Standards ('IFRS'). Definitions of these alternative performance measures, their calculation and an explanation of the reasons for their use can be found in the Appendix to the 2024 Annual Report and Accounts . \n All key performance indicators are presented on a continuing basis, unless otherwise stated. Adjusted profit before tax refers to profit before income tax from continuing operations before exceptional items. Further information on exceptional items are included in Note 8 of the Financial Statements . \n The Directors' Remuneration report in the 2024 Annual Report and Accounts, sets out how executive pay is linked to the assessment of key financial and non-financial performance metrics. \n In 2024, we delivered strong lending growth, particularly within our Consumer Finance businesses, with net lending growth, of 8.8% driving income growth of 10.4% at a stable net interest margin. Cost growth has been actively managed and contained at 4.1%, but we have incurred higher impairments within our Vehicle Finance business due to the operational impacts of the FCA's review of Borrowers in Financial Difficulty ('BiFD'). The Group achieved an adjusted profit before tax of £39.1 million (2023: £42.6 million), with the Common Equity Tier 1 ('CET 1') ratio of 12.3%. \n Increased impairment charges have reduced profits, resulting in total Earnings Per Share ('EPS') decreasing from 129.6 pence per share (2023) to 103.4 pence per share. On an adjusted basis, EPS decreased to 150.1 pence per share (2023: 172.3 pence per share). Total return on average equity decreased from 7.3% (2023) to 5.5%. On an adjusted basis, return on average equity decreased to 8.0% (2023: 9.6%). \n Detailed disclosures of EPS are shown in Note 11 to the Financial Statements. The components of the Group's profit are analysed in more detail in the following sections. \n Operating income \n The Group's operating income increased by 10.4% to £203.9 million (2023: £184.7 million). Net interest income on the Group's lending assets continues to be the largest component of operating income. This increased by 10.4% to £184.9 million (2023: £167.5 million), driven by growth in net lending assets, with average balances increasing by 10.1% to £3,413.9 million (2023: £3,099.4 million). \n The Group's net interest margin was maintained at 5.4% (2023: 5.4%) by actively increasing gross yields to reflect the higher cost of funds. \n The Group's other income, which relates to net fee and commission income, increased by 10.5% to £19.0 million (2023: £17.2 million). \n Impairment charge \n Impairment charges increased to £61.9 million (2023: £43.2 million) resulting in an increased Group cost of risk of 1.8% (2023: 1.4%). \n Increased expected credit losses in the Vehicle Finance business have been the principal reason for the increased impairment charges. Vehicle Finance has experienced increased levels of customer defaults due to a pause in collections activities from second half of 2023 as the business addressed the specific feedback received following the FCA's review of BiFD. The credit quality of new lending in the Vehicle Finance business has improved over time and arrears levels have reduced over the year. \n Impairment charges are lower year on year across all other lending businesses. Retail Finance has originated a greater mix of higher-quality loans and also updated to reflect an improved debt sale arrangement. Both Business Finance businesses have incurred charges on specific cases but, overall, the portfolios performed better than 2023. \n Overall impairment provisions increased to £111.8 million (2023: £88.1 million) with a total coverage level of 3.0% (2023: 2.6%). \n During the financial year, the Group refreshed macroeconomic inputs to its IFRS 9 Expected Credit Loss ('ECL') models, incorporating its external economic adviser's latest UK economic outlook. The forecast economic assumptions within each IFRS 9 scenario, and the weighting applied, are set out in more detail in Note 16 to the Financial Statements. \n The Group has applied Expert Credit Judgements ('ECJ's') underlays totalling £5.7 million (2023: £1.2 million underlay), where management believes the IFRS 9 modelled output is not accurately reflecting current risks in the loan portfolios. The majority of the ECJ underlays of £4.5 million (2023: £2.1 million) relate to the Vehicle Finance lending portfolios LGD stage 1 and 2 recovery assumptions being understated in the model; which will be updated in 2025. Further details of these ECJs are included in Note 16 to the Financial Statements. During the year, the Group implemented a new IFRS 9 model for Vehicle Finance prime lending and an enhanced Probability of Default model for Retail Finance. These better reflect the underlying credit quality of business written and has reduced the need for ECJ's. We have also updated IFRS 9 Significant Increase in Credit Risk ('SICR') criteria, and implemented a new curing policy for Consumer Finance, further information can be found in Note 16 to the Financial Statements. \n Fair value and other gains on financial instruments \n The Group has highly effective hedge accounting relationships, and, as a result, recognised a small hedging ineffectiveness gain of £0.1 million (2023: £0.1 million gain) and £0.6 million gain (2023: £nil) relating to hedge accounting inception and amortisation adjustments (See Note 5 to the Financial Statements). The Group also recognised a gain of £0.5 million (2023: £0.8 million loss) relating to interest rate swaps being entered into ahead of hedge accounting becoming available, which will reverse to the income statement over the remaining life of the swaps. \n During 2023, the Group realised a gain of £1.2 million on the buy-back of the 2018 Tier 2 debt. \n Operating expenses \n The Group's adjusted cost income ratio improved to 50.9% (2023: 54.0%) with the cost base increasing by 4.1% to £103.8 million (2023: £99.7 million). The improved ratio reflects both the increase in operating income and the ongoing programme of initiatives that are driving more efficient and effective operational processes, including digitalisation of processes, supplier and procurement reviews, organisational design and property management. As at the end of 2024, Project Fusion has delivered £5 million of annualised cost savings ¹ , and will deliver another £3 million of additional annualised savings 1 in 2025. Statutory cost income ratio inclusive of exceptional items was 55.8% (2023: 57.5%). \n Taxation \n The effective tax rate on continuing activities of 32.5%, increased compared with 2023 (26.9%) primarily as a result of non-deductible expenses in exceptional items. \n Exceptional items \n The Group recognised charges for exceptional items of £9.9 million during the year (2023: £6.5 million). \n Further costs have been recognised in 2024 following the FCA's review of BiFD across the industry of £1.5 million (£1.3 million costs and £0.2 million potential redress/goodwill). £4.7 million was recognised in 2023 (£2.7 million costs and £2.0 million potential redress/goodwill). \n In light of the FCA's ongoing review of historical discretionary commission arrangements ('DCA') in the motor finance market, and the Court of Appeal's judgment which is currently under appeal, we have recognised costs of £6.9 million (£5.2 million redress, £1.7 million costs) for both DCA and fixed commission structures. Further information can be found in Note 29 to the Financial Statements. \n Following an organisational redesign in 2024, £1.5 million was incurred for restructuring costs. In 2023, the Group recognised charges in relation to non-recurring corporate activity of £1.8 million. \n Further details on all Exceptional items are included in Note 8 to the Financial Statements. \n Distributions to shareholders \n The Board recommended the payment of a final dividend for 2024 of 22.5 pence per share, which together with the interim dividend of 11.3 pence per share, represents a total dividend for the year of 33.8 pence per share (2023: 32.2 pence per share). This is in line with the Group's progressive dividend policy. \n 1. £5.0 million cost savings relative to operating expenses for the 12 months ended December 2021. The additional £3.0 million savings will be relative to annualised operating expenses for the six months ending 30 June 2024. \n Summarised balance sheet \n \n \n \n \n Assets \n \n \n 2024 \n £million \n \n \n  2023 \n £million \n \n \n \n \n Cash and Bank of England reserve account \n \n \n 445.0 \n \n \n 351.6 \n \n \n \n \n Loans and advances to banks \n \n \n 24.0 \n \n \n 53.7 \n \n \n \n \n Loans and advances to customers \n \n \n 3,608.5 \n \n \n 3,315.3 \n \n \n \n \n Fair value adjustment for portfolio hedged risk \n \n \n (6.8) \n \n \n (3.9) \n \n \n \n \n Derivative financial instruments \n \n \n 14.3 \n \n \n 25.5 \n \n \n \n \n Other assets \n \n \n 31.7 \n \n \n 35.8 \n \n \n \n \n \n \n \n 4,116.7 \n \n \n 3,778.0 \n \n \n \n \n Liabilities \n \n \n \n \n \n \n \n \n \n \n Due to banks \n \n \n 365.8 \n \n \n 402.0 \n \n \n \n \n Deposits from customers \n \n \n 3,244.9 \n \n \n 2,871.8 \n \n \n \n \n Fair value adjustment for portfolio hedged risk \n \n \n (3.4) \n \n \n (1.4) \n \n \n \n \n Derivative financial instruments \n \n \n 10.0 \n \n \n 22.0 \n \n \n \n \n Tier 2 subordinated liabilities \n \n \n 93.3 \n \n \n 93.1 \n \n \n \n \n Other liabilities \n \n \n 45.6 \n \n \n 46.0 \n \n \n \n \n \n \n \n 3,756.2 \n \n \n 3,433.5 \n \n \n \n \n New business \n 2024 was another positive year for new business with new lending of £2,331.9 million, up 1.1% year on year (2023: £2,305.4 million). Consumer Finance, which grew by 11.2% over 2023, offset by lower Business Finance, 24.6% lower than in 2023 due to more challenging market conditions. Further details on the divisional split of this new business can be found in the Business Review. \n New business volumes \n 2024: £2,331.9m (2023: £2,305.4m) \n \n \n \n \n Retail Finance \n \n \n Vehicle Finance \n \n \n Real Estate Finance \n \n \n Commercial Finance \n \n \n \n \n £1,289.7m \n \n \n £552.9m \n \n \n £383.5m \n \n \n £105.8m \n \n \n \n \n Customer lending and deposits \n Group lending assets increased by £293.2 million (8.8%) to £3,608.5 million (2023: £3,315.3 million), continuing our growth towards our net lending ambition of £4.0 billion. \n Consumer Finance balances grew by £225.7 million or 13.4% driven by strong demand from strategic partner retailers, supported by Business Finance balances growth of £67.5 million (4.2%). \n Loans and advances to customers \n 2024: £3,608.5m (2023: £3,315.3m) \n \n \n \n \n Retail Finance \n \n \n Vehicle Finance \n \n \n Real Estate Finance \n \n \n Commercial Finance \n \n \n \n \n £1,357.8m \n \n \n £558.3m \n \n \n £1,341.4m \n \n \n £351.0m \n \n \n \n \n Further analysis of loans and advances to customers, including a breakdown of the arrears profile of the Group's loan books, is provided in Note 16 to the Financial Statements. \n Customer deposits include Fixed term bonds, ISAs, Notice and Access accounts. Customer deposits increased by 13.0% to £3,244.9 million (2023: £2,871.8 million) driven by lending book growth and as part of the strategy to replace drawings from the Bank of England Term Funding Scheme with additional incentives for SMEs ('TFSME') funding. Total funding ratio of 112.4% increased slightly from 31 December 2023 (111.7%). The mix of the deposit book has continued to change as the Group has adapted to the interest rate environment, with a focus on meeting customer demand for Access products, and retaining stable funds, which is reflected in the proportion of Fixed term bonds and ISAs. \n Investments and wholesale funding \n Amounts due to banks include drawings from the TFSME facility of £230.0 million, reducing from 2023 (£390.0 million) as the Group actively prepays this funding. In addition, it includes £125.0 million drawn from the Indexed Long-Term Repo ('ILTR') facility as at the end of 2024 (2023: £nil), a routine sterling liquidity management facility provided by the Bank of England. \n Tier 2 subordinated liabilities \n Tier 2 subordinated liabilities represent £90.0 million of 10.5-year 13.0% Fixed Rate Callable Subordinated Notes, which qualify as Tier 2 capital. \n Capital \n Management of capital \n Our capital management policy is focused on optimising shareholder value over the long term. Capital is allocated to achieve targeted risk adjusted returns, while ensuring appropriate surpluses are held above the minimum regulatory requirements. \n Key factors influencing the management of capital include: \n \n \n \n \n ·    \n \n \n The level of buffers and the capital requirement set by the Prudential Regulation Authority ('PRA'); \n \n \n \n \n ·    \n \n \n Estimated credit losses calculated using IFRS 9 methodology, and the applicable transitional rules; \n \n \n \n \n ·    \n \n \n New business volumes; and \n \n \n \n \n ·    \n \n \n The product mix of new business. \n \n \n \n \n Capital resources \n Capital resources increased over the year from £397.6 million to £415.7 million. This includes the proposed 2024 final dividend of £4.2 million. The increase was primarily in CET 1 capital and was driven by total profit for the year of £19.7 million, offset by the final 2024 dividend of £4.2 million, and the expected reduction in the IFRS 9 transitional adjustment of £2.0 million. The remainder of the increase was from Tier 2 (£4.6 million) as capital eligibility increased through asset growth. \n The resultant CET 1 and Total capital ratios are 12.3% (2023: 12.7%) and 14.6% (2023: 15.0%) respectively. \n \n \n \n \n Capital \n \n \n 2024 \n £million \n \n \n 2023 \n £million \n \n \n \n \n CET 1 capital, excluding IFRS 9 transitional adjustment \n \n \n 351.3 \n \n \n 335.8 \n \n \n \n \n IFRS 9 transitional adjustment \n \n \n 0.1 \n \n \n 2.1 \n \n \n \n \n CET 1 capital \n \n \n 351.4 \n \n \n 337.9 \n \n \n \n \n Tier 2 capital 1 \n \n \n 64.3 \n \n \n 59.7 \n \n \n \n \n Total capital \n \n \n 415.7 \n \n \n 397.6 \n \n \n \n \n Total risk exposure \n \n \n 2,855.7 \n \n \n 2,653.4 \n \n \n \n \n   \n \n \n \n \n Capital ratios \n \n \n 2024 \n % \n \n \n 2023 \n % \n \n \n \n \n CET 1 capital ratio \n \n \n 12.3 \n \n \n 12.7 \n \n \n \n \n Total capital ratio \n \n \n 14.6 \n \n \n 15.0 \n \n \n \n \n CET 1 capital ratio (excluding IFRS 9 transitional adjustment) \n \n \n 12.3 \n \n \n 12.7 \n \n \n \n \n Total capital ratio (excluding IFRS 9 transitional adjustment) \n \n \n 14.5 \n \n \n 14.9 \n \n \n \n \n Leverage ratio \n \n \n 9.5 \n \n \n 9.7 \n \n \n \n \n 1. Tier 2 capital, which is solely subordinated debt net of unamortised issue costs, capped at 25% of total Pillar 1 and Pillar 2A requirements. \n Capital requirements \n The Total Capital Requirement, set by the PRA, includes both the calculated requirement derived using the standardised approach and the additional capital required, derived from the Internal Capital Adequacy Assessment Process ('ICAAP'). In addition, capital is held to cover generic buffers set at a macroeconomic level by the PRA. \n \n \n \n \n \n \n \n 2024 \n £million \n \n \n 2023 \n £million \n \n \n \n \n Total Capital Requirement \n \n \n 257.0 \n \n \n 238.8 \n \n \n \n \n Capital conservation buffer \n \n \n 71.4 \n \n \n 66.3 \n \n \n \n \n Countercyclical buffer \n \n \n 57.1 \n \n \n 53.1 \n \n \n \n \n Total \n \n \n 385.5 \n \n \n 358.2 \n \n \n \n \n The increase in lending balances through the year resulted in an increase in risk weighted assets over the period, bringing the total risk exposure up from £2,653.4 million to £2,855.7 million. \n Liquidity \n Management of liquidity \n The Group uses a number of measures to manage liquidity risk. These include: \n \n \n \n \n ·  \n \n \n The Overall Liquidity Adequacy Requirement ('OLAR'), which is the Board's view of the Group's liquidity needs, as set out in the Board-approved Internal Liquidity Adequacy Assessment Process ('ILAAP'). \n \n \n \n \n ·  \n \n \n The Liquidity Coverage Ratio ('LCR'), which is a regulatory measure that assesses net 30-day cash outflows as a proportion of High Quality Liquid Assets ('HQLA'). \n \n \n \n \n ·  \n \n \n Total funding ratio, as defined in the Appendix to the Annual Report. \n \n \n \n \n ·  \n \n \n 'HQLA' are held in the Bank of England Reserve Account and UK Treasury Bills. For LCR purposes, the HQLA excludes UK Treasury Bills that are pledged as collateral against the Group's TFSME drawings with the Bank of England. \n \n \n \n \n The Group was above the LCR minimum threshold (100%) throughout the year, with the Group's average LCR being 219.6% (2023: 208.0%) based on a rolling 12 month-end average. \n Liquid assets \n We continued to hold significant surplus liquidity over the minimum requirements throughout 2024, managing liquidity by holding HQLA and utilising funding (predominantly from retail funding) to support lending. Total liquid assets increased to £469.0 million (2023: £400.3 million) which, amongst other things, reflects the levels of liquidity at the end of 2024 to support funding required to fund the pipeline and fixed term bond maturities. \n The Group is a participant in the Bank of England's Sterling Money Market Operations under the Sterling Monetary Framework and has drawn £230.0 million under the TFSME (2023: £390.0 million) and £125.0 million under the ILTR scheme (2023: £nil). The ILTR scheme has used collateral already prepositioned with the Bank of England and was initiated during the year as part of the strategy to repay TFSME before the end of its contractual term. Further drawings of ILTR are planned in 2025 as the remaining balance of TFSME is repaid. The Group has no liquid asset exposures outside the United Kingdom and no amounts that are either past due or impaired. \n \n \n \n \n Liquid assets \n \n \n 2024 \n £million \n \n \n 2023 \n £million \n \n \n \n \n Aaa-Aa3 \n \n \n 445.0 \n \n \n 356.4 \n \n \n \n \n A1-A2 \n \n \n 24.0 \n \n \n 43.9 \n \n \n \n \n Total \n \n \n 469.0 \n \n \n 400.3 \n \n \n \n \n We continue to attract customer deposits to support balance sheet growth. The composition of customer deposits is shown in the table below: \n \n \n \n \n Customer deposits \n \n \n 2024 \n % \n \n \n 2023 \n % \n \n \n \n \n Fixed term bonds \n \n \n 47 \n \n \n 54 \n \n \n \n \n Notice accounts \n \n \n 2 \n \n \n 6 \n \n \n \n \n ISAs \n \n \n 26 \n \n \n 22 \n \n \n \n \n Access accounts \n \n \n 25 \n \n \n 18 \n \n \n \n \n Total \n \n \n 100 \n \n \n 100 \n \n \n \n \n Business review \n Consumer Finance \n Retail Finance \n We provide quick and easy finance options at the point of purchase. \n What we do \n \n \n \n \n ·  \n \n \n We provide a market-leading online e-commerce service to retailers, providing unsecured, interest-free and interest-bearing prime lending products to UK customers to facilitate the purchase of a wide range of consumer products, including furniture, jewellery, dental, leisure items and football season tickets. These retailers include a large number of household names. \n \n \n \n \n ·  \n \n \n Products are available to purchase in store or online, using our market-leading origination platform, which provides fast decision making, with 90% of applications agreed in an average of six seconds. \n \n \n \n \n ·  \n \n \n The customer proposition and the integrated platform support the growth of UK retailers and the real economy. \n \n \n \n \n 2024 performance \n \n \n \n \n ·  \n \n \n Another record year for new lending led to lending balances increasing by 11.0% with an increase in Retail Finance's market share of new business, which grew to 15.3% 1 (2023: 13.5%). \n \n \n \n \n ·  \n \n \n In the year, the lag effect of the steep increases in Base Rate began to reverse, with a stable and now declining Base Rate, such that margins expanded, resulting in net interest margin increasing to 6.8% (2023: 6.4%). \n \n \n \n \n ·  \n \n \n At the end of the year, 86.7% (2023: 86.3%) of the lending book related to interest-free lending, and 87.4% (2023: 80.4%) of customers have signed up to online account management allowing self-service of their account. \n \n \n \n \n Outlook \n \n \n \n \n ·  \n \n \n Despite a challenging environment for both retailers and consumers, we still anticipate further lending growth from both new and existing retail partners, with potential improvement in net interest margin. Cost of risk will normalise to 2023 levels. \n \n \n \n \n ·  \n \n \n Our operational plans now include our recently launched AppToPay service, which will continue to digitalise our processes to improve our customer and retail partners' experience through app-based technology. \n \n \n \n \n 1. Source: Finance & Leasing Association ('FLA'): New business values within retail store and online credit: 2024 15.3% (2023: 13.5%): FLA total and Retail Finance new business of £8,427 million (2023: £8,810 million) and £1,289.7 million (2023: £1,185.4 million) respectively. As published at 31 December 2024. \n Performance history \n New business (£m ) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 614.5 \n \n \n 771.5 \n \n \n 1,124.3 \n \n \n 1,185.4 \n \n \n 1,289.7 \n \n \n \n \n Loans and advances to customers (£m) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 658.4 \n \n \n 764.8 \n \n \n 1,054.5 \n \n \n 1,223.2 \n \n \n 1,357.8 \n \n \n \n \n Net interest margin (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 8.7 \n \n \n 8.1 \n \n \n 6.8 \n \n \n 6.4 \n \n \n 6.8 \n \n \n \n \n Risk adjusted margin (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 6.7 \n \n \n 7.8 \n \n \n 5.6 \n \n \n 5.3 \n \n \n 6.0 \n \n \n \n \n   \n Consumer Finance \n Vehicle Finance \n We provide quick and easy used car f inance options at the point of purchase. \n What we do \n \n \n \n \n ·  \n \n \n We provide consumer lending products that are secured against the second hand vehicle being financed. \n \n \n \n \n ·  \n \n \n We also provide a vehicle stock funding product, which is secured against dealer forecourt used car stock; sourced from auctions, part exchanges or trade sources. \n \n \n \n \n ·  \n \n \n Finance is provided via technology platforms, allowing us to receive applications online from introducers; provide an automated decision; facilitate document production through to pay-out to dealer; and manage in-life loan accounts. \n \n \n \n \n 2024 performance \n \n \n \n \n ·  \n \n \n Record new business of £552.9 million, resulted in lending balances increasing by 19.5%. Our market share of new business increased to 1.4% 1 (2023: 1.2%). \n \n \n \n \n ·  \n \n \n Growth has come from higher-quality, lower-margin consumer products and Stock Funding. Combined this has reduced net interest margin to 9.4% (2023: 10.3%). \n \n \n \n \n ·  \n \n \n Stock funding continued to grow despite the contraction of the overall market with some competitors choosing to exit. We now have 427 active dealers (2023: 297) with credit lines of £70.8 million (2023: £51.5 million). \n \n \n \n \n ·  \n \n \n Cost of risk increased to 7.6% (2023: 3.4%) largely driven by the pause in consumer collections in the second half of 2023 in relation to the FCA's review of Borrowers in Financial Difficulty. \n \n \n \n \n ·  \n \n \n We have now completed the final phase of our Motor Transformation Programme, including the rate for risk module, and undertaken a pilot with a select number of introducers. This allows us to price customer lending based on the risk profile of the borrower. \n \n \n \n \n Outlook \n \n \n \n \n ·  \n \n \n We have already taken steps in 2025 to refine our strategy in Vehicle Finance to focus on higher returning segments. \n \n \n \n \n ·  \n \n \n We plan to complete the transfer of all future consumer vehicle finance originations onto the new rate for risk platform by the end of 2025. \n \n \n \n \n 1. Source: FLA. Cars bought on finance by consumers through the point of sale: New business values: 2024 1.4% (2023: 1.2%): Used cars: 2024, FLA total and Vehicle Finance total of £21,281 million (2023: £22,082 million) and £294.4 million (2023: £260.0 million) respectively. As published at 31 December 2024. \n Performance history \n New business (£m) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 78.6 \n \n \n 199.8 \n \n \n 401.7 \n \n \n 471.2 \n \n \n 552.9 \n \n \n \n \n Loans and advances to customers (£m) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 243.9 \n \n \n 263.3 \n \n \n 373.1 \n \n \n 467.2 \n \n \n 558.3 \n \n \n \n \n Net interest margin (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 12.8 \n \n \n 13.1 \n \n \n 12.0 \n \n \n 10.3 \n \n \n 9.4 \n \n \n \n \n Risk adjusted margin (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 5.1 \n \n \n 14.0 \n \n \n 6.1 \n \n \n 7.3 \n \n \n 1.9 \n \n \n \n \n   \n Business Finance \n Real Estate Finance \n We lend money against residential properties to professional landlords and property developers. \n What we do \n \n \n \n \n ·  \n \n \n We provide non-regulated first charge secured lending to specialist real estate markets, lending to professional landlords to enable them to improve and grow their portfolio and provide development facilities to property developers and SME housebuilders to help build new homes for sale or letting. \n \n \n \n \n ·  \n \n \n Due to our specialist relationship-led business model, we offer through the cycle tailored underwriting and cash flow led debt structuring. \n \n \n \n \n ·  \n \n \n Finance opportunities are sourced and supported on a relationship basis directly and via introducers and brokers. \n \n \n \n \n 2024 performance \n \n \n \n \n ·  \n \n \n Strong levels of new business, particularly in the Residential Investment sector, built on a strong origination team and the refinancing of existing loans through strong customer relationships. \n \n \n \n \n ·  \n \n \n Lending balances grew by 7.8% to a record high of £1,341.4 million despite weak economic growth and a challenging economy for investors and developers. \n \n \n \n \n ·  \n \n \n The portfolio principally comprises lower risk residential investment lending, 88.1% (2023: 83.8%). The remainder of the book relates to development and commercial investment lending. \n \n \n \n \n ·  \n \n \n Our market remains competitive, however, net revenue margin was maintained at 2.6% (2023: 2.6%). \n \n \n \n \n ·  \n \n \n Impairment charges of £4.0 million (2023: £4.5 million) remain higher than the historical average, primarily due to one legacy development case, which is being actively managed to achieve a timely exit. Despite this, we have seen a 0.1% improvement in the risk adjusted margin. \n \n \n \n \n ·  \n \n \n As at year-end, the loan book has an average loan-to-value of 56.0% (2023: 57.2%). \n \n \n \n \n Outlook \n \n \n \n \n ·  \n \n \n With the economic outlook for house prices more stable than in recent years, we see real growth opportunities in our focused real estate segments supported by the new UK government's desire to build more homes. \n \n \n \n \n   \n Performance history \n New business (£m) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 189.5 \n \n \n 376.1 \n \n \n 384.5 \n \n \n 434.0 \n \n \n 383.5 \n \n \n \n \n   \n Loans and advances to customers (£m) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 1,051.9 \n \n \n 1,109.6 \n \n \n 1,115.5 \n \n \n 1,243.8 \n \n \n 1,341.4 \n \n \n \n \n   \n Net revenue margin (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 3.0 \n \n \n 3.0 \n \n \n 2.7 \n \n \n 2.6 \n \n \n 2.6 \n \n \n \n \n                 \n Risk adjusted margin (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 2.5 \n \n \n 3.0 \n \n \n 2.6 \n \n \n 2.2 \n \n \n 2.3 \n \n \n \n \n   \n Business Finance \n Commercial Finance \n We support the growth of UK businesses by enabling effective cash flow. \n What we do \n \n \n \n \n ·  \n \n \n We offer a full suite of asset-based lending solutions to SMEs and some larger corporates who need bespoke working capital solutions for their business. \n \n \n \n \n ·  \n \n \n We operate a high-touch relationship-led model throughout the life of a facility, where partners and clients have direct access to decision-makers. \n \n \n \n \n ·  \n \n \n Our lending remains predominantly against receivables, releasing funds of up to 90% of qualifying invoices under invoice discounting facilities. \n \n \n \n \n ·  \n \n \n Business is sourced and supported directly from clients via private equity houses and professional introducers, but is not reliant on the broker market. \n \n \n \n \n 2024 performance \n \n \n \n \n ·  \n \n \n New business lending has been lower in 2024 due to limited M&A activity in our target markets, and our unwillingness to transact on riskier deal structures at low margins. \n \n \n \n \n ·  \n \n \n Whilst year-end balances were 7.9% lower in 2024, average lending balances were 1.2% higher year-on-year. \n \n \n \n \n ·  \n \n \n The increase in net revenue margin was driven by fees charged for new facilities, extensions and early terminations. \n \n \n \n \n ·  \n \n \n The risk adjusted margin has increased to 5.9%, reflecting the higher fees, but it included a higher cost of risk at 1.7% (2023: 2.3%) after a £5.6 million charge relating to a specific client. \n \n \n \n \n Outlook \n \n \n \n \n ·  \n \n \n Economic and market conditions still remain challenging for our clients, but we remain committed to supporting their growth and success, and we look forward to partnering with new businesses in 2025 as market conditions improve. \n \n \n \n \n   \n Performance history \n New business (£m) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 126.1 \n \n \n 93.7 \n \n \n 157.3 \n \n \n 214.8 \n \n \n 105.8 \n \n \n \n \n Loans and advances to customers (£m) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 230.7 \n \n \n 313.3 \n \n \n 376.4 \n \n \n 381.1 \n \n \n 351.0 \n \n \n \n \n   \n Net revenue margin (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 5.5 \n \n \n 5.7 \n \n \n 6.4 \n \n \n 7.0 \n \n \n 7.6 \n \n \n \n \n Risk adjusted margin (%) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 5.0 \n \n \n 5.8 \n \n \n 6.2 \n \n \n 4.7 \n \n \n 5.9 \n \n \n \n \n \n Savings \n We look after our customers' savings and provide a competitive return. \n What we do \n \n \n \n \n ·  \n \n \n We offer a range of savings accounts that are purposely simple in design, with a choice of products from Access to 180-day notice, and six month to seven-year fixed terms across both Bonds and ISAs. \n \n \n \n \n ·  \n \n \n Our range of savings products enables us to access the majority of the UK personal savings markets and compete for significant liquidity pools, achieving a lower marginal cost with the volume, mix and the competitive rates offered; optimised to the demand of our funding needs. \n \n \n \n \n 2024 performance \n \n \n \n \n ·  \n \n \n In 2024, we successfully funded the growth in the lending businesses, and are now managing deposits of £3.2 billion, a 13.0% increase on year-end 2023 (£2.9 billion). We have raised over £1.6 billion of new deposits and retained £0.9 billion at maturity. \n \n \n \n \n ·  \n \n \n The Bank of England Base Rate remained at 5.25% for the first half of 2024, with two 0.25% reductions in the second half in line with market forecasts. Further rate reductions are expected in 2025, these are priced into market rates for savings. \n \n \n \n \n ·  \n \n \n We have seen significant growth in both Access and ISAs, both proving a popular customer choice. Notice products have continued to be a less popular choice in a high interest environment. \n \n \n \n \n ·  \n \n \n Savings balances are made up of retail customers. 95.1% of total deposits are fully covered by Financial Services Compensation Scheme ('FSCS') providing our customers with additional confidence about the security of their savings. \n \n \n \n \n Outlook \n \n \n \n \n ·  \n \n \n The savings market has started to see product pricing adjustments in anticipation of a falling interest rate environment. Customers will seek to optimise returns, and we have a product set designed to meet these needs. \n \n \n \n \n Performance history \n Total deposits (£m) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 1,992.5 \n \n \n 2,103.2 \n \n \n 2,514.6 \n \n \n 2871.8 \n \n \n 3,244.9 \n \n \n \n \n Total funds raised (£m) \n \n \n \n \n 2020 \n \n \n 2021 \n \n \n 2022 \n \n \n 2023 \n \n \n 2024 \n \n \n \n \n 535.9 \n \n \n 661.3 \n \n \n 1,210.1 \n \n \n 1,719.1 \n \n \n 1,604.2 \n \n \n \n \n   \n 2024: £3,244.9m \n \n \n \n \n ISA \n \n \n Notice \n \n \n Access \n \n \n Term \n \n \n \n \n £857.3m \n \n \n £72.4m \n \n \n £805.2m \n \n \n £1,510.0m \n \n \n \n \n   \n 2023: £2,871.8m \n \n \n \n \n ISA \n \n \n Notice \n \n \n Access \n \n \n Term \n \n \n \n \n £629.6m \n \n \n £174.3m \n \n \n £521.3m \n \n \n £1,546.6m \n \n \n \n \n   \n Market review \n The Group operates exclusively within the UK and its revenue is derived almost entirely from customers operating in the UK. The Group is therefore particularly exposed to the condition of the UK economy. Customers' borrowing demands are variously influenced by, among other things, UK property markets, employment levels, inflation, interest rates and customer confidence. The economic environment and outlook affect demand for the Group's products, margins that can be earned on lending assets and the levels of loan impairment provisions. \n As a financial services firm, the Group is subject to extensive and comprehensive regulation by governmental and regulatory bodies in the UK. The Group conducts its business subject to ongoing regulation by the Financial Conduct Authority ('FCA') and the Prudential Regulation Authority ('PRA'). The Group must comply with the regulatory regime across many aspects of its activities, including: the training, authorisation and supervision of personnel; systems; processes; product design; customer journey; and documentation. \n Economic review \n Economic growth, measured in real annual UK Gross Domestic Product ('GDP'), was estimated to be 0.9% in 2024 (2023: 0.4%). Economists' base case forecasts indicate GDP growth will increase in 2025, with full-year growth in GDP expected to be 1.4%. However, there is some scepticism that the new UK government's first Budget will have the desired effects of boosting growth, and that household savings are less available to be deployed to boost consumer spending. This has led to downward revisions in more recent UK GDP forecasts, in contrast to global growth forecasts, which have improved partly due to the expected loosening of US fiscal policy under President Trump. \n The rate of inflation fell sharply in 2024 and was largely back to the Bank of England target of 2% by June 2024, but there was a small increase to 2.5% by the end of the year and a further increase to 3.0% in January 2025. Reflecting the 2024 fall in inflation, the Bank of England reduced the Base Rate from 5.25% to 5.00% in August 2024 and from 5.00% to 4.75% in November 2024. A further decrease to 4.50% was announced in February 2025. Financial markets have responded to the Bank of England reducing rates and the expectation that inflation has largely stabilised by pricing in further Base Rate reductions through 2025, albeit at a relatively cautious level. \n Employment levels in December 2024 were 74.9% 1 which represents a small decrease during the period from 75.0% 1 in December 2023. In line with this fall, unemployment has risen from 3.9% 1 in December 2023 to 4.4% 1 at December 2024. Vacancies in the labour market were circa 0.8 million and have been decreasing for two and a half years. Although unemployment levels have risen during the period, wage growth remained strong, at 5.9% 1 and remains ahead of inflation. The latest forecasts suggest that unemployment has peaked, and will remain near its current level throughout 2025. \n UK house prices grew by 4.6% 2 in 2024 and the risk of a large correction in prices has reduced. The uncertainty over the timing and quantum of Base Rate cuts has given rise to some mortgage rate volatility in the year, albeit the overall position is one of lower rates being available than in recent years. Net mortgage borrowing showed 1.5% 3 annual growth in December 2024, with mortgage approvals up significantly year on year. \n Outlook \n Interest rates are expected to fall further in 2025 with the market expecting Base Rate to end the year below 4.00%. The UK economy is expected to grow in 2025 by less than 1% 3 per the Bank of England's latest forecast down from its previous forecast of 1.5%. House prices are expected to continue to grow as mortgage rates soften and borrower affordability improves. Unemployment is expected to remain near its current level of 4.4% 1 for 2025. The longer-term expectation is that unemployment will recover towards a long run level of 4.0% by 2028. \n 1. Source: Office for National Statistics, data as at 31 December 2024, unless otherwise stated. \n 2. Source: HM Land Registry \n 3. Bank of England \n Government and regulatory \n This has been another eventful year for government and regulatory announcements that impact the Group and/or the markets in which it operates. The key announcements in 2024 are set out below. \n Prudential regulation \n During March 2024, the PRA issued PS5/24 'Solvent exit planning for non-systemic banks and building societies'. This is intended to provide an alternative to resolution and creates a new requirement for non-systemic banks to perform a Solvent Exit Analysis to develop an understanding of how firms would exit from PRA-regulated activities, while remaining solvent, the main barriers and risks faced in doing so, and how they would make timely and effective decisions during the process. The Group has commenced work on the Solvent Exit Analysis ahead of the implementation date of 1 October 2025. \n Basel 3.1 changes remain the core focus of regulatory change for the Group alongside the Small Domestic Deposit Takers ('SDDT') regime. Slightly later than anticipated due to the general election, in September 2024, the PRA issued PS9/24 'Implementation of the Basel 3.1 Standards near-final part 2' and four consultation papers relevant to the topic. The policy statement set out the awaited changes to Credit Risk, Pillar 3 disclosures and consequential reporting changes, which completed the framework when considering PS17/23, issued in December 2023. \n The simplified capital regime proposal for SDDT firms was set out in CP7/24. The highlights from these proposals included the removal of Pillar 1 requirements for counterparty credit risk and credit valuation adjustment risk, simplified Pillar 2A approaches to credit risk, credit concentration risk, operational risk, the removal of some methodologies and proposed replacement of Pillar 2B capital buffers with a new non-cyclical Single Capital Buffer ('SCB'). In addition, it also proposed reduced reporting, including changes to the Internal Capital Adequacy Assessment Process ('ICAAP'). \n The Group undertook an initial impact analysis of the combined PS9/24 and PS17/23 amendments, also considering the proposals set out in CP7/24 to understand the impact under SDDT. The Group expects the impact to be broadly neutral overall. \n In the second half of 2024, the Group received confirmation of its successful application to join the SDDT regime. PS17/23 confirmed that firms, that are part of the SDDT regime, do not need to adopt full Basel 3.1 rules and can remain on the interim rules equivalent to the current UK Capital Requirements Regulation regime until the capital rules applicable to the SDDT regime are applicable. \n In November 2024, the PRA issued PS19/24 'Strong and simple framework: The definition of an Interim Capital Regime', which set out the process firms should follow to apply to adopt the Interim Capital Regime ('ICR'). The ICR was expected to apply from 1 January 2026 with the expected SDDT implementation date being 1 January 2027. However, on 18 February 2025, the PRA announced a delay to Basel 3.1 implementation by one year to 1 January 2027. As a consequence we expect a delay in the implementation date for SDDT. The Group has applied for a Modification by Consent waiver to apply the ICR. \n Conduct regulation \n Throughout 2024, FCA publications focused on Consumer Duty, including the findings from their review of implementation, which highlighted good practice and areas of improvement. Dear CEO letters and speeches have reiterated the focus on ensuring firms prioritise areas where there is the greatest risk of consumer harm, setting and testing higher standards, and promoting competition and positive change. The application of the Duty to closed products came into force on 31 July 2024 with limited impact to the Group. \n In January 2024, the FCA introduced temporary changes to the rules for handling motor finance complaints. This was to allow time for its review of historical discretionary commission arrangements ('DCAs'), information requests for which were sent to motor finance firms in the period. On 25 October 2024, the Court of Appeal issued its decision on three motor finance commission cases. \n The lenders involved have been granted permission to appeal the judgment to the Supreme Court, the hearing for which will take place in April 2025. The FCA will update firms on its next steps after the Supreme Court decision. The pause in complaints responses was extended to 4 December 2025 for all motor finance commission complaints. The FCA also issued a Dear CEO letter directing firms to maintain adequate financial resources, with a view to the implications for firms of any potential remedial activities arising from DCAs. Further details on the impact of these developments can be found in Note 29 to the Financial Statements. \n In April 2024, the FCA published two policy statements. One on protections for Borrowers in Financial Difficulty, incorporating aspects of the Tailored Support Guidance into the FCA's sourcebooks with effect from November 2024; the requirements for this have been addressed through an internal project. The other bringing Consumer Credit product sales data reporting into force in Q4 2025. This will be the focus of an internal project during 2025. \n Government and monetary policy \n The Bank of England MPC announced two rate reductions over 2024, 0.25% rate cuts in August and November 2024, reducing UK Bank Base Rate to 4.75% as at 31 December 2024. \n Principal risks and uncertainties \n Risk management \n The effective management of risk is a key part of the Group's strategy and is underpinned by its Risk Aware value. This helps to protect the Group's customers and generate sustainable returns for shareholders. The Group is focused on maintaining sufficient levels of capital, liquidity, operational control, and acting in a responsible way. \n The Group...

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