7th May 2020 13:58
(Alliance News) - Secure Trust Bank PLC on Thursday reported a double-digit rise in 2019 profit on significant loan book growth but withheld its final dividend to preserve cash amid the Covid-19 outbreak.
In 2019, the retail and commercial lender reported a 12% rise in pretax profit to GBP38.7 million from GBP34.7 million in 2018.
Net interest income was up 8.8% year on year in 2019 to GBP145.4 million from GBP133.7 million in 2018. Operating income grew 9.2% to GBP165.5 million.
STB's loan book ended 2019 at GBP2.45 billion, up 21% from GBP2.03 billion at the same point a year before. However, the lender's net interest margin worsened to 6.5% in 2019 from 7.4% in 2018.
Customer deposits increased 9.2% to GBP2.02 billion from GBP1.85 billion.
"Controlled growth in both our Business Finance and Consumer Finance businesses continued to deliver increased profits in 2019. Customer numbers, lending balances and income increased whilst the cost of risk continued to decrease. These factors have driven strong growth in reported and adjusted earnings despite the slowdown in UK economic activity in the second half of 2019," STB said.
STB's CET1 ratio stood at 12.7% at the end of 2019, down from 13.8% the year before.
Operating expenses expanded 11% to GBP94.2 million. As a result, the lender's cost-to-income ratio worsened to 56.9% from 55.7%.
Chair Michael Forsyth said: "2019 was another successful year for the group with double digit growth in profits before tax delivered for the second successive year. This and a strong start to 2020 would ordinarily see the board recommend an increased dividend.
"However we have rapidly entered a period of extreme uncertainty driven by the Covid-19 outbreak and in these exceptional circumstances the board considered that it was more prudent to preserve capital. Accordingly, the board is not recommending a final dividend for approval by shareholders at the Annual General Meeting. The board will keep this under review."
STB said it was trading in line with internal expectations in the first quarter, despite a rise in credit loss impairments.
Chief Executive Paul Lynam added: "From mid-March we have seen a slowdown in demand for our products, particularly in respect of our Consumer Finance lending. The extent to which this contraction continues will be influenced by any revival in economic activity and our credit risk appetites which will remain cautious. Healthy capital and liquidity positions, combined with the group's flexible business model, means it is well placed to navigate the current crisis."
Shares in Secure Trust Bank were 5.4% higher in London on Thursday afternoon at 840.00 pence each.
By Paul McGowan; [email protected]
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