Interim Results to 30 June 2025

About this update from Secure Trust Bank Plc

[{"type":"text","content":"\n \n   \n PRESS RELEASE \n 14 August 2025 \n LEI: 213800CXIBLC2TMIGI76 \n   \n   \n SECURE TRUST BANK PLC \n Interim Results for the six months to 30 June 2025 \n Significant increase in profits with tangible book value per share up to £19.37 \n Secure Trust Bank PLC ('STB', 'Secure Trust Bank', or the 'Group'), a leading specialist bank, announces its interim results to 30 June 2025, which reflects strong double digit percentage increases in both reported and adjusted 1 pre-tax profits, on the back of solid net revenue growth and material improvement in cost income ratio. \n David McCreadie, Chief Executive Officer, said: \n \"Secure Trust Bank has made continued progress towards delivering sustainable higher returns. The business delivered a 36.3% increase in adjusted 1 profit before tax to £23.3 million as a result of strong income growth and effective cost management. We are on track to deliver £8 million 2 of annualised cost savings by the end of 2025. We recently announced a strategic pivot away from Vehicle Finance which will enable further allocation of capital to our higher-performing specialist lending businesses. This decision, alongside a strategic refresh which will be detailed at a capital markets event in Q4 2025, will position the Group to deliver sustainable attractive returns. \n As previously announced, I will be retiring as the Group's CEO. During my tenure, we have delivered a radical transformation of the Group to position it for future growth. I wish my successor, Ian Corfield, every success in the role.\" \n Financial highlights \n \n \n \n \n • \n \n \n Adjusted 1 profit before tax increased 36.3% to £23.3 million (30 June 2024: £17.1 million) \n \n \n \n \n • \n \n \n Loan book growth of 6.1% to £3.8 billion (31 December 2024: £3.6 billion) \n \n \n \n \n • \n \n \n Statutory profit before tax increased by 30.4% to £22.3 million (30 June 2024: £17.1 million) \n \n \n \n \n • \n \n \n Net Interest Margin ('NIM') improved by 0.1pp to 5.4% (30 June 2024: 5.3%) \n \n \n \n \n • \n \n \n A djusted 1 cost income ratio improved by 460 bps to 49.1% (30 June 2024: 53.7%) \n \n \n \n \n • \n \n \n Adjusted 1 return on average equity ('ROAE') increased to 9.6% (30 June 2024: 7.3%) \n \n \n \n \n • \n \n \n Tangible book value per share increased 3.9% to £19.37 per share (31 December 2024: £18.64) \n \n \n \n \n • \n \n \n Increased interim dividend of 11.8 pence per share (30 June 2024: 11.3 pence), in line with progressive dividend policy \n \n \n \n \n The Group achieved 6.1% net lending growth in the six months to 30 June 2025, to £3.8 billion, driven by growth in the Retail Finance and Business Finance portfolios. Net Interest Margin ('NIM') improved to 5.4% (30 June 2024: 5.3%), due to lower cost of funds in the first half of the year and improved margins in Retail Finance. Project Fusion, the Group's cost optimisation programme, and tight cost control, contributed to an improved adjusted 1 cost income ratio of 49.1% (30 June 2024: 53.7%). \n Cost of risk remained elevated but stable at 1.7% (30 June 2024: 1.7%). This is driven by improving Vehicle Finance cost of risk, offset by a small number of legacy cases impacting Business Finance, and a normalisation of impairment charges in Retail Finance due to non-recurring model enhancement benefits in 2024 and an increase in IFRS 9 stage 1-2 rolls. \n A combination of growth in net lending balances and disciplined cost management under Project Fusion has led to an increase in adjusted 1 ROAE of 9.6% (30 June 2024: 7.3%) while maintaining strong capital ratios. Customer deposits reached a record level of £3.5 billion (31 December 2024: £3.2 billion) in the first half of the year, supporting the early repayment of Term Funding Scheme with additional incentives for SMEs ('TFSME') balances ahead of maturity. \n In July 2025, Secure Trust Bank announced a strategic pivot away from Vehicle Finance, to further improve ROAE over time. This means the Group has stopped new lending in Consumer Vehicle Finance and Stock Funding businesses and put the existing portfolios into run-off. \n Details of our refreshed Strategic Plan, and updated medium term ambitions, including the opportunities identified to enhance the Group's ROAE further, will be announced at a capital markets event to be held in Q4 2025. \n   \n   \n Financial summary \n \n \n \n \n \n \n \n Six months to \n30 June \n2025 \n \n \n Six months to \n30 June \n2024 \n \n \n Change \n \n \n \n \n Total statutory profit before tax \n \n \n £22.3m \n \n \n £17.1m \n \n \n 30.4% \n \n \n \n \n Adjusted 1 profit before tax \n \n \n £23.3m \n \n \n £17.1m \n \n \n 36.3% \n \n \n \n \n Adjusted 1 profit before tax and pre impairments \n \n \n £54.2m \n \n \n £45.2m \n \n \n 19.9% \n \n \n \n \n Basic earnings per share \n \n \n 87.6 pence \n \n \n 67.2 pence \n \n \n 30.4% \n \n \n \n \n Interim dividend per share \n \n \n 11.8 pence \n \n \n 11.3 pence \n \n \n 4.4% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusted 1 return on average equity \n \n \n 9.6% \n \n \n 7.3% \n \n \n 2.3pp \n \n \n \n \n Total return on average equity \n \n \n 9.2% \n \n \n 7.3% \n \n \n 1.9pp \n \n \n \n \n Net interest margin \n \n \n 5.4% \n \n \n 5.3% \n \n \n 0.1pp \n \n \n \n \n Cost of risk \n \n \n 1.7% \n \n \n 1.7% \n \n \n - \n \n \n \n \n Adjusted 1 cost income ratio \n \n \n 49.1% \n \n \n 53.7% \n \n \n (4.6)pp \n \n \n \n \n Statutory cost income ratio \n \n \n 50.0% \n \n \n 53.7% \n \n \n (3.7)pp \n \n \n \n \n \n \n \n 30 June \n2025 \n \n \n 31 December \n2024 \n \n \n Change \n \n \n \n \n \n Net lending balances \n \n \n £3,828.8m \n \n \n £3,608.5m \n \n \n 6.1% \n \n \n \n \n Customer deposits \n \n \n £3,510.1m \n \n \n £3,244.9m \n \n \n 8.2% \n \n \n \n \n Tangible book value per share \n \n \n £19.37 \n \n \n  £18.64 \n \n \n 3.9% \n \n \n \n \n Common Equity Tier 1 ('CET 1') ratio \n \n \n 12.6% \n \n \n 12.3% \n \n \n 0.3pp \n \n \n \n \n Total capital ratio \n \n \n 14.8% \n \n \n 14.6% \n \n \n 0.2pp \n \n \n \n \n Optimising for growth: Execution against strategic priorities \n The Group underpins delivery against medium-term targets with the strategic priorities of Simplify, Enhance Customer Experience and Leverage Networks. Key points of focus throughout the year and looking forward include: \n \n \n \n \n • \n \n \n Strategic decision to stop new lending in Vehicle Finance. \n \n \n \n \n • \n \n \n On track to make annualised cost savings of £8 million 2 by the end of the year through our cost optimisation programme Project Fusion. \n \n \n \n \n • \n \n \n Customers continue to increase use of digital platforms, with over 98% of Savings customers registered with online banking and our AppToPay registrations reaching 250,000 customers in just 6 months. \n \n \n \n \n • \n \n \n Retail Finance works with over 1,000 partners and in the first half of the year supported a £1.4 billion net lending balance (30 June 2024: £1.3 billion). \n \n \n \n \n • \n \n \n For the second time in three years, our Commercial Finance team were the winners of the Asset-Based Lender of the Year at the Real Deals Private Equity Awards 2025. \n \n \n \n \n • \n \n \n In Real Estate Finance, we have leveraged our existing client base showing the power of our robust relationship model, with new lending to existing clients in the first half of 2025 at 59% of new business. \n \n \n \n \n Other highlights \n \n \n \n \n • \n \n \n Awarded Exceptional Service badge by Feefo for excellence in key customer review areas; customer satisfaction maintains its high standard, as measured by Feefo, 4.6 stars (30 June 2024: 4.7 stars). \n \n \n \n \n • \n \n \n Great Place to Work®, once again ranked us as one of the UK's Best Workplaces™, in the large organisations category. Further accolades have also included being ranked for Best Workplace for Development™ and Best Workplace for Women™. \n \n \n \n \n Regulatory and legal developments \n On 1 August 2025, the Supreme Court gave its judgment on the historical use of commission arrangements in the motor finance industry. The Supreme Court ruled that, in two cases, the relationship between motor dealer and the customer was not of a fiduciary nature and the payment of a commission to a motor dealer was not a bribe. However, the Supreme Court upheld that, in the case of Johnson v FirstRand, the relationship was unfair to Mr. Johnson in the specific circumstances of the case. Overall the judgment was positive for the motor finance industry. \n The FCA has announced it will consult with the industry on a compensation scheme for motor finance customers who have been treated unfairly, with the consultation to launch by early October 2025, and for it to be open for six weeks. There remains continued uncertainty as to the eventual cost for impacted firms. As a result, the Group has retained its remaining provision for potential redress and operational costs. \n Dividend \n The Board has approved an increased interim dividend of 11.8 pence per share, consistent with our progressive dividend policy. This will be paid on 25 September 2025 with an associated record date of 29 August 2025. \n CEO Transition \n On 17 June 2025 we announced the appointment of Ian Corfield as CEO Designate effective 23 June 2025, and (subject to regulatory approvals) as CEO effective 16 August 2025. In that announcement we stated that, to achieve a smooth transition of responsibilities, David McCreadie will remain available to support the business until June 2026. The leadership transition has progressed well, however the requisite regulatory approvals are pending.  David McCreadie will continue to undertake the senior management responsibilities of the role and remain on the Board until this regulatory approval process is completed. We will provide a further update as and when required. \n Outlook \n Interest rates are not expected to fall further in 2025 with further cuts expected in 2026. Despite anticipated tightening of fiscal policy and political and economic global uncertainty, the Group remains confident in its ability to deliver against its ROAE target in the near-term, continue to grow income and deliver on cost efficiencies. The Group looks forward to updating on its strategic plans in Q4 2025. \n   \n \n \n \n \n Medium-term targets \n \n \n 30 June 2025 \n Actual \n \n \n Target \n \n \n \n \n Net lending balance \n \n \n £3.8bn \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 49.1% \n \n \n 44-46% \n \n \n \n \n Adjusted 1 return on average equity \n \n \n 9.6% \n \n \n 14% - 16% \n \n \n \n \n CET 1 ratio \n \n \n 12.6% \n \n \n >12.0% \n \n \n \n \n Footnotes \n \n \n \n \n 1 \n \n \n Adjusted metrics exclude exceptional items of £1.0 million (30 June 2024: £nil, 31 December 2024: £9.9 million). Details can be found in Note 5 to the Financial Statements \n \n \n \n \n 2 \n \n \n £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 \n \n \n \n   \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, 14 August 2025 at 10.00am, which can be accessed by registering at: https://brrmedia.news/STB HY 25 \n For those wishing to ask a question, please dial into the event by conference call: \n   \n Dial +44 (0)330 551 0200 \n UK Toll Free: 0808 109 0700 \n Confirmation code (if prompted): STB Half Year \n Enquiries:  \n Secure Trust Bank PLC \n David McCreadie, Chief Executive Officer \n Rachel Lawrence, Chief Financial Officer \n Phil Deakin, Strategy and Corporate Development Director \n Tel: +44 (0) 7385 950427  \n Investec Bank plc (Joint Broker) \n Christopher Baird, David Anderson, Maria Gomez de Olea \n Tel: +44 (0) 20 7597 5970 \n Shore Capital Stockbrokers (Joint Broker) \n Mark Percy / Sophie Collins (Corporate Advisory) \n Guy Wiehahn (Corporate Broking) \n Tel: +44 (0) 20 7408 4090 \n Camarco \n Geoffrey Pelham-Lane, Amrith Uppuluri \n [email protected] \n  Tel: +44 (0) 7733 124 226, +44 (0) 7763 083 058 \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 About us \n Our vision \n To be the most trusted specialist lender in the UK \n Purpose \n To help more consumers and businesses fulfil their ambitions \n Our strategic priorities \n \n \n \n \n Simplify \n Focus on core business units and use technology to deliver efficiency and better operational processes \n \n \n Enhance Customer Experience \n Improve the customer journey to increase retention and attract new customers to gain market share \n \n \n Leverage Networks \n Take advantage of our strong partnerships with introducers to drive growth \n \n \n \n \n Enabled by technology \n Take advantage of recent investments within our technology platforms to automate processes and streamline and enhance customer experience for our business partners via integration, and for our end customers, through self-service \n \n \n \n \n   \n Strengths \n \n \n \n \n Specialist \n   \n \n \n Expert \n   \n \n \n Diverse \n \n \n Ambitious \n   \n \n \n \n \n Values \n \n \n \n \n Customer Focused \n   \n \n \n Risk Aware \n   \n \n \n Future Orientated \n   \n \n \n Teamwork \n   \n \n \n Ownership \n   \n \n \n Performance \nDriven \n \n \n \n \n   \n Stakeholders \n \n \n \n \n Customers \n \n   \n \n \n Shareholders and Investors \n \n \n Employees \n \n   \n \n \n Business Partners \n \n \n Regulators \n \n \n Community and Society \n \n \n \n \n Chief Executive's statement \n \"On track to deliver enhanced returns\" \n I am delighted with the continued progress we have made towards delivering sustainable, higher returns for the Group. We remain confident in achieving our existing targets in the near term and recently announced a strategic pivot away from Vehicle Finance which creates the foundations for delivering enhanced returns in our Core businesses. \n The team has continued to execute effectively and made further progress towards delivering our £4 billion net lending ambition. As a result, we achieved strong income growth of 10.6% and continued to manage costs effectively through embedded cost discipline and through Project Fusion, our cost optimisation programme. The changes from the strategic refresh we will be implementing, will underpin the next wave of the Group's ambitions, and put us in a strong position to continue delivering further progress in the second half of the year and beyond. \n Strategic pivot \n In July 2025, we announced a strategic pivot away from Vehicle Finance, to further improve return on average equity ('ROAE') over time. The decision reflects the historical financial performance and medium-term outlook of the Vehicle Finance business, both on an absolute basis and relative to other parts of the Group, and its sub-scale nature. We have stopped new lending in our Consumer Vehicle Finance and Stock Funding businesses and put the existing portfolios into run-off. \n As a result, 284 colleagues have been placed at risk of redundancy, and we are consulting with those impacted. Thereafter, impacted headcount will reduce in line with the run-off profile of the Vehicle Finance portfolios. This difficult decision was not taken lightly but is an important step to promote the success of the Group. It will enable us to increase capital allocation to our three higher returning businesses of Retail Finance, Real Estate Finance and Commercial Finance where we see further opportunities to develop and grow. \n We will announce details of our refreshed strategic plan and new medium-term ambitions, including the opportunities identified to enhance the Group's ROAE further, at a capital markets event to be held in Q4 2025. \n Financial results \n We have delivered a statutory profit before tax of £22.3 million (30 June 2024: £17.1 million); on an adjusted 1 basis we delivered £23.3 million (30 June 2024: £17.1 million). This improvement was driven by growth in our net interest income, in line with balance sheet growth, and maintaining broadly flat operating costs, despite the increase in our lending balances. Cost of risk on the lending book remained stable in the first half of the year and impairment charges increased in line with lending growth, reaching £30.9 million (30 June 2024: £28.2 million). Excluding impairment charges, adjusted 1 profit before tax pre impairments grew by 19.9% to £54.2 million (30 June 2024: £45.2 million). \n We have chosen to concentrate our investment in markets where we continue to see excellent growth potential. This is demonstrated by gains in Retail Finance's market share of new business, which grew to 17.3% 2 . Consumer Finance has seen net lending growth of £76.8 million since 31 December 2024. Business Finance has seen net lending growth of £143.5 million over the same period. \n The Board has approved an increased interim dividend of 11.8 pence per share (30 June 2024: 11.3 pence), in line with our progressive dividend policy. \n Financial and non-financial Key Performance Indicators ('KPIs') \n \n \n \n \n \n \n \n Target \n \n \n 30 June \n2025 \n \n \n 30 June \n2024 \n \n \n 31 December \n2024 \n \n \n   \n \n \n \n \n Medium-term targets \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Financial KPIs \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Loans and advances to customers (£ billion) \n \n \n 4.0 \n \n \n 3.8 \n \n \n 3.4 \n \n \n 3.6 \n \n \n   \n \n \n \n \n Why we measure this: Shows the growth in the Group's lending balances, which generate income \n \n \n   \n \n \n \n \n Net interest margin (%) \n \n \n >5.5 \n \n \n 5.4 \n \n \n 5.3 \n \n \n 5.4 \n \n \n   \n \n \n \n \n Why we measure this: Shows the interest margin earned on the Group's lending balances, net of funding costs \n \n \n   \n \n \n \n \n Adjusted 1 cost income ratio (%) \n \n \n 44-46 \n \n \n 49.1 \n \n \n 53.7 \n \n \n 50.9 \n \n \n   \n \n \n \n \n Why we measure this: Measures how efficiently the Group utilises its cost base, excluding exceptional items 1 to produce income \n \n \n   \n \n \n \n \n Adjusted 1 return on average equity (%) \n \n \n 14-16 \n \n \n 9.6 \n \n \n 7.3 \n \n \n 8.0 \n \n \n   \n \n \n \n \n Why we measure this: Measures the Group's ability to generate profit from the equity available to it, excluding exceptional items 1 \n \n \n   \n \n \n \n \n Common Equity Tier 1 ('CET 1') ratio (%) \n \n \n >12.0 \n \n \n 12.6 \n \n \n 12.7 \n \n \n 12.3 \n \n \n   \n \n \n \n \n Why we measure this: The CET 1 ratio demonstrates the Group's capital strength \n \n \n   \n \n \n \n \n Other KPIs \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Financial KPIs \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Statutory cost income ratio \n \n \n \n \n \n 50.0 \n \n \n 53.7 \n \n \n 55.8 \n \n \n \n \n Why we measure this: Measures how efficiently the Group utilises its cost base \n \n \n \n \n Total return on average equity (%) \n \n \n \n \n \n 9.2 \n \n \n 7.3 \n \n \n 5.5 \n \n \n   \n \n \n \n \n Why we measure this: Measures the Group's ability to generate profit from the equity available to it \n \n \n   \n \n \n \n \n Cost of risk (%) \n \n \n \n \n \n 1.7 \n \n \n 1.7 \n \n \n 1.8 \n \n \n \n \n Why we measure this: Measures how effectively the Group manages the credit risk of its lending portfolios \n \n \n \n \n Non-Financial KPIs \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Customer Feefo ratings (Stars) \n \n \n \n \n \n 4.6 \n \n \n 4.7 \n \n \n 4.7 \n \n \n \n \n Why we measure this: Indicator of customer satisfaction with the Group's products and services \n (mark out of 5 based on star rating from 879 reviews, (30 June 2024: 1,073 reviews, 31 December 2024: 1,661 reviews)) \n \n \n \n \n Further explanation of the financial key performance indicators is discussed in the narrative within the Financial review on pages 8 to 13. \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n The first half of the year saw continued positive momentum towards achieving our existing medium-term targets. The decision to stop lending in our Vehicle Finance business will lower the level of loans and advances to customers and net interest margin ('NIM') targets and will result in an improved cost income ratio and ROAE. We will provide further information on our new ambitions and targets at a capital markets event in Q4 2025. \n We achieved strong net lending growth of 6.1% to £3.8 billion in the first half of 2025 (31 December 2024: £3.6 billion), bringing us close to our £4 billion ambition. This was largely driven by growth in our Business Finance and Retail Finance portfolios. Given the recent announcement on Vehicle Finance, we now expect to reach net lending of £4.0 billion in our Core businesses in 2026. \n NIM improved to 5.4% (30 June 2024: 5.3%), following active management of yields as cost of funds fell in the first half of the year. Retail Finance NIM has increased to 7.0% (30 June 2024: 6.6%) due to the falling yield curve and the contractual re-pricing lag. Our expectation is that NIM will remain around this level in the second half of 2025 but will reduce as the higher margin Vehicle Finance portfolio runs-down and returns improve. Risk adjusted margin is expected to remain broadly stable, reflecting the higher cost of risk of Vehicle Finance. \n We have continued to make good progress with Project Fusion, with operational changes having delivered £1.5 million additional cost savings in the year so far. We are on track to deliver the full, previously announced, additional £3 million of cost savings by the end of 2025. This will bring our total annualised savings from Project Fusion to £8 million 3 . This has contributed towards a lower adjusted 1 cost income ratio, which improved by 460bps to 49.1% (30 June 2024: 53.7%). We expect our Core cost income ratio to improve as a result of the decision to stop lending in Vehicle Finance. \n Our cost of risk has remained broadly stable year-on-year, at 1.7% (30 June 2024: 1.7%). We have seen normalisation of impairment charges in Retail Finance which benefited from non-recurring model enhancement benefits in 2024 and increase in IFRS 9 stage 1-2 rolls , steady improvements in Vehicle Finance, and increases in Business Finance as we continued to manage a small number of legacy defaults cases. We expect an improvement in the cost of risk as we run-off the Vehicle Finance portfolio. \n Continued robust growth in net lending balances and the implementation of our disciplined cost management approach under Project Fusion, has led to an increase in adjusted 1 ROAE to 9.6% (30 June 2024: 7.3%). Total ROAE was 9.2% (30 June 2024: 7.3%). This has been achieved with an improved CET 1 ratio of 12.6% (31 December 2024: 12.3%). \n Capital and funding \n We accelerated repayment of our Term Funding Scheme with additional incentives for SMEs ('TFSME') funding and full repayment was achieved by the end of the first half of the year. We have continued to utilise the Bank of England's Indexed Long-Term Repo ('ILTR') facility during the period and have balances outstanding of £250.0 million (31 December 2024: £125.0 million). \n Current expectations are that the PRA will implement Basel 3.1 standards in January 2027. The Strong and Simple capital regime for Small Domestic Deposit Taker ('SDDT') firms is expected to be implemented at the same time and will provide an alternative to smaller banks to the full Basel 3.1 standards. The Group has been approved as an SDDT; the framework and 1 January 2027 effective date is subject to final policy announcements from the PRA. The Group has factored the expected impacts from the Basel 3.1 and SDDT regimes into its capital management processes. \n Strategic priorities \n Simplify \n As part of our continued focus on simplifying the Group, we have decided to prioritise our three higher returning businesses of Retail Finance, Real Estate Finance and Commercial Finance. Reallocating capital to our three specialist businesses will enable further simplification of our Group structure and deliver a higher ROAE. \n We continue to make significant progress with Project Fusion, which remains on track to achieve our updated target of £8 million (from £5 million) in annualised savings by the end of 2025 3 . This includes a positive impact on our operating expenses as the impact of our organisational redesign at the end of last year took effect, driving £1.5 million of the additional £3 million cost savings. \n Enhance customer experience \n Our customers continue to increase their use of our digital platforms for an improved customer journey. Our Savings mobile app launched in September 2023, and since then nearly 30% of our active users have registered to use the app, with over 98% of customers registered with online banking. \n Our Savings accounts offer competitive rates to depositors, and we attracted significant levels of new funding of £1.1 billion (30 June 2024: £0.7 billion), as well as retaining matured funds of £0.5 billion (30 June 2024: £0.4 billion). Our deposits are entirely from retail customers and 95.1% (31 December 2024: 95.1%) of deposits are fully covered by the Financial Services Compensation Scheme. \n We continue to prioritise improving customer satisfaction. In the first half of the year, Secure Trust Bank was awarded the Feefo Exceptional Service badge, which recognises just 32 businesses that have shown excellence in key customer review areas. The Group has also won the Gold Trusted Service Award for its Savings proposition and the Platinum Trusted Service Award for its Moneyway and Retail Finance businesses. Our Feefo scoring remained high at 4.6 (31 December 2024: 4.7) for our Consumer Finance businesses. \n Leverage networks \n For the second time in three years, our Commercial Finance team were the winners of the Asset-Based Lender of the Year at the Real Deals Private Equity Awards 2025. This award demonstrates the commitment to supporting private equity investors and providing exceptional service to the businesses we work with. \n Retail Finance works with over 1,000 partners and in the first half of the year supported a £1.4 billion net lending balance (30 June 2024: £1.3 billion). Highlights included expanding the footprint in the home improvement sector, strengthening key relationships in dental finance, and outperforming broader market trends with several record lending days achieved. These milestones reflect the strength of our partnerships and the resilience of our model. We serve over 1.3 million customers in our Retail Finance business. \n In Real Estate Finance, we have leveraged our existing client base showing the power of our robust relationship model, with lending to existing clients in the first half of 2025 at 59% of new business. We have increased the use of broker channels this year highlighting our proactive shift to growing Real Estate Finance via the opening of new business channels. \n Enabled by technology \n During the first half of the year, we continued our momentum in technology developments. Over 89% of Retail Finance customers self-serve using the online account management system, enabling a smoother journey for the customer and creating a more efficient business model. We have seen increased adoption of our mobile servicing AppToPay proposition by our Retail Finance customers, which launched in December 2024. Already, AppToPay has 250,000 registrations and more customer transactions are already being made on AppToPay than on our online account management system. We are delighted to continue enhancing the digital capability available to customers. \n Regulatory and legal developments \n On 1 August 2025, the Supreme Court gave its judgment on the historical use of commission arrangements in the motor finance industry. The Supreme Court ruled that, in two cases, the relationship between motor dealer and the customer was not of a fiduciary nature and the payment of a commission to a motor dealer was not a bribe. However, the Supreme Court upheld that in the case of Johnson v FirstRand, the relationship was unfair to Mr. Johnson in the specific circumstances of the case. Overall, the judgment was positive for the motor finance industry. The FCA has announced it will consult with the industry on a compensation scheme for motor finance customers who have been treated unfairly, with the consultation to launch by early October 2025, and for it to be open for 6 weeks. \n Pending the FCA consultation, which, once finalised, will determine the scope and design of any redress scheme, there remains continued uncertainty about the eventual cost for impacted firms. As a result, the Group has retained its remaining provision for potential redress and operational costs (further information can be found in Note 13.1 to the Financial Statements). \n As highlighted in 2024, following the FCA's review of Borrowers in Financial Difficulty ('BiFD'), we identified that it was appropriate to pay £2.2 million to customers where we could have supported them better due to their individual circumstances. A significant proportion of this has now been paid to customers. We continue to work through more complex cases which has extended the timeline to complete the programme of work. As a result, we have recognised an additional £1.0 million as an exceptional item, primarily in relation to costs to manage the programme. \n As a result of the BiFD review, we had an elevated stock of defaulted Vehicle Finance loans at the end of 2024. During the first half of the year, we made progress in reducing this position through an initial debt sale of £25.8 million in April 2025, with a second sale completed early in August 2025 of £14.5 million. \n Environmental, Social and Governance ('ESG') \n Volunteering remains an integral part of the Group's community work, and our colleagues continue to support volunteering programmes in addition to participating in charitable fundraising activities. In Cardiff, the partnership with Tŷ Hafan has been extended for another three years, raising over £100,000 since supporting the charity and contributing to the £250,000 target over the six-year partnership. In Solihull, we are delighted to partner with Birmingham Children's Hospital and have already made good progress towards our £100,000 3-year target following events such as the Annual Golf Day and Summer Fete. Additional ongoing highlights include continuing to be a proud supporter of Pride events in the locations of our largest offices and supporting colleagues to become Mental Health First Aiders. \n Great Place to Work®, the global authority on workplace culture, once again ranked us as one of the UK's Best Workplaces™, within the large organisations category. Further accolades have also included rankings for Best Workplace for Development™ and Best Workplace for Women™. Our inclusion is supported by employee engagement surveys, and I would like to extend my personal thanks for the hard work and commitment of all our colleagues at Secure Trust Bank, particularly as we manage through periods of significant change. For those impacted by the difficult decision we have made to move away from Vehicle Finance, we will continue to offer support and guidance moving forward. \n Following the achievement of our target to reduce Scope 1 and 2 emissions by 50% a full year ahead of schedule, the Group remains committed to our climate strategy and action planning. Key achievements in the first half of 2025 include over half of our company vehicles now being electric and installation of smart metering in multiple offices. We have sold our former head office in Solihull completing the process of reducing the property footprint in this area. \n CEO succession \n As previously announced, I will retire as the Group's CEO and a Director but will remain available to support the business until June 2026. It has been a privilege to lead Secure Trust Bank and to work with so many talented people. We have navigated a number of challenges in recent years and so I am proud of the transformation we have delivered to position the business for future growth and enhanced shareholder returns. It is good to see this start to be recognised by the market. \n I have been working with my successor Ian Corfield, to ensure a smooth transition in the Group's leadership and I wish him every success in role. It is the right time to hand over to Ian to ensure consistent leadership throughout the next stage of the Group's strategic development. Ian will share details of the Group's new ambitions for 2026 and beyond at a capital markets event later this year. \n Other Executive Committee updates \n At the end of July, Anne Mckenning, Chief People Officer, left the Group. Having joined in 2007, Anne has been a highly valued member of our Executive Committee and played a significant role in shaping our culture, people strategy and supporting the growth and transformation of the Group. I would like to extend my thanks to Anne for her significant contribution and wish her all the best for the future. \n Outlook \n Interest rates are not expected to fall further in 2025 with the market now expecting further rate cuts in 2026. The UK economy is expected to grow modestly through 2025, although anticipated tightening of fiscal policy and increased global uncertainty may impact the medium-term outlook. Unemployment remains elevated and is anticipated by many economists to peak in 2026 as employers adjust to higher national insurance contributions, before steadily improving to around 4% by the end of 2030. \n We have identified a number of exciting opportunities for further growth in our Core businesses, the details of which will be outlined by Ian later this year. I wish the team every success for the future and thank them for their unwavering support during my tenure. The Board and I are confident that the Group is well placed to deliver a sustainable improvement in returns. \n   \n David McCreadie \n Chief Executive Officer \n   \n 1. Adjusted metrics exclude exceptional items of £1.0 million (30 June 2024: £nil, 31 December 2024: £9.9 million). Details can be found in Note 5 to the Interim Financial Statements \n 2. Source: Finance & Leasing Association ('FLA'): New business values within retail store and online credit 17.3%: 2025 based on January to June. FLA total and Retail Finance new business of £4,083 million (1 January 2024 to 30 June 2024: £4,255 million) and £708.1 million (1 January 2024 to 30 June 2024: £645.1 million) respectively. As published at 8 August 2025. \n 3. £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 Financial review \n \"Improved profit driven by operating income momentum and cost efficiencies\" \n Income statement \n \n \n \n \n \n \n \n 30 June \n2025 \n£million \n \n \n 30 June \n2024 \n£million \n \n \n Change \n% \n \n \n 31 December \n2024 \n£million \n \n \n \n \n Continuing operations \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Interest income and similar income \n \n \n 187.8 \n \n \n 178.6 \n \n \n 5.2 \n \n \n 366.0 \n \n \n \n \n Interest expense and similar charges \n \n \n (88.8) \n \n \n (90.4) \n \n \n (1.8) \n \n \n (181.1) \n \n \n \n \n Net interest income \n \n \n 99.0 \n \n \n 88.2 \n \n \n 12.2 \n \n \n 184.9 \n \n \n \n \n Fee and commission income \n \n \n 7.4 \n \n \n 8.0 \n \n \n (7.5) \n \n \n 19.2 \n \n \n \n \n Fee and commission expense \n \n \n (0.1) \n \n \n (0.1) \n \n \n - \n \n \n (0.2) \n \n \n \n \n Net fee and commission income \n \n \n 7.3 \n \n \n 7.9 \n \n \n (7.6) \n \n \n 19.0 \n \n \n \n \n Operating income \n \n \n 106.3 \n \n \n 96.1 \n \n \n 10.6 \n \n \n 203.9 \n \n \n \n \n Net impairment charge on loans and advances to customers \n \n \n (30.9) \n \n \n (28.2) \n \n \n 9.6 \n \n \n (61.9) \n \n \n \n \n Other gains/(losses) \n \n \n - \n \n \n 0.1 \n \n \n (100.0) \n \n \n (0.3) \n \n \n \n \n Fair value and other gains on financial instruments \n \n \n 0.1 \n \n \n 0.7 \n \n \n (85.7) \n \n \n 1.2 \n \n \n \n \n Operating expenses \n \n \n (52.2) \n \n \n (51.6) \n \n \n 1.2 \n \n \n (103.8) \n \n \n \n \n Profit before income tax before exceptional items \n \n \n 23.3 \n \n \n 17.1 \n \n \n 36.3 \n \n \n 39.1 \n \n \n \n \n Exceptional items \n \n \n (1.0) \n \n \n - \n \n \n n/a \n \n \n (9.9) \n \n \n \n \n Profit before income tax \n \n \n 22.3 \n \n \n 17.1 \n \n \n 30.4 \n \n \n 29.2 \n \n \n \n \n Income tax expense \n \n \n (5.6) \n \n \n (4.3) \n \n \n 30.2 \n \n \n (9.5) \n \n \n \n \n Profit for the period \n \n \n 16.7 \n \n \n 12.8 \n \n \n 30.5 \n \n \n 19.7 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Basic earnings per share (pence) - Adjusted \n \n \n 91.8 \n \n \n 67.2 \n \n \n 36.6 \n \n \n 150.1 \n \n \n \n \n Basic earnings per share (pence) - Total \n \n \n 87.6 \n \n \n 67.2 \n \n \n 30.4 \n \n \n 103.4 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n % \n \n \n % \n \n \n Percentage point movement \n \n \n % \n \n \n \n \n Net Interest Margin ('NIM') \n \n \n 5.4 \n \n \n 5.3 \n \n \n 0.1 \n \n \n 5.4 \n \n \n \n \n Net revenue margin \n \n \n 5.8 \n \n \n 5.8 \n \n \n - \n \n \n 6.0 \n \n \n \n \n Cost of funds \n \n \n 4.8 \n \n \n 5.4 \n \n \n (0.6) \n \n \n 5.3 \n \n \n \n \n Adjusted cost to income ratio \n \n \n 49.1 \n \n \n 53.7 \n \n \n (4.6) \n \n \n 50.9 \n \n \n \n \n Statutory cost to income ratio \n \n \n 50.0 \n \n \n 53.7 \n \n \n (3.7) \n \n \n 55.8 \n \n \n \n \n Cost of risk \n \n \n 1.7 \n \n \n 1.7 \n \n \n - \n \n \n 1.8 \n \n \n \n \n Adjusted return on average equity \n \n \n 9.6 \n \n \n 7.3 \n \n \n 2.3 \n \n \n 8.0 \n \n \n \n \n Total return on average equity \n \n \n 9.2 \n \n \n 7.3 \n \n \n 1.9 \n \n \n 5.5 \n \n \n \n \n Common Equity Tier 1 ('CET 1') ratio \n \n \n 12.6 \n \n \n 12.7 \n \n \n (0.1) \n \n \n 12.3 \n \n \n \n \n Total capital ratio \n \n \n 14.8 \n \n \n 15.0 \n \n \n (0.2) \n \n \n 14.6 \n \n \n \n \n   \n   \n \n \n \n \n Certain key performance indicators and performance metrics represent alternative performance measures that are not defined or specified under 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 Interim Report from page 50. \n Adjusted profit before tax and related metrics refers to profit before income tax before exceptional items. Further information on exceptional items are included in Note 5 of the Interim Financial Statements. \n \n \n \n \n   \n In the first half of 2025 adjusted profit before tax increased by 36.3% to £23.3 million (30 June 2024: £17.1 million). Statutory profit before tax increased by 30.4% from £17.1 million to £22.3 million. Average lending balances grew by 8.6% since 31 December 2024, net interest margin improved by 0.1 percentage points to 5.4% (30 June 2024: 5.3%) and our cost of risk at 1.7% was stable with the previous half year. Furthermore, the adjusted cost to income ratio fell below 50.0% to 49.1% (30 June 2024: 53.7%) and the CET 1 ratio improved to 12.6% (31 December 2024: 12.3%). \n Earnings per share rose from 67.2 pence per share (30 June 2024) to 87.6 pence per share. On an adjusted basis, EPS increased from 67.2 pence per share (30 June 2024) to 91.8 pence per share. Total return on average equity increased from 7.3% (30 June 2024) to 9.2%. \n Detailed disclosures of earnings per ordinary share are shown in Note 7 to the Interim Financial Statements. The components of the Group's profit for the period are analysed in more detail in the sections below. \n Operating income \n The Group's operating income increased by 10.6% to £106.3 million (30 June 2024: £96.1 million). Net interest income on the Group's lending assets continues to be the largest component of operating income. This increased by 12.2% to £99.0 million (30 June 2024: £88.2 million), primarily due to the growth in net lending balances, where average balances increased by 8.6% to £3,707.9 million (31 December 2024: £3,413.9 million). \n The Group's NIM increased to 5.4% (30 June 2024: 5.3%) reflecting active management of yields as the cost of funds fell during the first half of 2025. Cost of funds have fallen by 0.6 percentage points to 4.8% (30 June 2024: 5.4%) while gross yields reduced by 0.5 percentage points to 10.2% (30 June 2024: 10.7%). \n The Group's other income, which relates to net fee and commission income, decreased slightly by 7.6% to £7.3 million (30 June 2024: £7.9 million) driven primarily by lower fees in the Vehicle Finance division. \n Impairment charge \n Impairment charges increased to £30.9 million (30 June 2024: £28.2 million) and the cost of risk remained at 1.7% (30 June 2024: 1.7%). Of the £2.7 million increase, £2.4 million was due to higher impairments on a few specific cases within Business Finance. The credit quality of new lending in the Vehicle Finance business has continued to improve and arrears levels reduced over the six months to 30 June 2025 leading to a lower cost of risk. Retail Finance has continued to originate high quality loans, however, impairment charges for the business have increased over the six months to 30 June 2025 compared to that of the prior period which included reduced one-off provision releases of £2.6 million due to IFRS 9 model enhancements. Excluding the one-off releases, the cost of risk would be 1.9% for 30 June 2024. \n Overall impairment provisions were at £107.5 million (30 June 2024: £101.6 million) with an aggregate coverage level of 2.7% (30 June 2024: 2.9%). \n During the second quarter of the financial year, the Group refreshed macroeconomic inputs to its IFRS 9 Expected Credit Loss ('ECL') models, incorporating its external economic advisers' 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 10.1.1 to the Interim Financial Statements. \n The Group has applied Expert Credit Judgements ('ECJs') totalling £3.1 million (30 June 2024: £1.2 million) underlays where management believes the IFRS 9 modelled output does not fully reflect current risks within the loan portfolios. The majority of the ECJ underlays of £2.5 million (30 June 2024: £3.2 million) relate to the Vehicle Finance lending portfolios Loss Given Default stage 1 and 2 recovery assumptions being understated in the model; which will be updated in the second half of 2025. Further details of these ECJs are included in Note 10 to the Interim 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 loss of £0.1 million (30 June 2024: £0.1 million gain) and £0.2 million loss (30 June 2024: £0.4 million gain) relating to hedge accounting inception and amortisation adjustments (see Note 4 to the Interim Financial Statements). The Group also recognised a gain of £0.4 million (30 June 2024: £0.2 million gain) 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 Operating expenses \n The Group's cost base increased in the period by 1.2% to £52.2 million (30 June 2024: £51.6 million), with the adjusted cost income ratio improving to 49.1% (30 June 2024: 53.7%), despite the impact of inflation on operating expenses. The ratio reflects both the increase in operating income and the ongoing programme of initiatives that seek to achieve more efficient and effective operational processes, including the digitalisation of processes, supplier and procurement reviews, organisational design and property management. The statutory cost income ratio inclusive of exceptional items was 50.0% (30 June 2024: 53.7%). \n Taxation \n The total effective tax rate of 25.1% remained in line with 2024 (30 June 2024: 25.1%). \n Exceptional items \n Exceptional items during the second half of 2024 were recognised in respect of costs associated with the FCA's review of BiFD across the industry. At 30 June 2025, further costs of £1.0 million (31 December 2024: £1.5 million, 30 June 2024: £nil) were recorded relating to £0.7 million of costs, and £0.3 million potential redress/goodwill. \n Further exceptional costs were recognised in the second half of 2024 in respect 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 was under appeal at that time. In early August 2025, the Supreme Court provided its judgment, where it rejected two cases and upheld one case. Following on from the Supreme Court's judgment, the FCA announced it will consult on the scope and design of a redress scheme covering how firms should assess what comprised an unfair relationship, applying various factors decided by the Supreme Court. The Group has undertaken a review of its estimate of potential costs and redress, including a probability weighted scenario analysis of outcomes. As a result, the Group has retained its provision for potential redress and operational costs. As at 30 June 2025, a provision of £5.5 million (31 December 2024: £6.4 million, 30 June 2024: £nil) was held. Further detail is provided in Note 13.1 to the Interim Financial Statements. \n Distributions to shareholders \n The Board has approved an interim dividend of 11.8 pence per share (30 June 2024: 11.3 pence per share). \n Balance sheet \n \n \n \n \n Summarised balance sheet \n \n \n 30 June \n2025 \n£million \n \n \n \n30 June \n2024 \n£million \n \n \n 31 December 2024 \n£million \n \n \n \n \n Assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cash and balances at central banks \n \n \n 385.9 \n \n \n 412.2 \n \n \n 445.0 \n \n \n \n \n Loans and advances to banks \n \n \n 28.8 \n \n \n 21.7 \n \n \n 24.0 \n \n \n \n \n Loans and advances to customers \n \n \n 3,828.8 \n \n \n 3,421.6 \n \n \n 3,608.5 \n \n \n \n \n Fair value adjustment for portfolio hedged risk \n \n \n 6.3 \n \n \n (10.7) \n \n \n (6.8) \n \n \n \n \n Derivative financial instruments \n \n \n 6.6 \n \n \n 18.3 \n \n \n 14.3 \n \n \n \n \n Other assets \n \n \n 31.5 \n \n \n 35.8 \n \n \n 31.7 \n \n \n \n \n \n \n \n 4,287.9 \n \n \n 3,898.9 \n \n \n 4,116.7 \n \n \n \n \n Liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Due to banks \n \n \n 261.0 \n \n \n 359.1 \n \n \n 365.8 \n \n \n \n \n Deposits from customers \n \n \n 3,510.1 \n \n \n 3,042.7 \n \n \n 3,244.9 \n \n \n \n \n Fair value adjustment for portfolio hedged risk \n \n \n 4.7 \n \n \n (7.4) \n \n \n (3.4) \n \n \n \n \n Derivative financial instruments \n \n \n 2.6 \n \n \n 14.4 \n \n \n 10.0 \n \n \n \n \n Tier 2 subordinated liabilities \n \n \n 93.3 \n \n \n 93.1 \n \n \n 93.3 \n \n \n \n \n Other liabilities \n \n \n 42.1 \n \n \n 41.5 \n \n \n 45.6 \n \n \n \n \n \n \n \n 3,913.8 \n \n \n 3,543.4 \n \n \n 3,756.2 \n \n \n \n \n   \n New business \n Loan originations in the period, being the total of new loans and advances to customers entered into during the period, increased by 30.7% to £1,388.3 million (30 June 2024: £1,061.8 million). \n \n \n \n \n New business volumes \n \n \n 30 June \n 2025 \n \n \n 30 June \n2024 \n \n \n Change \n% \n \n \n \n \n Consumer Finance \n \n \n \n \n \n \n \n \n \n \n \n \n \n  Retail Finance \n \n \n 708.1 \n \n \n 645.1 \n \n \n 9.8 \n \n \n \n \n  Vehicle Finance \n \n \n 305.3 \n \n \n 248.8 \n \n \n 22.7 \n \n \n \n \n Business Finance \n \n \n \n \n \n \n \n \n \n \n \n \n \n  Real Estate Finance \n \n \n 190.4 \n \n \n 135.5 \n \n \n 40.5 \n \n \n \n \n  Commercial Finance \n \n \n 184.5 \n \n \n 32.4 \n \n \n 469.4 \n \n \n \n \n Total \n \n \n 1,388.3 \n \n \n 1,061.8 \n \n \n 30.7 \n \n \n \n \n Customer lending and deposits \n Group lending assets increased by £220.3 million or 6.1% to £3,828.8 million (31 December 2024: £3,608.5 million), driven by strong lending growth in Retail Finance and both Business Finance businesses. \n Consumer Finance balances grew by £76.8 million or 4.0%, driven by strong demand from strategic partner retailers in the first half of 2025 and Business Finance grew by £143.5 million or 8.5%. \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 19 to the Interim Financial Statements. \n Customer deposits include Fixed-term bonds, ISAs, Notice and Access accounts. Customer deposits increased by 8.2% to £3,510.1 million (31 December 2024: £3,244.9 million) in order to fund the growth in the lending book and as part of the strategy to replace drawings from the Bank of England Term Funding Scheme with additional incentives for SMEs ('TFSME') funding. \n Total funding ratio of 110.5% decreased slightly from 31 December 2024 (112.4%). 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 of £261.0 million (31 December 2024: £365.8 million) includes £250.0 million drawn from the Indexed Long-Term Repo ('ILTR') facility (31 December 2024: £125.0 million), a routine sterling liquidity management facility provided by the Bank of England. The TFSME facility was fully repaid at the end of June 2025 (31 December 2024: £230.0 million). \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 period from £415.7 million to £432.7 million. CET 1 capital increased by £15.7 million, primarily driven by a total profit for the period of £16.7 million, offset by the 2025 interim dividend of £2.2 million. The remainder of the increase was from Tier 2 capital (£1.3 million), as capital eligibility has increased as a consequence of risk-weighted asset growth. \n \n \n \n \n Capital \n \n \n 30 June \n2025 \n£million \n \n \n \n30 June \n2024 \n£million \n \n \n \n31 December \n2024 \n£million \n \n \n \n \n CET 1 capital, excluding IFRS 9 transitional adjustment \n \n \n 367.1 \n \n \n 348.2 \n \n \n 351.3 \n \n \n \n \n IFRS 9 transitional adjustment \n \n \n - \n \n \n - \n \n \n 0.1 \n \n \n \n \n CET 1 capital \n \n \n 367.1 \n \n \n 348.2 \n \n \n 351.4 \n \n \n \n \n Tier 2 capital 1 \n \n \n 65.6 \n \n \n 61.5 \n \n \n 64.3 \n \n \n \n \n Total capital \n \n \n 432.7 \n \n \n 409.7 \n \n \n 415.7 \n \n \n \n \n Total risk exposure \n \n \n 2,916.8 \n \n \n 2,735.3 \n \n \n 2,855.7 \n \n \n \n \n Capital ratios \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n CET 1 capital ratio \n \n \n 12.6 \n \n \n 12.7 \n \n \n 12.3 \n \n \n \n \n Total capital ratio \n \n \n 14.8 \n \n \n 15.0 \n \n \n 14.6 \n \n \n \n \n CET 1 capital ratio (excluding IFRS 9 transitional adjustment) \n \n \n 12.6 \n \n \n 12.7 \n \n \n 12.3 \n \n \n \n \n Total capital ratio (excluding IFRS 9 transitional adjustment) \n \n \n 14.8 \n \n \n 15.0 \n \n \n 14.6 \n \n \n \n \n Leverage ratio \n \n \n 9.3 \n \n \n 9.9 \n \n \n 9.5 \n \n \n \n \n 1. Tier 2 capital, which is solely subordinated debt net of unamortised issue costs, is 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 derived in conjunction with 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 30 June \n2025 \n£million \n \n \n \n30 June \n2024 \n£million \n \n \n 31 December 2024 \n£million \n \n \n \n \n Total Capital Requirement \n \n \n 262.5 \n \n \n 246.2 \n \n \n 257.0 \n \n \n \n \n Capital conservation buffer (2.5%) \n \n \n 72.9 \n \n \n 68.4 \n \n \n 71.4 \n \n \n \n \n Countercyclical buffer (2.0%) \n \n \n 58.3 \n \n \n 54.7 \n \n \n 57.1 \n \n \n \n \n Total \n \n \n 393.7 \n \n \n 369.3 \n \n \n 385.5 \n \n \n \n \n The increase in lending balances through the first six months of the year resulted in an increase in risk weighted assets over the period, bringing the total risk exposure up from £2,855.7 million to £2,916.8 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 Interim Report; and \n \n \n \n \n • \n \n \n 'HQLAs' 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 met the LCR minimum threshold throughout the year, with the Group's average LCR being 193.5% (30 June 2024: 216.3%), based on a rolling 12-month end average. \n Liquid assets \n We continued to hold significant surplus liquidity over the minimum requirements throughout the first six months of the year, managing liquidity by holding HQLA and utilising predominantly retail funding to support lending. Total liquid assets decreased to £412.8 million (31 December 2024: £469.0 million) which, amongst other things, reflects the levels of liquidity at the end of the six months to June 2025 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 £250.0 million under the ILTR scheme (31 December 2024: £125.0 million). The ILTR scheme has used collateral already prepositioned with the Bank of England and was initiated in 2024 as part of the strategy to repay TFSME before the end of its contractual term. As at the end of June 2025 TFSME was fully repaid (31 December 2024: £230.0 million). The Group has no liquid asset exposures outside of the United Kingdom and no amounts that are either past due or impaired. \n \n \n \n \n Liquid assets \n \n \n 30 June \n2025 \n£million \n \n \n 30 June \n2024 \n£million \n \n \n 31 December 2024 \n£million \n \n \n \n \n Aaa - Aa3 \n \n \n 385.9 \n \n \n 412.2 \n \n \n 445.0 \n \n \n \n \n A1 - A2 \n \n \n 26.9 \n \n \n 21.7 \n \n \n 24.0 \n \n \n \n \n Total \n \n \n 412.8 \n \n \n 433.9 \n \n \n 469.0 \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 30 June \n2025 \n% \n \n \n 30 June \n2024 \n% \n \n \n 31 December 2024 \n% \n \n \n \n \n Fixed-term bonds \n \n \n 44 \n \n \n 50 \n \n \n 47 \n \n \n \n \n Notice accounts \n \n \n 2 \n \n \n 3 \n \n \n 2 \n \n \n \n \n ISAs \n \n \n 32 \n \n \n 23 \n \n \n 26 \n \n \n \n \n Access accounts \n \n \n 22 \n \n \n 24 \n \n \n 25 \n \n \n \n \n Total \n \n \n 100 \n \n \n 100 \n \n \n 100 \n \n \n \n \n   \n Business review \n Consumer Finance \n Retail Finance \n We provide quick and easy finance options at point of sale. \n \n \n \n \n \n \n \n \n \n \n \n \n \n 30 June \n2025 \n \n \n 30 June \n2024 \n \n \n 31 December 2024 \n \n \n \n \n New business (£million) \n \n \n \n \n \n \n \n \n 708.1 \n \n \n  645.1 \n \n \n 1,289.7 \n \n \n \n \n Loans and advances to customers (£million) \n \n \n \n \n \n \n \n \n 1,436.4 \n \n \n  1,315.4 \n \n \n 1,357.8 \n \n \n \n \n Net interest margin (%) \n \n \n \n \n \n \n \n \n 7.0 \n \n \n  6.6 \n \n \n  6.8 \n \n \n \n \n Risk adjusted margin (%) \n \n \n \n \n \n \n \n \n 5.8 \n \n \n  6.1 \n \n \n  6.0 \n \n \n \n \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 H1 2025 performance \n \n \n \n \n • \n \n \n We achieved record new lending in H1 2025 with £708.1 million, 9.8% higher than the same period in 2024 (30 June 2024: £645.1 million). As a result, lending balances have grown 5.8% since December 2024. Retail Finance now holds 17.3% 1 market share of the retail store and online credit new business market (30 June 2024: 15.2%) 1 . \n \n \n \n \n • \n \n \n The new business growth has been led by the furniture and healthcare sectors from within existing retailers and signing up new retailers. We have further strengthened our position as one of the major lenders in the point of sale credit market, with over 1.3 million customers. \n \n \n \n \n • \n \n \n NIM has increased by 0.4 percentage points to 7.0% compared to 30 June 2024 as a result of falling interest rates and customer re-pricing mechanisms. The cost of risk has returned to the 2023 level of 1.4%, as indicated within the 2024 Annual Report (31 December 2024: 1.0%), after the one-off benefit of refinements to the IFRS 9 model during H1 2024. As a result, the risk adjustment margin decreased from 6.1% to 5.8% period on period. Net interest margin and cost of risk reflect the success of our strategy of focusing on prime sectors. \n \n \n \n \n • \n \n \n At the end of June 2025, 87.0% (31 December 2024: 86.7%) of the lending book related to interest-free lending, and 89.2% (31 December 2024: 87.4%) of customers have signed up to online account management allowing self-service of their account. \n \n \n \n \n • \n \n \n The Retail Finance account servicing app, AppToPay, has surpassed 250,000 users, with payment activity now exceeding the online account management platform. \n \n \n \n \n Outlook \n \n \n \n \n • \n \n \n We anticipate continued lending growth from our current sectors, but we are also assessing opportunities in adjacent and complementary markets. Our operational plans remain focused on efficiency and continually improving our customer journeys and retail partners' experience. \n \n \n \n \n   \n 1.     Source: Finance & Leasing Association ('FLA'): New business values within retail store and online credit 17.3%: 2025 based on January to June. FLA total and Retail Finance new business of £4,083 million (1 January 2024 to 30 June 2024: £4,255 million) and £708.1 million (1 January 2024 to 30 June 2024: £645.1 million) respectively. As published at 8 August 2025. \n   \n Vehicle Finance \n We provide quick and easy used car finance options at the point of purchase. \n \n \n \n \n \n \n \n \n \n \n \n \n \n 30 June \n2025 \n \n \n 30 June \n2024 \n \n \n 31 December 2024 \n \n \n \n \n New business (£million) \n \n \n \n \n \n \n \n \n 305.3 \n \n \n  248.8 \n \n \n 552.9 \n \n \n \n \n Loans and advances to customers (£million) \n \n \n \n \n \n \n \n \n 556.5 \n \n \n  497.9 \n \n \n 558.3 \n \n \n \n \n Net interest margin (%) \n \n \n \n \n \n \n \n \n 9.2 \n \n \n  9.5 \n \n \n  9.4 \n \n \n \n \n Risk adjusted margin (%) \n \n \n \n \n \n \n \n \n 3.7 \n \n \n  1.1 \n \n \n  1.9 \n \n \n \n \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 H1 2025 performance \n \n \n \n \n • \n \n \n New business lending has grown by 22.7% in the six months to 30 June 2025 against the same period last year, wholly through the growth of Stock Funding. In line with our previously announced strategy to focus on higher returning segments, we have seen a reduction in new consumer lending which is 18.9% lower in H1 2025 than in H1 2024. In this period, our market share of new business has been 1.0% 1 (30 June 2024: 1.2%). \n \n \n \n \n • \n \n \n Overall net lending balances are 0.3% lower than the 31 December 2024. While Stock Funding has grown quickly, the short lending cycle means that overall lending balances have reduced marginally. \n \n \n \n \n • \n \n \n Net interest margin is 30 bps lower compared to the same period last year due to an increase in mix from higher credit quality lending products. We have continued to recover from the impacts of the FCA's Borrowers in Financial Difficulty ('BiFD') review, which had an impact on collections processes, resulting in an improved cost of risk and risk adjusted margin. \n \n \n \n \n • \n \n \n As highlighted previously, the business had high levels of historic defaulted balances due to the operational consequences of BiFD. To manage this balance down, we successfully sold a large tranche of these loans in April 2025, and a large proportion of the remaining stock was sold in August 2025. Furthermore, we have agreed a forward flow arrangement to sell eligible accounts new to default on a regular basis. \n \n \n \n \n Outlook \n \n \n \n \n • \n \n \n On 2 July 2025, we announced that we would cease new lending. We will continue to service existing consumers until the end of their agreement. In addition, we will support our stock funding customers to transition lending facilities to other providers. \n \n \n \n \n • \n \n \n In relation to historic motor finance commissions, the Group has made an initial assessment of the outcome of the Supreme Court judgment issued on 1 August 2025, and the subsequent statement from the FCA. The FCA has confirmed it will consult on the scope and design of a proposed redress scheme in early October 2025, which the Group will work through, linking in with industry bodies, once received. Further information can be found in Note 13.1 to the Interim Financial Statements. \n \n \n \n \n   \n 1.     Source: FLA. Cars bought on finance by consumers through the point of sale: New business values for used cars: 2025 based on January to June 2025, FLA total of £11,400 million (1 January 2024 to 30 June 2024: £11,076 million) and Vehicle Finance total £110.2 million (1 January 2024 to 30 June 2024: £135.9 million). As published at 8 August 2025. \n Business Finance \n Real Estate Finance \n We lend money against residential properties to professional landlords and property developers. \n \n \n \n \n \n \n \n \n \n \n \n \n \n 30 June \n2025 \n \n \n 30 June \n2024 \n \n \n 31 December 2024 \n \n \n \n \n New business (£million) \n \n \n \n \n \n \n \n \n 190.4 \n \n \n  135.5 \n \n \n 383.5 \n \n \n \n \n Loans and advances to customers (£million) \n \n \n \n \n \n \n \n \n 1,447.5 \n \n \n  1,271.5 \n \n \n 1,341.4 \n \n \n \n \n Net revenue margin (%) \n \n \n \n \n \n \n \n \n 2.4 \n \n \n  2.6 \n \n \n  2.6 \n \n \n \n \n Risk adjusted margin (%) \n \n \n \n \n \n \n \n \n 1.7 \n \n \n  2.2 \n \n \n  2.3 \n \n \n \n \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 H1 2025 performance \n \n \n \n \n • \n \n \n We have seen 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 7.9% to a record high of £1,447.5 million (31 December 2024: £1,341.4 million) despite weak economic growth and a slow property market in the South East. \n \n \n \n \n • \n \n \n The Residential Investment share of the portfolio increased further by the end of June 2025 to 90.7% (31 December 2024: 88.1%). This reflects both the repayment of development deals and 89% of new lending being within Residential Investment. \n \n \n \n \n • \n \n \n The portfolio mix shift towards Residential Investments is reflected in the reduction in the net interest margin to 2.4% (30 June 2024: 2.6%). \n \n \n \n \n • \n \n \n The cost of risk has increased reflecting provisions on two individual loans in default, which has reduced risk adjusted margin. The loan to value is 58.0% at 30 June 2025 and continues to remain very stable (31 December 2024: 56%, 30 June 2024: 57%) and well within risk appetite. Overall, we are positive about the low underlying credit risk within the portfolio. \n \n \n \n \n Outlook \n \n \n \n \n • \n \n \n We expect to continue to grow profitably despite the economic headwinds and a slow residential market where borrowers are not finding it easy to sell properties. \n \n \n \n \n Commercial Finance \n We support the growth of UK businesses by enabling effective cash flow. \n \n \n \n \n \n \n \n 30 June \n2025 \n \n \n 30 June \n2024 \n \n \n 31 December 2024 \n \n \n \n \n New business (£million) \n \n \n 184.5 \n \n \n  32.4 \n \n \n 105.8 \n \n \n \n \n Loans and advances to customers (£million) \n \n \n 388.4 \n \n \n  336.8 \n \n \n 351.0 \n \n \n \n \n Net revenue margin (%) \n \n \n 6.3 \n \n \n  6.3 \n \n \n 7.6 \n \n \n \n \n Risk adjusted margin (%) \n \n \n 5.9 \n \n \n  6.3 \n \n \n 5.9 \n \n \n \n \n What we do \n \n \n \n \n • \n \n \n We offer a full suite of Asset-Based Lending ('ABL') 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 H1 2025 performance \n \n \n \n \n • \n \n \n Lending balances have increased by 10.7% since December 2024 driven by strong new business in the period and low client attrition. Average lending balances are at the same level as throughout 2024. \n \n \n \n \n • \n \n \n The new business success has come through working closely with private equity houses despite the ABL lending in our target markets being limited by lower M&A activity. \n \n \n \n \n • \n \n \n The net revenue margin at 6.3% in H1 2025 is in line with H1 2024 whereas in the second half of 2024 we collected high levels of fees from early client terminations. \n \n \n \n \n • \n \n \n The H1 2025 risk adjusted margin at 5.9% (30 June 2024: 6.3%) reflects a low cost of risk of 0.4% (30 June 2024: 0.0%) due to a few cases moving from IFRS 9 Stage 1 to Stage 2. The low cost of risk has been achieved by addressing adverse client trading performance early and working with their private equity partners to mitigate against credit losses. We have had no client failures in the period. \n \n \n \n \n Outlook \n \n \n \n \n • \n \n \n We will continue to leverage our networks and support the growth of UK businesses. We see market opportunity and an ability to grow net lending beyond the £400 million level. \n \n \n \n \n Savings \n Customers trust us to look after their savings and provide a competitive return. \n \n \n \n \n \n \n \n \n \n \n \n \n \n 30 June \n2025 \n£million \n \n \n 30 June \n2024 \n£million \n \n \n 31 December 2024 \n£million \n \n \n \n \n Total funds raised \n \n \n \n \n \n \n \n \n 1,093.6 \n \n \n 741.9 \n \n \n 1,604.2 \n \n \n \n \n Product split \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n    Fixed-term bonds \n \n \n \n \n \n \n \n \n 1,543.3 \n \n \n 1,518.1 \n \n \n 1,510.0 \n \n \n \n \n    Notice accounts \n \n \n \n \n \n \n \n \n 54.3 \n \n \n 104.7 \n \n \n 72.4 \n \n \n \n \n    ISAs \n \n \n \n \n \n \n \n \n 1,131.8 \n \n \n 689.2 \n \n \n 857.3 \n \n \n \n \n    Access accounts \n \n \n \n \n \n \n \n \n 780.7 \n \n \n 730.7 \n \n \n 805.2 \n \n \n \n \n \n \n \n \n \n \n \n \n \n 3,510.1 \n \n \n 3,042.7 \n \n \n 3,244.9 \n \n \n \n \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 H1 2025 performance \n \n \n \n \n • \n \n \n In the first half of 2025, the Bank of England Monetary Policy Committee reduced the UK Bank Base Rate ('BBR') from 4.75% to 4.50% on 6 February 2025 and from 4.50% to 4.25% on 8 May 2025. \n \n \n \n \n • \n \n \n The offer of different products at different rates allows us to manage the overall cost of funds. During the period, we have raised £1.1 billion of new deposits and retained £0.5 billion on maturity (76% of maturing fixed-term deposits) in order to fund the growth in lending balances. \n \n \n \n \n • \n \n \n Deposits balances have increased by 8.2% to £3,510.1 million (31 December 2024: £3,244.9 million), primarily through the successful acquisition of cash ISA accounts, a trend is being seen across the market as a whole. \n \n \n \n \n • \n \n \n The market for acquisition has remained very competitive, particularly for term deposits. \n \n \n \n \n • \n \n \n Savings balances are made up of retail customers. Of total deposits, 95.1% are fully covered by the Financial Services Compensation Scheme (31 December 2024: 95.1%) providing our customers with additional confidence about the security of their savings. \n \n \n \n \n • \n \n \n We continue to invest in the digital journey of our customers. \n \n \n \n \n Outlook \n \n \n \n \n • \n \n \n UK BBR is unlikely to fall below 4% in the second half of the year, with additional cuts now expected in 2026. We expect the savings market to remain active and competitive. \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 quarterly as UK Gross Domestic Product ('GDP'), increased in the first quarter of 2025 by 0.7% 1 following an increase of 0.1% 1 in the final quarter of 2024. Following a stronger than anticipated Q1, economists anticipate GDP growth will continue in 2025, with full year growth in GDP expected to be 1.1% 2 , albeit with trade friction and global uncertainty weighing on medium-term outlook. \n After an initial fall in CPI in the first quarter of the year, inflation has risen in the second quarter of 2025, with the rate as of June 2025 at 3.6% 1 , the highest since January 2024. The Bank of England reduced the Base Rate twice within the first six months of 2025, in February and May. A further cut in August 2025 reduced the Base Rate to 4.0%. Economists now anticipate additional interest rate cuts in 2026. \n Employment levels in June 2025 were 75.2% 1 , an increase of 0.3% from December 2024. However, unemployment levels rose to 4.7% 1 as of June 2025, from 4.4% 1 in December 2024, to its highest level since 2021. Vacancies were around 0.7 million 1 for the period April - June 2025, with surveys suggesting firms are not recruiting new workers and/or replacing those who have left. The impact of increased national insurance contributions ('NICs') for employers came into effect in April. Wage growth remained strong, with growth in average earnings at 5.0% 1 . Economists forecast the unemployment rate to peak in 2026 as firms adjust to higher NICs. \n The first half of 2025 saw increased lending and transactions in the housing market as consumers moved to complete purchases ahead of the end of the temporary stamp duty cut. Growth is expected to modestly slow in the second half of the year due to higher stamp duty rates and the impact of refinancing cheaper fixed-rate mortgage deals which were put in place before mid-2022. With mortgage approvals up ~3% 3 year-on-year in May 2025, and the market anticipating further rate cuts by the Bank of England in 2026, economists note a balanced housing market through 2025. \n The response to the change in UK Government has largely been mixed, with the new government's impact on growth still to be determined. The market awaits the Autumn Budget to assess impacts of any fiscal policy changes on UK growth, which could see tax rises or greater spending restraint implemented by the Labour Government. The Group will continue to monitor the situation closely and assess the potential impact on its business plans. Elevated global uncertainty around economic and political landscapes, including US tariffs and international wars, weighs on the growth outlook for the UK. Despite a challenging global landscape, UK banks have performed well, with positive movements in lending data and savings balances, alongside broadly stable pricing in the market. \n Outlook \n Interest rates are not expected to fall further in 2025 with the market now expecting further rate cuts in 2026. The UK economy is expected to grow modestly through 2025 by 1.1% 2 , although tightening fiscal policy and increased global uncertainty impact the medium-term outlook. The housing market is expected to remain stable, with a more balanced number of transactions and price growth than in previous years. Unemployment remains elevated and is anticipated by economists to peak in 2026 as employers adjust to higher NICs, before steadily recovering to around 4% by the end of 2030 2 . \n 1. Source: Office for National Statistics, data as at 30 June 2025, unless otherwise stated. \n 2. Source: Oxford Economics \n 3. UK Parliament House of Commons Library \n Government and regulatory \n There have been a number of announcements that impact the Group and/or the markets in which it operates. The key announcements in the period to date are set out below. \n Prudential regulation \n At the beginning of the year, the PRA announced delaying Basel 3.1 implementation by one year to 1 January 2027, shortening the transitional period for full implementation which remains 31 January 2030. Recent announcements have confirmed the implementation date for Small Domestic Deposit Taker (' SDDT') firms will coincide with Basel 3.1, therefore removing the requirements of the Interim Capital Regime. \n At the start of Q2 2025, the PRA published its Business Plan for 2025. Some of the key initiatives for the Group were: plans to publish the Basel 3.1 final rules once parliament has revoked relevant parts of the CRR, intentions to publish a policy statement in Q4 2025 finalising the Simplified Capital Regime and additional liquidity simplifications and the amalgamation of the Banking Data Review and Transforming Data Collection projects to deliver tangible cost reductions in banking regulatory reporting. The Group continues to monitor developments in this area. It also included the Solvent Exit Analysis which comes into force on 1 October 2025. The Group prepared its Solvent Exit Analysis during the period, which was approved by the Board in early August 2025. \n In May 2025, the PRA published CP12/25 'Pillar 2A review - Phase 1' and PS7/25 'Update to PS9/24 on the SME and infrastructure lending adjustments'. This Consultation Paper consults on proposed changes to credit risk, operational risk, market and counterparty credit risk methodologies, as well as reducing the regulatory burden around pension risk. \nThe Group is planning to perform an impact analysis during Q3 before the consultation closes in September 2025. The near final policy statement outlines how adjustments for SME and infrastructure lending will be applied under Pillar 2A, with the intentions to mitigate the impact of removing the SME and infrastructure support factor under Basel 3.1. As the Group is an SDDT firm, the adjustments will be addressed separately under the Strong and Simple Framework. \n In July 2025, the Bank of England, jointly with the PRA, published several updates and proposals. In particular, they announced in CP14/15, a proposed reduction in the Recovery plan frequency, to every two years for SDDTs, acknowledging firms of this size are less complex and tend to have less material changes to address. \n Conduct regulation \n We continued to monitor regulatory developments closely, particularly in relation to motor finance commission arrangements. The Supreme Court heard arguments, which challenge the legality of historical commission arrangements in motor finance. On 1 August the Supreme Court delivered its judgment and ruled that, in two cases, the relationship between motor dealer and the customer was not of a fiduciary nature and the payment of a commission to a motor dealer was not a bribe. However, the Supreme Court upheld that in the case of Johnson v FirstRand, the relationship with Mr. Johnson was unfair in the specific circumstances of the case. The FCA subsequently confirmed that beginning in early October 2025 it will consult about a compensation scheme for motor finance customers who have been treated unfairly. \n Separately, we have completed internal impact assessments in response to several FCA initiatives focused on the Consumer Duty. These include: \n ·      the FCA's review of how firms treat customers in vulnerable circumstances; \n ·      guidance on bereavement processes and the use of powers of attorney; and \n ·      findings from the regulator's review of the Consumer Duty's 'consumer support' outcome. \n The FCA has also outlined a broader action plan to evolve the Consumer Duty framework. This includes proposals to simplify rules, reduce regulatory burdens, and enhance consumer outcomes. Finalised details are expected in September 2025, at which point we will reassess the impact on our operations and compliance obligations. \n We welcome the increase to the Financial Services Compensation Scheme ('FSCS') deposit protection limit as positive for our customers. We see customers who currently deposit funds to the current £85,000 limit and may want to deposit further funds with the protections FSCS provide. \n From initial review of the consultations on the Senior Managers and Certification Regime and the reforms to the Financial Ombudsman Service and redress frameworks, we believe the proposed changes to be positive. Additionally, the sentiments in the Mansion House speech by the Chancellor are welcomed regarding getting the risk balance right to encourage more retail investment and growth. \n In parallel, the UK Government has introduced new rules to address concerns around \"debanking\". Under the new requirements, banks must provide customers with a minimum of 90 days' notice before closing an account, unless there are exceptional circumstances. This aims to improve transparency and protect access to essential banking services. \n The FCA has also published a new policy statement introducing a regulatory return for credit broking firms. This will enhance the FCA's data collection and supervisory oversight of the sector. \n Finally, several consultations are currently in progress, including: \n ·      reform of the Consumer Credit Act, aimed at modernising and simplifying the legislative framework; \n ·      streamlining of complaints data reporting requirements; and \n ·      proposed changes to the interest rates applied to compensation awards issued by the Financial Ombudsman Service (FOS). \n We are reviewing these consultations and will engage with relevant stakeholders to prepare for any forthcoming changes. \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's Chief Risk Officer is responsible for leading the Group's Risk function, which is independent from the Group's operational and commercial teams. The Risk function is responsible for designing and overseeing the embedding of appropriate risk management frameworks, processes and controls, to enable key risks to be identified, assessed, monitored, and accepted or mitigated in line with the Group's risk appetite. The Group's risk management practices are regularly reviewed and enhanced to reflect changes in its operating environment. The Chief Risk Officer is responsible for reporting to the Board on the Group's principal risks and how they are being managed against agreed risk appetite. \n Further details of the Group's risk management frameworks, including risk appetite statements and governance can be found on the Group's website: www.securetrustbank.com/riskmanagement \n Changes to the Group's risk profile \n Changes in assessment of the Group's risk profile since the position reported in the 2024 Annual Report and Accounts are set out below. \n Credit risk: Stable \n Description: The risk of loss to the Group from the failure of clients, customers, or counterparties to honour fully their obligations to the firm, including the whole and timely payment of principal, interest, collateral, or other receivables. \n Consumer Finance Credit risk \n Retail Finance continues to perform strongly from a credit risk perspective, demonstrating a stable customer risk profile and arrears materially below historical levels. Vehicle Finance has seen improved new business quality and early arrears rates due to targeted credit risk tightening and scorecard enhancements. Default rates have also trended positively in the first half, driven by ongoing enhancements in collections capabilities, although customer cure rates remaining below historical levels creates further opportunity for improvement. The agreement of a debt sale and forward flow arrangement in Vehicle Finance has assisted operational capacity with the collections team, supporting improved performance. Following Board approval, the Vehicle Finance portfolio has been placed into an orderly run-off, with new business originations to cease. Specific monitoring is being established to make sure portfolio performance is within acceptable thresholds for its remaining life. \n Business Finance Credit risk \n While Business Finance customers have been impacted by the evolving economic and geopolitical landscape, credit performance remains robust across both Business Finance portfolios. \n Real Estate Finance at a portfolio level is performing well. The market is seeing a reduction in property sales activity however continued strong rental demand is supporting valuations across the book. Only a small number of clients are in an active workout situation and, where appropriate, individual provisions have been taken to cover the risk of loss on these files. Individual provisions are reviewed regularly and updated to reflect latest information and expectation of outcome. \n Commercial Finance is similarly performing well at a portfolio level and, while it does have customers who have been impacted by rising employment costs and export disruption, the secured and highly structured nature of facilities means that in most cases these exposures can be managed down without loss to the Group. \n Liquidity and Funding risk: Stable \n Description: Liquidity risk is the risk that the Group is unable to meet its liquidity obligations as they fall due or can only do so at excessive cost. Funding risk is the risk that the Group is unable to raise or maintain funds to support asset growth, or the risk arising from an unstable funding profile that could result in higher funding costs. \n The Group has maintained its liquidity and funding ratios in excess of regulatory and internal risk appetite requirements throughout the first half of the year. A significant level of high-quality liquid assets, held as cash at the Bank of England, continues to be maintained so that there is no material risk that liabilities cannot be met as they fall due. The Group has repaid all Term Funding Scheme with additional incentives for SMEs ('TFSME') drawings in the first half of 2025 ahead of contractual maturities with a combination of retail funding and utilisation of the Bank of England's Indexed Long-Term Repo ('ILTR') facility. \n Capital risk: Stable \n Description: Capital risk is the risk that the Group will have insufficient capital resources to meet minimum regulatory requirements and to support levels of growth. \n The Group's balance sheet and total risk exposure has increased since the beginning of the year as the Group continues to grow its businesses organically. Despite the growth in its balance sheet, the Group has continued to maintain adequate capital and all capital ratio measures have been exceeded throughout the period. \n The Group has assessed the capital impact of severe but plausible outcomes in relation to potential redress payments related to historical motor finance commissions and is satisfied it could maintain capital adequacy in such scenarios. \n The Group has assessed the high-level impact of the proposed Basel 3.1 rules and the PRA's Small Domestic Deposit Taker ('SDDT') Capital Regime and has taken this into consideration as part of its capital planning. \n Market risk: Stable \n Description: Market risk is the risk to the Group's earnings and/or economic value from unfavourable market movements such as interest rates and foreign exchange rates. \n The Group hedges any significant residual fixed rate positions, after internal matching of assets and liability profiles using interest rate swaps. These are hedge accounted for through fair value or cash flow hedges which are deemed highly effective. \n Interest Rate Risk in the Banking Book ('IRRBB') is monitored by a range of Board risk appetite measures including Earnings at Risk ('EAR'), Market Value Sensitivity ('MVS') and Economic Value of Equity ('EVE'). The Group has remained within these risk appetite thresholds throughout the first half of the year and continues to enhance its risk identification, measurement, and mitigation for IRRBB. \n The Group has a small exposure to foreign exchange risk through its Commercial Finance clients, all exposures are appropriately hedged. The Group does not operate a trading book. \n Operational risk: Stable \n Description : Operational risk is the risk that the Group may be exposed to direct or indirect loss arising from inadequate or failed internal processes, personnel and succession, technology/infrastructure, or from external factors. \n The Group's operational risk processes and standards are defined in a formal Operational Risk Management Framework, which is aligned to the Basel Committee on Banking Supervision criteria for the sound management of operational risk. \n The Group has met the regulatory expectations set out in PS21/3 Building operational resilience and continues to enhance its operational resilience with further embedding and testing. \n Technological developments, including Artificial Intelligence ('AI'), continue to accelerate and the Group has taken a holistic approach to managing AI Risk; ensuring associated risks and opportunities are fully understood, with the management of AI Risk being integrated into existing risk frameworks. \n The Group has also reviewed its Information Security Strategy and has implemented an updated suite of information security metrics to provide improved visibility and assurance to the Executive and Board Risk Committees. \n Model risk: Stable \n Description: Model risk is the potential for adverse consequences from model errors or the inappropriate use of modelled outputs to inform business decisions. \n The Group continues to embed stronger model governance and has implemented a formalised approach to independent model validation. \n In the period, there has been strong progress on producing independent validation reporting for high and medium-high risk models. Clear identification and recording of model owners and responsibilities in the model inventory has created a much-improved framework to continue to develop ongoing monitoring and governance. \n Conduct and Compliance risk: Stable \n Description: The risk that the Group's products and services, and the way they are delivered, or the Group's failure to be compliant with all relevant regulatory requirements, result in poor outcomes for customers or markets in which we operate, or harm to the Group. This could be as a direct result of poor or inappropriate execution of our business activities or behaviour from our employees. \n In the period, the Group has continued with the final stages of the Borrowers in Financial Difficulty review and has progressed actions to enable good outcomes in line with the Consumer Duty, for example introducing the facility for those with power of attorney to apply for savings accounts on behalf of the donor. The Group is making progress on regulatory changes, including implementation of Solvent Exit Analysis and new Consumer Credit Product Sales Data reporting. \n In relation to historic motor finance commissions, the Group has made an initial assessment of the outcome of the Supreme Court judgment issued on 1 August 2025, and the subsequent statement from the FCA. The FCA has confirmed it will consult on a proposed redress scheme in October 2025, which the Group will work through, linking in with industry bodies, once received. Further information can be found in Note 13.1 to the Interim Financial Statements. \n Financial Crime risk: Stable \n Description: The risk that the Group's products and services will be used to facilitate financial crime, resulting in harm to its customers, the Group or third parties, and the Group fails to protect them by not having effective systems and controls. Financial Crime risk includes money laundering, terrorist financing, proliferation financing, sanctions, modern slavery, human trafficking, fraud (internal and external), bribery, corruption, tax evasion, failure to prevent fraud, failure to prevent bribery and the facilitation of tax evasion. The Group may incur significant remediation costs to rectify issues, reimburse losses incurred by customers and address regulatory censure and penalties. \n The Group meets its obligations to reduce financial crime risk by maintaining a proportionate control environment, standards and procedures. There remains significant focus on this area as we closely monitor changes to legal and regulatory requirements and criminal methods and responding to them. These external factors means that our financial crime risk management framework will continue to evolve at a corresponding pace. \n Climate Change risk: Stable \n Description: Climate change, and society's response to it, present risks to the UK financial services sector, with some of these only fully crystallising over an extended period. The Group is exposed to physical and transition risks arising from climate change. \n The Group has established a climate change working group to support in the management of climate change risk and continues to assess its risk exposure to both the potential 'physical' effects of climate change and the 'transitional' risks from the UK's target to bring all greenhouse gas ('GHG') emissions to net zero by 2050. \n The Group has complied with the requirements of Listing Rule 9.8.6(8) by including climate-related financial disclosures consistent with the recommendations and recommended disclosures of the Task Force for Climate-related Financial Disclosures' ('TCFD') within its 2024 Annual Report and Accounts. \n Condensed consolidated statement of comprehensive income \n \n \n \n \n For the period ended \n \n \n Note \n \n \n Unaudited \n30 June \n2025 \n£million \n \n \n \nUnaudited \n30 June \n2024 \n£million \n \n \n \nAudited \n31 December \n2024 \n£million \n \n \n \n \n \n \n Income statement \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Interest income and similar income \n \n \n 3 \n \n \n 187.8 \n \n \n 178.6 \n \n \n 366.0 \n \n \n \n \n Interest expense and similar charges \n \n \n 3 \n \n \n (88.8) \n \n \n (90.4) \n \n \n (181.1) \n \n \n \n \n Net interest income \n \n \n 3 \n \n \n 99.0 \n \n \n 88.2 \n \n \n 184.9 \n \n \n \n \n Fee and commission income \n \n \n \n \n \n 7.4 \n \n \n 8.0 \n \n \n 19.2 \n \n \n \n \n Fee and commission expense \n \n \n \n \n \n (0.1) \n \n \n (0.1) \n \n \n (0.2) \n \n \n \n \n Net fee and commission income \n \n \n 3 \n \n \n 7.3 \n \n \n 7.9 \n \n \n 19.0 \n \n \n \n \n Operating income \n \n \n 3 \n \n \n 106.3 \n \n \n 96.1 \n \n \n 203.9 \n \n \n \n \n Net impairment charge on loans and advances to customers \n \n \n 10 \n \n \n (30.9) \n \n \n (28.2) \n \n \n (61.9) \n \n \n \n \n Other gains/(losses) \n \n \n \n \n \n - \n \n \n 0.1 \n \n \n (0.3) \n \n \n \n \n Fair value and other gains on financial instruments \n \n \n 4 \n \n \n 0.1 \n \n \n 0.7 \n \n \n 1.2 \n \n \n \n \n Operating expenses \n \n \n \n \n \n (52.2) \n \n \n (51.6) \n \n \n (103.8) \n \n \n \n \n Profit before income tax before exceptional items \n \n \n \n \n \n 23.3 \n \n \n 17.1 \n \n \n 39.1 \n \n \n \n \n Exceptional items \n \n \n 5 \n \n \n (1.0) \n \n \n - \n \n \n (9.9) \n \n \n \n \n Profit before income tax \n \n \n \n \n \n 22.3 \n \n \n 17.1 \n \n \n 29.2 \n \n \n \n \n Income tax expense \n \n \n 6 \n \n \n (5....

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