2025 Annual Results and Investor Update Event

Secure Trust Bank PLC

12 March 2026

For immediate release

SECURE TRUST BANK PLC

2025 Annual Results and Investor Update Event: updated strategic plans and medium-term targets

Secure Trust Bank PLC ('STB', 'Secure Trust Bank', or the 'Group'), a leading specialist bank, will host its 2025 Annual Results and Investor Update event for analysts and institutional investors today, 12 March 2026.

A live webcast of the presentation and slides will be available at the following link at 13.00: https://brrmedia.news/STB_FY25_Investor_Update. The Annual Results presentation will begin at 13.00, with the Investor Update presentation to begin at 14.15.

The event will cover the Group's 2025 annual results and refreshed strategic plans, including product driven growth opportunities, and its capital allocation strategy. The event includes presentations from the CEO, CFO and management of the Retail Finance, Business Finance and Savings divisions.

2025 Financial highlights1:

Strategic update

2025 Annual Results

The Group achieved strong levels of new business lending, leading to an 8.1% increase in net lending balances to £3.3 billion (2024: £3.1 billion). Retail Finance grew 8.0%, as the business continued to leverage the strength of its retail distribution network. Business Finance grew by 8.1%, driven by Real Estate Finance which grew by 9.4% and continued momentum in Commercial Finance, delivering 3.2% growth in net lending balances. Strong pricing discipline across the Group in a falling rate environment contributed to stable net interest margin ('NIM') of 4.7% (2024: 4.7%).

Customer deposits increased 8.2% year on year to £3.5 billion (2024: £3.2 billion), supporting growth in the lending book, and remaining stable relative to the half year. The rundown of the Vehicle Finance portfolio reduced the need for additional funding in the second half of the year. The Group fully repaid its Bank of England Term Funding Scheme with additional incentives for SMEs ('TFSME') balances in 2025 (2024: £230.0 million). The Group has £201.2 million (2024: £125.7 million) of funding through sale and repurchase arrangements.

Cost income ratio improved to 45.2% (2024: 47.4%) reflecting strong income growth and effective cost management in an inflationary environment, and the delivery of operational efficiencies through our cost optimisation programme, Project Fusion3. In 2025, operating expenses included £2.5 million of non-recurring costs relating to changes in senior leadership; excluding these items, the cost income ratio would have been 43.7%.

Cost of risk increased to 1.0% (2024: 0.8%). This reflects the impact of three specific cases in Business Finance and a normalisation of impairment charges in Retail Finance, following the impact of one-off model benefits.

The Group was capital accretive in 2025 and strengthened its capital position in the year, improving the CET 1 ratio by 60 bps to 12.9% (2024: 12.3%). The sale of the Consumer Vehicle Finance business, which completed on 25 February 2026, further increases the CET 1 ratio on a pro forma basis to 14.7%2.

Financial Summary1

Execution against strategic priorities

We continued to make strong progress against the four strategic priorities set out in 2023: simplify, leverage networks, enhance customer experience and enabled by technology.

Regulatory and legal developments

In October 2025, and in response to the proposed FCA approach, we increased our provision for motor finance consumer redress and related costs by £16.4 million. As at the 31 December 2025 the provision held was £21.5 million (2024: £6.4 million).

Dividend

The Board recommends the payment of a final dividend for 2025 of 23.7 pence per share, which together with the interim dividend of 11.8 pence per share, represents a total dividend for the year of 35.5 pence per share (2024: 33.8 pence per share). This will be payable on 21 May 2026 to shareholders on the register at the close of business on 24 April 2026 and is in line with the Group's progressive dividend policy.

Updated strategic priorities and medium-term targets

2025 strategic pivot

In the first half of 2025, the Group underwent a strategic review and identified opportunities to increase ROAE over time. As a result, the Group took decisive actions to streamline the business during 2025, including announcing its decision to stop new Vehicle Finance lending and subsequently agreeing the sale of the Consumer Vehicle Finance business.

We have now simplified to two lending divisions, Retail Finance and Business Finance, supported by our Savings division. This new structure reflects the way that we manage and evaluate our businesses through a product lens. We have profitable growth opportunities across our divisions, all with an established track record of value creation. Our proven specialist market capabilities, combined with the operating leverage now embedded within our businesses, enable us to pursue growth opportunities at minimal incremental cost.

Refreshed strategy - Targeted growth for higher returns

Secure Trust Bank's refreshed strategy is "targeted growth for higher returns". This will be delivered though three strategic priorities:

Medium-term targets

Secure Trust Bank also announces new medium-term targets.

Our target ROAE of above 16% will be driven by a disciplined focus on key drivers and underpinned by our ambitions to:

Optimising capital management

Maintaining a strong capital base is pivotal to the delivery of our medium-term targets.

Our capital allocation framework is designed to optimise capital deployment for growth and value creation, whilst managing capital buffers. Our ambition is to maintain the CET 1 ratio at c.13.0%. We aim to deploy any surplus capital in the highest returning opportunities or return capital to shareholders, so as to enable us to deploy capital in organic product driven growth opportunities and enhance distributions to shareholders. Subject to regulatory approval and no material changes in prevailing market conditions, we will be committing surplus capital to initiate a share buyback programme with £10 million intended to be delivered in tranches over the next 12 months, as well as reaffirming our commitment to a progressive dividend policy. The Group is capital accretive and can support both further growth in net lending and dividends.

These choices are possible due to the sale of the Consumer Vehicle Finance business which has released capital ahead of schedule. This also accelerates our removal of costs from the Group. In our 2025 Interim Results, we indicated that the exit from Vehicle Finance would release £25 million of costs by 2030, involving incurring costs of £5 million. We are reaffirming our target to remove £25 million of run-rate costs but will do so by 2028, incurring additional costs of £12 million. We intend to support our medium-term target of more than 16% ROAE in this way through material improvements in the cost income ratio.

2026 Guidance

Having taken decisive strategic actions in 2025, 2026 will be a transitional year to launch new products and reduce cost. Accordingly, we provide the following guidance on 2026 expected performance.

CEO, Ian Corfield said:

"Our strategy is simple. We will grow in large investable scale markets, where there are product driven opportunities that leverage our proven capabilities, and we will do this with operating leverage that will deliver an improved cost income ratio in the medium-term. We have a clear trajectory to higher returns, delivered at a reduced cost of risk. We are well capitalised and intend to deliver value back to shareholders through a share buyback programme. In combination this will allow us to deliver targeted growth at higher returns."

Footnotes

1. Performance metrics relate to continuing operations, unless otherwise stated. The term 'Total' refers to statutory continuing and discontinued operations. Further details of the metrics can be found in the Appendix to the 2025 Annual Report and Accounts.

2. The revised pro forma CET 1 ratio at 31 December 2025 reflects 1) the Consumer Vehicle Finance portfolio had credit risk weighted assets of £293.2 million at that time and 2) the Vehicle Finance business sale generated a one-off net gain on sale on completion which increased CET 1.

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) are relative to annualised operating expenses for the six months ended 30 June 2024.

4. Adjusted metrics exclude exceptional items of £24.1 million (2024: £9.9 million). Details can be found in Note 8 to the Financial Statements.

5. Source: Finance & Leasing Association: New business values within retail store and online credit: 2025: 15.5% (2024: 13.6%). FLA total and Retail Finance new business of £9,094.8 million (2024: £9,476.0 million) and £1,407.0 million (2024: £1,289.7 million). As published at 31 December 2025.

Enquiries:

Secure Trust Bank PLC

Ian Corfield, Chief Executive Officer

Rachel Lawrence, Chief Financial Officer

Phil Deakin, Strategy and Corporate Development Director

Tel: 0121 693 9100

Investec Bank plc (Joint Broker)

Christopher Baird

David Anderson

Maria Gomez de Olea

Tel: +44 (0) 20 7597 5970

Shore Capital Stockbrokers (Joint Broker)

Mark Percy / Sophie Collins (Corporate Advisory)

Oliver Jackson / Ansh Batura (Corporate Broking)

Tel: +44 (0) 20 7408 4090

Camarco

Geoffrey Pelham-Lane, Amrith Uppuluri

[email protected]

Tel: +44 (0) 7733 124 226, +44 (0) 7763 083 058

Forward looking statements

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.

About STB

STB is an established, well‐funded and capitalised UK retail bank with a 72‐year trading track record. STB operates principally from its head office in Solihull, West Midlands. The Group's diversified lending portfolio currently focuses on two sectors:

(i) Business Finance through its Real Estate Finance and Commercial Finance divisions; and

(ii) Consumer Finance through its V12 Retail Finance division,

supported by its Savings division.

Secure Trust Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Secure Trust Bank PLC, Yorke House, Arleston Way, Solihull, B90 4LH.

Group at a glance

Our strategic progress against 2025 priorities

Simplify

Enhance customer experience

Leverage networks

Enabled by technology

Updating our strategic priorities for 2026 and beyond

Our refreshed strategic ambitions will position the Group for long‑term, sustainable growth

Refer to Chief Executive statement for further information.

Notes:

1. £5.0 million cost savings relative to operating expenses for the 12 months ended December 2021. The additional £3.0 million savings (of the total £8.0 million) are relative to annualised operating expenses for the six months ending 30 June 2024.

2. Mark out of 5 based on star rating from 11,220 reviews (2024: 15,527).

3. Source: Finance & Leasing Association: New business values within retail store and online credit: 2025 15.5% (2024: 13.6%). FLA total and Retail Finance new business of £9,094.8m (2024: £9,476.6m) and £1,407.0m (2024: £1,289.7m) respectively. As published at 31 December 2025.

Chair's statement

It has been a year of change at Secure Trust Bank, with the Board having taken decisive action to strengthen the business and to lay the foundations for enhanced shareholder returns.

In June, we appointed a new Chief Executive Officer ('CEO'), Ian Corfield, to lead the Group through the next phase of its growth strategy, to accelerate the pace of change across the Group and help drive improved performance. The Board is pleased with the progress he has made since his appointment.

In July, we made the difficult decision to cease lending in our Vehicle Finance business, which had been loss making, and with additional recent operational challenges and increased loan impairments, was materially impacting our Group performance. In December, we announced the sale of the Consumer Vehicle Finance business, which completed in February 2026. This was an important strategic milestone and will help to accelerate further our strategic progress by releasing capital to invest in our higher returning business areas.

I would like to take this opportunity to thank all of our Vehicle Finance colleagues, who helped grow the business despite the increasingly challenging operating environment, and to wish them all the very best for the future.

We have refreshed our strategy and simplified our medium-term targets ensuring the business is focused on delivering growth and driving improved returns for our shareholders. Under our revised strategy we will deploy capital, with discipline, into our three higher returning business units; Retail Finance, Commercial Finance and Real Estate Finance, supported by funding through our Savings business. We are focused on developing adjacent products where we have expertise, can add value to our customers and business partners, and leverage technology to ensure our services can be delivered effectively and efficiently. We will continue to have a rigorous approach to cost management, as we right-size the business following the sale of Consumer Vehicle Finance, and further improve our cost income ratio.

We are confident that the strategic decisions taken will support the sustainable growth of our business, deliver improved performance and increased return on equity.

Business performance

Adjusted1 total profit before tax for the year ended 31 December 2025 increased by 32.0% to £51.6 million (2024: £39.1 million). This was strong year-on-year growth, however, it was below our expectations for the year with performance once again impacted by the volatility in impairments within our legacy Vehicle Finance business.

Total statutory profit before tax decreased slightly to £27.5 million (2024: £29.2 million). Statutory profit was negatively impacted by exceptional costs incurred due to the decision to cease lending within our Vehicle Finance business and the additional provision booked following the publication of the FCA's consultation on the proposed redress scheme for motor finance commissions.

Whilst we appreciate the additional certainty the FCA's redress scheme will bring, we believe the proposed scheme is not aligned with the Supreme Court judgment in Johnson v FirstRand. If implemented in the form proposed, we believe the scheme will result in redress also being paid to customers who received competitive finance and were not harmed and will unfairly impact lenders, particularly those providing near prime financing through specialist brokers operating competitive panels of lenders. We provided a robust response (supported by analysis of our data) to the consultation, including setting out how customers who received competitive finance were not harmed.

Capital and shareholder returns

On a total basis, adjusted1 return on average equity was 10.4% (2024: 8.0%); however, if the legacy Vehicle Finance business is excluded, the adjusted1 return on average equity for the continuing business was 14.3% (2024: 15.0%).

The returns generated by the continuing business, and the plans to increase these further, are positive indicators for the Group's ability to deliver a return on average equity of over 16% in line with our revised medium-term targets.

We have a strong capital position, which has increased during 2025 and, as at 31 December 2025, the Group's Common Equity Tier 1 ratio was 12.9% (2024: 12.3%). This ratio includes the additional provision booked for the estimated redress and costs associated with the FCA's redress scheme for historic motor finance commissions.

It is pleasing to see the progress being made across the business, starting to be reflected in the Company's share price, which increased by 244% over the course of 2025. However, the share price as at 31 December 2025 was £12.45, which is still materially below the Group's tangible book value of £19.73.

In accordance with the Group's progressive dividend policy, the Board has proposed a final dividend payment of 23.7 pence per share (2024: 22.5 pence per share), which if approved by shareholders at the Company's 2026 Annual General Meeting, will be paid on 21 May 2026 to those shareholders on the register on 24 April 2026.

Governance

There have been several changes to the Board this year. David McCreadie, our former CEO, retired in August 2025 and I would like to thank David on behalf of the Board, employees and all stakeholders for the progress he drove during his tenure as CEO. He oversaw material increases in our lending balances and helped simplify and refocus the Group, providing us with a strong platform for growth.

Our Senior Independent Director and Chair of the Audit Committee, Ann Berresford, who had served on the Board for nine years, stepped down as a Non-Executive Director on 30 December 2025. Ann was appointed to the Board in November 2016 and as Audit Committee Chair in September 2017, and has overseen significant change across the organisation and enhanced the operation of the Audit Committee. In her role as Senior Independent Director, she led the recruitment for the Chair role, which concluded in 2024. I would like to extend our thanks and best wishes to Ann.

Steve Colsell was appointed to the Board on 12 June 2025 and was appointed Chair of the Audit Committee with effect from 30 December 2025. Steve brings extensive financial and accounting experience, particularly within financial services, and is already making a strong contribution to the Board.

In August, Victoria Mitchell was appointed our designated Non-Executive Director for employee engagement, taking over from Paul Myers. We were also delighted to appoint Julie Hopes, who joined the Board in October 2024, as our new Senior Independent Director and Deputy Chair with effect from 30 December 2025.

There have been some changes to our Executive Committee during the year (further information on which can be found in the Chief Executive's statement). I would like to thank all former colleagues for their contribution to Secure Trust Bank and wish all those commencing new roles every success.

Outlook

The macroeconomic outlook remains uncertain with muted growth across the UK and significant geopolitical uncertainty. We will need to remain agile to adapt to market conditions and continue to focus on delivering good outcomes for our customers, in the specialist areas we operate.

The strategic changes we have implemented during the year position us well to drive improved performance and accelerate our growth and returns for the benefit of our shareholders and other stakeholders. Across the Group we look forward with optimism and renewed energy.

I would like to thank our customers, business partners and shareholders for their continued support and all of our employees who have worked tirelessly to deliver for our customers and the business.

Note:

1. Adjusted metrics exclude exceptional items of £24.1 million, all relating to Vehicle Finance (2024: £9.9 million, of which £8.4 million relating to Vehicle Finance). Details can be found in Note 8 to the Financial Statements.

Chief Executive's statement

Our 2025 results reflect a year of decisive strategic execution to improve financial performance. While there have been challenges, I believe the actions taken in 2025 to refresh the leadership team, streamline the Group to operate as one business and to deploy resources into higher returning business units will position us to deliver higher returns and enhanced long-term value creation.

I was delighted to join Secure Trust Bank as Chief Executive Officer at the mid-year. During my first six months I have observed the many strengths of the Group: deep specialist credit and financial expertise, strong partner relationships and flexible platforms. Above all, I have been struck by the commitment of my new colleagues to do the right thing for the business and our customers. I am pleased with the way they have managed a period of significant change with resilience. With a renewed focus on in-office collaboration, I look forward to further progress in 2026 and beyond.

We have grown our continuing businesses, with net lending growth of 8.1% to £3.3 billion (2024: £3.1 billion). Our capital position has strengthened with a significant improvement in the Common Equity Tier 1 ('CET 1') ratio of 60 bps in the year to 12.9% (2024: 12.3%). Customer deposits grew in line with the loan book during the year, supporting robust lending.

These results signal that, despite the need to guide the market to a lower profit number during the year, the Group has solid foundations for the next phase of its development.

Strategic pivot

In July, we made the decision to stop new lending in our Vehicle Finance business. In December, we announced the sale ofthe Consumer Vehicle Finance business, which completed as planned on 25 February 2026. The decision to stop new lending was made following a Groupwide strategic review in the first half of the year and reflects the historical financial performance, as well as the medium-term outlook, of the Vehicle Finance business. The sale means the Group can now accelerate its strategic plans. Exiting the Vehicle Finance business will unlock capital to reinvest into higher returning opportunities, supporting long-term growth ambitions and enable consideration of enhanced shareholder distributions.

As a result of the first half strategic review, we identified an optimised model for the Group to significantly improve shareholder returns over the medium-term. We have profitable organic growth opportunities across our Retail Finance and Business Finance businesses which have an established track record of value creation. We are also well placed to leverage the operational improvements and will be disciplined in our approach to investment for growth.

All key performance indicators are presented on a continuing basis, unless otherwise stated.

Financial results - continuing business

The Group delivered a robust set of financial results in 2025. Notably, we delivered profit before tax of £59.3 million (2024: £59.4 million), with stable net interest margin ('NIM') of 4.7% (2024: 4.7%), reflecting strong pricing discipline in a falling rate environment.

Our cost income ratio improved by 220 bps to 45.2% (2024: 47.4%) reflecting continued income growth and disciplined cost management following the success of our cost optimisation programme, Project Fusion.

The Group's operating expenses included non-recurring costs relating to changes in senior leadership, with the underlying cost base stable year-on-year, despite inflationary pressures. We will maintain our focused approach to cost management, and optimise the cost base as we enter into the next phase of our strategic ambitions.

Growth across our continuing businesses was driven by continued strong levels of new business written across all markets, whilst navigating a year of modest economic growth.

Increased lending balances were supported by an 8.2% increase in customer deposits to £3.5 billion (2024: £3.2 billion), where our product mix remained focused on fixed-term offerings. We raised c. £1.8 billion of new deposits in the year, and over 97% of deposits (by value) are protected by the Financial Services Compensation Scheme.

The Group was capital accretive in 2025, and at the end of the period the Group's CET 1 ratio increased to 12.9% (2024: 12.3%). This remains comfortably above the regulatory requirements and supports the Group's growth ambitions. The sale of the Consumer Vehicle Finance business further strengthens this position, and improves our CET 1 ratio on a proforma basis by 180 bps to 14.7%, enabling reinvestment into our continuing businesses.

Cost of risk increased to 1.0% (2024: 0.8%). This was driven by impairment charges related to a few specific cases in Business Finance and a normalisation of impairment charges in Retail Finance, following one-off model benefits in 2024.

Total profit before tax was £27.5 million (2024: £29.2 million), impacted by the additional £16.4 million provision relating to motor finance commissions redress provisions. The Group also recognised £5.0 million of exceptional costs relating to the decision to exit Vehicle Finance.

Total adjusted¹ return on average equity ('ROAE') was 10.4% (2024: 8.0%). Excluding Vehicle Finance, adjusted¹ ROAE was 14.3% (2024: 15.0%). These measures indicate that the right decisions have been implemented to set the Group on a stronger trajectory for higher returns.

Note:

1. Adjusted metrics exclude exceptional items of £24.1 million, all relating to Vehicle Finance (2024: £9.9 million, of which £8.4 million relating to Vehicle Finance). Details can be found in Note 8 to the Financial Statements.

We made solid progress against the medium-term targets set in 2023, increasing net lending, improving cost income ratio, and maintaining stable NIM, while preserving robust capital ratios. However, market conditions have required a reset of strategic ambitions. Vehicle Finance continued to weigh on NIM and ROAE, and although our decision to exit this business will initially reduce lending balances and NIM, it will improve both the cost income ratio and ROAE over time. Given these changes, it is the right time to establish new medium-term targets focused on higher returning growth. Looking ahead, we are targeting c.10% annual growth in our continuing businesses and an ROAE of more than 16% in the medium-term. Whilst we acknowledge risk adjusted margins, pricing for capital requirements, and effective cost management are important to delivering high returns we do not intend to set individual targets for these measures and will balance these drivers to deliver against the target ROAE.

Capital and funding

As previously announced, we repaid our Term Funding Scheme with additional incentives for SMEs ('TFSME') funding in the first half of 2025 ahead of contractual maturity. The Group continued to make use of sale and repurchase agreements as part of its funding strategy, ending the period with an outstanding balance of £200.0 million (2024: £125.0 million).

The PRA is to introduce the Basel 3.1 standards in January 2027. At the same time, it will implement the Strong and Simple capital regime for Small Domestic Deposit Taker ('SDDT') firms, providing an alternative to smaller banks to the full Basel 3.1 standards. The Group has been approved as an SDDT, and is making good progress in its preparations for transfer to the new regime. The Group has factored the anticipated requirements from the Basel 3.1 and SDDT regimes into its capital management; these transitions are not expected to materially impact the Group.

Strategic priorities

In 2023 we established four strategic priorities to guide the Group: simplify, leverage networks, enhance customer experience and enabled by technology. These priorities underpinned the medium-term targets for the Group first established in 2021. During 2025, we continued to make good progress against these.

Our commitment to simplification was most clearly demonstrated by the sale of our Consumer Vehicle Finance business, allowing capital deployment to be focused in higher performing businesses. Project Fusion, our cost optimisation programme, has concluded, delivering total annualised savings of c.£8 million¹ through changes to our organisational design, streamlining legacy operational processes and simplifying the Group. These efficiencies support the next phase of our growth ambitions. Across the Group, we have streamlined operations, including the consolidation of our office footprint which has generated cost savings and contributed to our climate commitments.

Our customers are at the core of what we do, and we continue to use our digital platforms to enhance customer experience. In December, we launched our upgraded Savings app, providing a more streamlined journey and additional capabilities for self-service. High‑quality client interactions remain core to our relationship‑led model in Business Finance, as evidenced by the consistently strong customer satisfaction scores in our internal surveys.

Leveraging our networks remains central to our business model. The depth of relationships we hold with retailers and other business partners, and customers across our markets enable growth. Our relationships with approximately 900 retail partners supported £1.5 billion (2024: £1.4 billion) of net lending across a diverse range of retailers, both in sector and size. This supported an increase in Retail Finance's market share of new business to 15.5%² (2024: 13.6%). In Business Finance, high levels of repeat business and client retention reflect the strength of our regional footprint and the relationships we build with local advisory teams to deliver bespoke solutions.

Technology has been a key enabler of our strategic objectives. The Retail Finance app has surpassed 475,000 registrations, offering a seamless customer experience and direct access to our full product suite. Integration of new platforms and partners has enhanced the Group's scalability and strengthened key controls. We have made continued progress in our digital-first approach, with over 99% of customers registered for online banking for Savings and over 91% opting for online account management in Retail Finance. This provides customers with greater control and a more efficient journey, enhancing their overall customer experience.

Notes:

1. £5.0 million cost savings relative to operating expenses for the 12 months ended December 2021. The additional £3.0 million savings (of the £8.0 million) are relative to annualised operating expenses for the six months ending 30 June 2024.

2. Source: Finance & Leasing Association ('FLA'): New business values within retail store and online credit: 2025: 15.5% (2024: 13.6%). FLA total and Retail Finance new business of £9,094.8m (2024: £9,476.6m) and £1,407.0m (2024: £1,289.7m) respectively. As published at 31 December 2025.

Regulatory and legal interventions

In October 2025, the FCA released a consultation paper on an industry-wide compensation scheme relating to motor finance commissions. The FCA is now working through an extensive range of responses to the consultation and has indicated it will publish redress scheme rules by the end of March 2026. The current proposed redress scheme is towards the extreme end of outcomes previously expected, however, these proposals are subject to consultation and therefore remain uncertain. As a result of the FCA proposals, the Group increased its provision for motor finance consumer redress and related costs by £16.4 million. As at 31 December 2025 we held a provision of £21.5 million (2024: £6.4 million. See Note 31 to the Financial Statements for further information).

To calculate the provision, we updated our range of probability-weighted scenarios, including a high probability of the FCA scheme being implemented as proposed. If the FCA scheme was implemented entirely in its current form, the Group would expect to increase the provision for redress by a further £6 million.

Following the FCA's review of Borrowers in Financial Difficulty ('BiFD') in 2023, 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. We have now completed this programme of work. During 2025 we have recognised an additional £2.1 million (2024: £1.5 million) charge, as an exceptional item, which largely relates to costs to manage and conclude the programme (See Note 8 to the Financial Statements).

As a result of the BiFD review, we had an elevated stock of defaulted Vehicle Finance loans at the end of 2024. During the year, we agreed several debt sales, which reduced the level of defaulted balances, and entered into a forward flow arrangement for newly terminated accounts.

Environmental, Social and Governance ('ESG')

Following a period of organisational transformation, we are reviewing our ESG strategy to ensure it aligns fully with our renewed strategic ambitions.

Our employees have worked hard to make 2025 an exceptional year for fundraising. The Group raised over £126,000 for important causes in the year (2024: £99,800) supporting our partners at Birmingham Children's Hospital, Tŷ Hafan, Mind, Go Beyond and Bone Cancer Research.

Building on our 2024 achievement of reducing direct CO2 emissions by 50% ahead of schedule, we implemented further reductions in 2025, through energy efficiency initiatives, further reducing our office footprint, and accelerating our paper-to-digital transition via enhanced self-service journeys in Retail Finance and Savings.

I am proud that we appear on the 2025 lists for Great Place to Work®, including accolades for UK Best Workplaces™ and UK Best Workplaces for Women™. However, 2025 was also a year of significant transition. The strategic decision to exit Vehicle Finance and then sell the Consumer Vehicle Finance business resulted in many roles being made redundant. With increased clarity on the timing of the forthcoming changes, the Group is committed to supporting all those who have been impacted. As a result, our employee engagement Trust Index score fell to 64% (2024: 74%) and we are taking actions to rebuild trust and engagement in 2026. I acknowledge the significant impact strategic decisions have had on all colleagues as we have navigated this period and thank all employees for their hard work and resilience.

Executive Committee and Senior Leadership

During the second half of 2025, there were several changes to what had been a relatively long-standing Executive team. Katie Docherty, former Chief Operating Officer ('COO'), left the Group after four years. I was pleased to welcome Jim Appleby, who has extensive experience in UK and international financial service operations, as COO.

Chris Harper, Chief Risk Officer ('CRO'), also left the Group after nearly five years of service. Uwe Seedorf has joined as Interim CRO, bringing a wealth of experience in risk leadership, including in his previous role as CRO at Allied Irish Bank UK.

Following the departure of Anne Mckenning, Vicki Baker joined the Group as Chief People Officer in February 2026. With over 20 years' experience in HR, transformation and strategy, Vicki brings valuable commercial insight and a strong people-first approach.

Finally, I was pleased that Rajat Mehta joined the Group as Savings Director, taking over from Julian Hartley, former Managing Director of Vehicle Finance and Savings, who left the Group in 2025. With over 20 years of leadership experience in retail banking, savings strategy and digital innovation, Rajat's expertise in delivering innovative solutions and driving growth will be invaluable.

I would like to thank Anne, Katie, Chris and Julian for their contribution and dedication to the success of the Group over several years. I am confident that the new additions to the Executive Committee and senior leadership mean we have the right leadership team in place to support delivery of the next phase of the Group's growth.

Outlook

Despite signs of improving confidence across our markets, we recognise that recent developments in global conflict bring heightened uncertainty, particularly their potential effects on inflation and interest rates. However, with a clear strategy, strong foundations, and a long term outlook, we remain well positioned to navigate these challenges and deliver sustained value for customers and shareholders. The conclusion of regulatory interventions into the motor finance sector would also provide much needed certaintyin 2026.

I am confident that the strategic decisions we have taken should enable the Group to begin building a track record as a sustainable high returning business. The Board and I believe that Secure Trust Bank is positioned for value creation and enhanced shareholder returns.

Key performance indicators

The following key performance indicators are the primary measures used by management to assess the performance of the Group.

Financial

Loans and advances to customers (£bn)

Why we measure this

Shows the growth in the Group's lending balances, which generate income

Common Equity Tier 1 ('CET 1') ratio (%)

Why we measure this

The CET 1 ratio demonstrates the Group's capital strength

Return on average equity (%)

Why we measure this

Measures the Group's ability to generate profit from the equity available to it

Cost to income ratio (%)

Why we measure this

Measures how efficiently the Group uses its cost base to produce income

Net interest margin (%)

Why we measure this

Shows the interest margin earned on the Group's lending balances, net of funding costs

Cost of risk (%)

Why we measure this

Measures how effectively the Group manages the credit risk of its lending portfolios

Non-financial

Customer Trustpilot ratings (Stars)2

Why we measure this

Indicator of customer satisfaction with the Group's products and services

Employee survey trust index score (%)

Why we measure this

Indicator of employee engagement and satisfaction

Environmental intensity indicator3

Why we measure this

Indicator of the Group's impact on the environment

Note:

1. Adjusted figures exclude exceptional items. For further information see Note 8 to the Financial Statements.

2. Mark out of 5 based on star rating from 11,220 reviews (2024: 15,527, 2023: 4,776)

3. Total Scope 1, 2 and certain Scope 3 emissions per £million Group operating income. See page 60 of the 2025 Annual Report and Accounts for further details

Certain key performance indicators represent alternative performance measures that are not defined or specified under International Financial Reporting Standards ('IFRS').

Definitions of the financial key performance indicators, their calculation and an explanation of the reasons for their use can be found in the Appendix to the 2025 Annual Report and Accounts.

All key performance indicators are presented on a continuing basis, unless otherwise stated.

Further information on discontinued operations are included in Note 10 to the Financial Statements. Further explanation of the financial key performance indicators is discussed in the narrative of the Financial review. Further explanation of the non-financial key performance indicators is provided in the Managing our business responsibly and Climate-related financial disclosures sections of the 2025 Annual Report and Accounts.

The Directors' Remuneration report in the 2025 Annual Report and Accounts, sets out how executive pay is linked to the assessment of key financial and non-financial performance indicators.

Financial review

Income statement

Certain key performance indicators and performance metrics represent alternative performance measures that are not defined or specified under International Financial Reporting Standards ('IFRS'). Definitions of these alternative performance measures, their calculation and an explanation of the reasons for their use can be found in the Appendix to the 2025 Annual Report and Accounts.

All key performance indicators are presented on a continuing basis, unless otherwise stated. Adjusted metrics exclude exceptional items. Further information on exceptional items are included in Note 8 of Financial Statements and discontinued operations are included in Note 10 to the Financial Statements.

The Directors' Remuneration report the 2025 Annual Report and Accounts, sets out how executive pay is linked to the assessment of key financial and non-financial performance metrics.

The Group achieved a continuing profit before tax of £59.3 million (2024: £59.4 million), maintaining a net interest margin ('NIM') of 4.7% (2024: 4.7%) with growth in lending balances of 8.1% to £3,295.8 million (2024: £3,050.2 million). 2025 saw a further improvement in effective cost management, achieving an adjusted cost income ratio of 45.2% (2024: 46.4%). Cost of risk increased to 1.0% (2024: 0.8%), with the Group being impacted by three specific cases within Business Finance. Common Equity Tier 1 ('CET 1') ratio at the end the year increased to 12.9% (2024: 12.3%).

Adjusted return on average equity decreased from 15.0% in 2024 to 14.3% in the year. Return on average equity decreased from 14.6% in 2024 to 14.3% in the year.

Adjusted earnings per share ('EPS') increased to 238.8 pence per share (2024: 233.5 pence per share). EPS increased to 238.8 pence per share (2024: 227.7 pence per share). Detailed disclosures of EPS are shown in Note 11 to the Financial Statements. The components of the Group's profit are analysed in more detail in the following sections.

Total adjusted profit before tax increased by 32.0% to £51.6 million (2024: £39.1 million). Total profit before tax decreased by £1.7 million to £27.5 million (2024: £29.2 million), being most significantly impacted by an exceptional item relating to an additional charge for the motor finance compensation scheme of £16.4 million (2024: £6.9 million) (see Note 31 to the Financial Statements for further information).

Continuing operations

Operating income

The Group's operating income increased by 6.2% to £165.2 million (2024: £155.5 million). Net interest income on the Group's lending assets continues to be the largest component of operating income. This increased by 10.1% to £151.1 million (2024: £137.3 million), driven by a growth in average lending balances of 9.5% to £3,184.3 million (2024: £2,908.4 million).

The Group's net interest margin was maintained at 4.7% (2024: 4.7%) by actively managing the reduction in gross yields in light of the reductions in the Bank of England Base Rate and lower cost of funds.

Other income, which relates to net fee and commission income, reduced by 22.5% to £14.1 million (2024: £18.2 million) due to lower one-off termination fees within Commercial Finance.

Impairment charge

Impairment charges increased by £8.2 million year on year resulting in the cost of risk for increasing to 1.0% (2024: 0.8%), which included the impact of higher impairments on a few specific cases within Business Finance.

The impairment charge within Retail Finance of £19.2 million, was £5.9 million higher than the prior year (2024: £13.3 million), however, 2024 included the impact of IFRS 9 model enhancements.

During the year, the Group refreshed macroeconomic inputs to its IFRS 9 Expected Credit Loss ('ECL') models, incorporating its external economic adviser's latest UK economic outlook. The forecast economic assumptions within each IFRS 9 scenario, and the weightings applied, are set out in more detail in Note 17 to the Financial Statements. The overall impact of the updates to macroeconomic inputs in 2025 was an additional impairment charge of £1.0 million (2024: £1.2 million release).

The Group has applied Expert Credit Judgements ('ECJs') overlays totalling £1.6 million (2024: £5.7 million underlay), where management believes the IFRS 9 modelled output is not accurately reflecting current risks in the loan portfolios. The most significant underlay of £2.7 million relates primarily to specific Commercial Finance cases, where the model does not reflect the full value of the security held. During 2025, the 2024 ECJ underlay relating to the Vehicle Finance lending portfolios LGD stage 1 and 2 recovery assumptions were incorporated into the IFRS 9 model (2024: £4.5 million).

Fair value gains on financial instruments

The Group has highly effective hedge accounting relationships, and, as a result, did not recognise a hedging ineffectiveness gain or loss in 2025 (2024: £0.1 million gain) and £0.5 million loss (2024: £0.6 million gain) relating to hedge accounting inception and amortisation adjustments (see Note 5 to the Financial Statements). The Group recognised a gain of £0.6 million (2024: £0.5 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.

Operating expenses

The cost base increased by £2.5 million to £74.7 million (2024: £72.2 million), having been impacted by the changes in senior leadership and increases in employers national insurance.

The adjusted cost to income ratio improved by 120 basis points to 45.2% (2024: 46.4%). Statutory cost income ratio was 45.2% (2024: 47.4%).

Exceptional items

Following an organisational redesign in 2024, £1.5 million was incurred for restructuring costs.

Discontinued operations

At the year-end, the Vehicle Finance business was classified as discontinued. Further information on the performance of the business can be found in the Business Review. Details of exceptional items relating to this activity are described below.

Exceptional items

The Group recognised charges for exceptional items of £24.1 million during the year, which all related to the Vehicle Finance business (2024: £9.9 million, of which £8.4 million related to the Vehicle Finance business).

In respect of the FCA's consultation on the motor finance redress scheme, a further charge of £16.4 million was recognised in the second half of the year as a consequence of the publication of the FCA's consultation paper. (2024: £6.9 million). Further information can be found in Note 31 to the Financial Statements.

Following the decision to exit the Vehicle Finance market in July, an organisation and business restructure was undertaken incurring a charge of £5.0 million, which included redundancy costs and the write-down of associated assets.

Further costs of £2.1 million, (2024: £1.5 million) were recognised in relation to the FCA's review of Borrower's in Financial Difficulty across the industry in 2023. These primarily related to costs to complete the programme of work.

In respect of the sale of the Consumer Vehicle Finance book announced in December 2025, £0.6 million of transaction costs were recognised, with the remainder of costs to be recognised in 2026.

Further details on all Exceptional items are included in Note 8 to the Financial Statements.

Taxation

The effective tax rate was 24.8% (2024: 26.9%), which was broadly in line with the statutory rate.

Distributions to shareholders

The Board recommended the payment of a final dividend for 2025 of 23.7 pence per share, which together with the interim dividend of 11.8 pence per share, represents a total dividend for the year of 35.5 pence per share (2024: 33.8 pence per share). This is in line with the Group's progressive dividend policy.

Summarised balance sheet

1. Vehicle Finance portfolio classified as 'Held for Sale' in 2025, and 'Loans and Advances to Customers' in 2024.

New business volumes

£2,526.2m

2024: £2,331.9m

Loans and advances to customers

£3,686.6m

2024: £3,608.5m

New business

2025 was another strong year for new business with new lending for continuing businesses of £2,145.5 million, up 20.6% year on year (2024: £1,779.0 million).

Business Finance increased by 50.9% to £738.5 million (2024: £489.3 million) with strong growth in both divisions. Retail Finance was 9.1% higher at £1,407.0 million (2024: £1,289.7 million) as the business continued to grow its retail distribution network and develop its strategic relationships.

Customer lending and deposits

Net lending from continuing operations grew by 8.1% to £3,295.8 million (2024: £3,050.2 million) with Retail Finance up by 8.0%, Real Estate Finance by 9.4% and Commercial Finance by 3.2%.

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 17 to the Financial Statements.

Customer deposits include Fixed-term bonds, ISAs, Notice and Access accounts. Customer deposits increased by 8.2% to £3,509.6 million (2024: £3,244.9 million) in order to fund the growth in lending. This growth in deposits has come from ISAs.

Investments and wholesale funding

The Bank of England Term Funding Scheme with additional incentives for SMEs ('TFSME') facility was fully paid off during 2025 (2024: £230.0 million) and the Group increased its drawings under sale and repurchase agreements to £201.2 million at 31 December 2025 (2024: £125.7 million).

Total funding ratio of 113.3% increased slightly from 31 December 2024 (112.4%).

Tier 2 subordinated liabilities

In the current and prior year Tier 2 subordinated liabilities comprise £90.0 million of 10.5-year 13.0% Fixed-Rate Callable Subordinated Notes, which qualify as Tier 2 capital.

Capital

Management of capital

Our capital management policy is focused on optimising shareholder value over the long term. Capital is allocated to achieve targeted risk adjusted returns whilst ensuring appropriate surpluses are held above the minimum regulatory requirements.

Key factors influencing the management of capital include:

Capital resources

Capital resources increased over the period from £415.7 million to £428.4 million. CET 1 capital increased by £13.4 million, primarily driven by a total profit for the period of £17.6 million, offset by the 2025 final dividend of £4.4 million.

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.

Capital requirements

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.

The total risk exposure decreased from £2,855.7 million to £2,827.5 million, as a consequence of a change in the balance sheet mix at the end of the year, which included the impact of the Vehicle Finance loan book being in run-off.

Liquidity

Management of liquidity

The Group uses a number of measures to manage liquidity risk. These include:

The Group was above the LCR minimum threshold (100%) throughout the year, with the Group's average LCR being 190.4% (2024: 219.6%) based on a rolling 12-month-end average.

Liquid assets

We continued to hold significant surplus liquidity over the minimum requirements throughout 2025, managing liquidity by holding HQLA and utilising funding (predominantly from retail funding) to support lending. Total liquid assets increased to £560.8 million (2024: £469.0 million). This includes the receipt of a deposit of £45.8 million as part of the sale of the Consumer Vehicle Finance business.

The Group has drawn £201.2 million under sale and repurchase agreements (2024: £125.0 million). The Group maintains access to the Bank of England's Sterling Monetary Framework, including a reserves account. Amounts drawn under the TFSME scheme were repaid during the year. The Group has no liquid asset exposures outside the United Kingdom and no amounts that are either past due or impaired.

We continue to attract customer deposits to support balance sheet growth. The composition of customer deposits is shown in the table below:

Business review

Consumer Finance

Retail Finance

We provide quick and easy finance options at the point of purchase.

Performance history

New business (£m)

Loans and advances to customers (£m)

Net interest margin (%)

Risk adjusted margin (%)

What we do

2025 performance

Note:

1. Source: Finance & Leasing Association ('FLA'): New business values within retail store and online credit: 2025: 15.5% (2024: 13.6%). FLA total and Retail Finance new business of £9,094.8m (2024: £9,476.6m) and £1,407.0m (2024: £1,289.7m). As published at 31 December 2025.

Business Finance

Real Estate Finance

We lend money against residential properties to professional landlords and property developers.

Performance history

New business (£m)

Loans and advances to customers (£m)

Net interest margin (%)

Risk adjusted margin (%)

What we do

2025 performance

Business Finance

Commercial Finance

Supporting the growth of UK businesses by providing flexible, asset-based financing solutions

Performance history

New business (£m)

Loans and advances to customers (£m)

Net revenue margin (%)

Risk adjusted margin (%)

What we do

2025 performance

Consumer Finance

Vehicle Finance

We provided quick and easy used car finance options at the point of purchase.

We ceased lending in the Vehicle Finance portfolio in July 2025 to improve returns at Group level.

In February 2026 we completed the sale of the Consumer Vehicle Finance business, reflecting an acceleration of our strategic plans.

Performance history

New business (£m)

Loans and advances to customers (£m)

Net interest margin (%)

Risk adjusted margin (%)

What we do

2025 performance

Savings

We look after our customers' savings and provide a competitive return.

Performance history

Total deposits (£m)

Total funds raised (£m)

2024 Total deposits (£m)

£3,244.9m

2025 Term deposits (£m)

£3,509.6m

What we do

2025 performance

Market review

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.

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.

Economic review

Growth in the UK economy, measured by real annual Gross Domestic Product ('GDP') was estimated at 1.3%1 in 2025 (2024: 1.1%). Following the Autumn Budget, and marginally more favourable economic forecasts than anticipated, analysts have adjusted UK growth estimates to 1.0%2 GDP growth in 2026 and 1.4%2 in 2027. This reflects an outlook that remains challenged, and slow underlying momentum. Global growth in 2026 is projected at 2.7%2, bolstered by China's strengthening fiscal outlook. However, global stability faces escalating geopolitical risks, from conflict in Iran and the wider Middle East, heightened international interventions and ongoing tariff‑related pressures by the US. Broader global conflicts further add to the overall uncertainty. The technology sector, led by AI, continues to serve as the fundamental engine for global investment and expansion. However, concerns in overvaluation of technology leaders and the complex relationships that exist in the supply chain could create waves in global markets, should a correction occur.

Inflation was higher than anticipated in 2025, ending the year at 3.4%1 (2024: 2.5%). Consequently, the Bank of England took a more measured approach to rate reductions than expected, reducing the Base Rate four times in 2025 to 3.75% by December. Inflation had been expected to gradually decline towards the Bank of England's 2% target, driven by anticipated falls in the prices of energy and food. However, the extent to which recent developments in the conflict in Iran and the wider Middle East may increase energy prices, and in turn add to inflationary pressures, remains uncertain. The timing and quantum of future interest rate cuts is currently hard to predict.

The rate of employment stood at 75.0%1 in December 2025 (2024: 74.9%), with unemployment rising to 5.2%1 (2024: 4.4%), its highest level since 2021. Vacancies continued to decline, ending the year at 0.7 million1 (2024: 0.8 million). Economists anticipate unemployment levels to rise further in 2026 due to higher employment cost pressures. Unemployment is expected to gradually ease towards 4%2 by 2032, more slowly than previously forecast.

Despite higher borrowing costs and subdued buyer confidence, the housing market remained resilient during 2025. House prices grew by 2.4%3, with modest growth improving buyer affordability. Lower interest rates and steady levels of mortgage approval levels through 2025, leads to optimism in the housing market for 2026.

The Autumn Budget delivered historic tax increases (albeit coming into effect from 2028 and beyond) to fund public spending and strengthen fiscal headroom. UK productivity is expected to remain subdued due to structural challenges. However, rising investment in AI, technology infrastructure and supply‑chain capabilities are expected to generate new opportunities for growth.

2025 was marked by uncertainty, and yet UK banks performed strongly, with robust earnings and share price gains across the sector. This resilience was further underlined by the reduction of required Tier 1 Capital by the Bank of England, from 14% to 13%. UK banks have continued to see net interest income trending upwards, although competition in the savings market has put pressure on banks to increase savings rates following reductions in the Base Rate. Large banks are also enjoying a tailwind from structural hedges than will unwind over coming years.

Consumer Finance

2025 was a year of adjustment for UK retail. With businesses navigating inflation, shifting customer expectations and tighter operating conditions, many found new ways to adapt. Retailers leaned into AI opportunities, sustainability initiatives, and more connected omnichannel journeys to maintain demand. Physical stores continued to evolve, focusing on immersive experiences that complement the growing popularity of online shopping.

Amidst this change, demand remained resilient. New business volumes rose 6%4 in the year to November, with several months delivering mid‑ to high‑single‑digit growth.

Business Finance

In 2025, UK businesses proved remarkably resilient in times of economic uncertainty. In Real Estate, rising construction and operational costs weighed on the sector and commercial businesses were sensitive to inflationary pressures and shifting fiscal policies.

Reflecting this resilience, new Buy‑to‑Let lending increased by 11%5 compared with 2024. Gross SME lending also maintained its upward trajectory through 2025, with higher lending in Q3 marking the seventh consecutive quarterly increase since early 20245. These trends indicate positive momentum across Business Finance heading into 2026.

Looking ahead to 2026, pressures will remain from rising labour costs and stretched household budgets. While confidence across Consumer and Business Finance markets had been strengthening, the evolving Middle East conflict creates uncertainty regarding upward inflationary pressure and subsequent interest rate movements. Technology and innovation will remain vital in helping retailers and businesses deliver smoother, more personalised experiences.

Notes:

1. Source: Office for National Statistics, data as at 31 December 2025, unless otherwise stated.

2. Source: Oxford Economics.

3. Source: UK Parliament House of Commons Library.

4. Source: FLA.

5. Source: UK Finance.

Government and regulatory

This has been another eventful year for Government and regulatory announcements that impact the Group and/or the markets in which it operates. The key announcements in the year are set out below.

Prudential regulation

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. It was later confirmed in October 2025 that the Interim Capital Regime was being revoked as the Small Domestic Deposit Takers ('SDDTs') implementation date would align to the Basel 3.1 effective date.

During the second half of 2025, the PRA issued a number of publications, providing clarity to the simplified capital regime and the near final proposals for SDDT firms. PS20/25 'The strong and simple framework: The simplified capital regime for Small Domestic Deposit Takers SDDTs near-final', confirmed no significant changes to the Pillar 1 capital treatment to the consultation proposals. The Policy Statement changed areas of the Pillar 2A capital and included details on the Pillar 2A lending adjustment. It also confirmed the single capital buffer under Pillar 2B and announced a reduction in frequency of Pillar 2A and Pillar 2B updates to every two years in line with the ICAAP and ILAAP document production for SDDTs. The final rules were published in January 2026, with limited further changes. The Group has assessed the changes announced and expect the impact to befairly neutral.

As part of the wider Basel 3.1 regulatory change and implementation of the SDDT regime, the Group has established a project with involvement from across the firm to ensure the Group is prepared for implementation on 1 January 2027.

On 1 October 2025, the requirements for Solvent Exit analysis came into force and the required analysis was approved by the Board in August 2025.

In November 2025 the PRA announced an increase to the FSCS protection limit from £85,000 to £120,000, effective from 1 December 2025, providing increased protection to our savers.

Conduct regulation

The FCA's consultation on motor finance commission redress was issued in October 2025. It is towards the extreme end of outcomes previously expected from the Supreme Court judgment. On 20 October, the Group updated the market that it had increased its motor finance redress commission provision as a result. The Group responded to the consultation on 5 December 2025 and also contributed to the FLA's response.

Operational readiness arrangements are being progressed in line with the FCA's expectations set out in their Dear CEO letter. The FCA issued its policy statement in December on changes to handling rules for motor finance complaints which fall outside the scope of the proposed redress scheme.

During the year, new rules were introduced by the UK Government to address concerns around "debanking" and policy statements were issued for a new FCA regulatory return for credit broking firms, the Appointed Representatives regime; changes to complaints data reporting requirements; changes to the interest rates applied to compensation awards issued by FOS; remuneration reform; and non-financial misconduct guidance. The FCA published outputs from initiatives focused on the Consumer Duty, and findings from their sustainable lending project.

There were consultations on reform of the Consumer Credit Act, Senior Managers and Certification Regime review, redress reform and the Financial Ombudsman Service case fees, and deferred payment credit regulation. The Data (Use and Access) Act 2025 came into force with the Information Commissioner's Office committing to publish guidance over the next year.

Outlook

The near-term environment remains challenged by global geopolitical tensions and macro uncertainty. Although the outlook had been improving for lower interest rates and household incomes, recent developments create uncertainty around how the economy will be impacted. UK growth is expected to be modest; however, we remain well positioned to deliver value for consumers through our product proposition and to navigate the evolving environment.

Principal risks and uncertainties

Risk management

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.

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.

Risk appetite

The Group has identified the risk drivers and major risk categories relevant to the business, which has enabled it to agree a suite of risk appetite statements and metrics to underpin the strategy of the Group. The Board approves the Group's risk appetite statements annually and these define the level and type of risk that the Group is prepared to accept in the pursuit of its strategic objectives.

Risk culture

A strong risk-aware culture is integral to the successful delivery of the Group's strategy and the effective management of risk.

The Group's risk culture is shaped by a range of factors including risk appetite, risk frameworks and policies, values and behaviours, as well as a clear tone from the top.

The Group looks to enhance continually its risk culture, and performs an annual assessment against standards based on industry best practice and guidance from the Institute of Risk Management.

Risk governance

The Group's approach to managing risk is defined within its Enterprise-Wide Risk Management Framework. This provides a clear risk taxonomy and an overarching framework for risk management supported by frameworks and policies for individual risk disciplines. These frameworks set the standards for risk identification, assessment, mitigation, monitoring and reporting.

The Group's risk management frameworks, policies and procedures are regularly reviewed and updated to reflect the evolving risks that the Group faces in its business activities. They support decision making across the Group and are designed to ensure that risks are appropriately managed and reported on via appropriate committees.

An Executive Risk Committee, chaired by the Chief Risk Officer, reviews key risk management information from across all risk disciplines, with material issues escalated to the Executive Committee and/or the Risk Committee of the Board, as required.

The Group operates a 'Three Lines of Defence' model for the management of its risks. The Three Lines of Defence, when taken together, control and manage risks in line with the Group's risk appetite. The three lines are:

Board and Board Committees

See Corporate Governance section of the 2025 Annual Report and Accounts.

Group Executive Committee

Chair: Chief Executive Officer

Provides executive oversight of the ongoing safe and profitable operation of the Group. It reports to the Board through theChief Executive Officer. Responsible for the execution of the strategy of the Group at the direction of the Chief Executive Officer.

Executive Risk Committee

Chair: Chief Risk Officer

Responsible for overseeing the Group's risk profile, its adherence to regulatory compliance and monitoring these against the risk appetite set by the Board. Monitors the effective implementation of the risk management framework across the Group.

Assets and Liabilities Committee ('ALCO')

Chair: Chief Financial Officer

Responsible for implementing and controlling the liquidity, and asset and liability management risk appetite of the Group, providing high-level control over the Group's balance sheet and associated risks.

Set out controls, capital deployment, treasury strategy guidelines and limits, and focuses on the effects of future plans and strategy on the Group's assets and liabilities.

Credit Risk Committees

Responsible for making decisions and providing oversight of credit scorecards, strategies and modelling.

Model Governance Committee

Responsible for understanding, challenging and assessing risk and appropriateness of statistical and financial models, to challenge model assumptions, and to provide oversight of model validation.

Customer and Conduct Risk Committee

Responsible for providing oversight of Operational delivery, conduct and all other non-financial risks.

Assumptions Committee

Responsible for approving assumptions that have a material impact on the Group's reporting and/or decision-making processes.

Principal risks

Executive management performs ongoing monitoring and assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity.

Further details of the principal risks and the changes to risk profile seen during the 2025 financial year are set below.

The Group also regularly reviews strategic and emerging risks and analysis has been included to detail output of these reviews for 2025. Notes 39 to 42 to the Financial Statements provide further analysis of credit, liquidity, market and capital risks. Emerging risks are identified in line with the Group's Enterprise‑Wide Risk Management Framework, using a 'top-down' approach with Group Executive workshops, and Board discussion, and a 'bottom-up' approach through the business unit Risk and Control Self-Assessment process.

Further details of the Group's risk management framework, including risk appetite, can be found on the Group's website: www.securetrustbank.com/riskmanagement

Strategic and emerging risks

The key strategic risk for the Group remains the macroeconomic, and to a certain extent the political, environment in the UK. The Group's operational footprint, lending exposures and funding sources are all in the UK, therefore, overall performance is influenced by the strength and performance of the UK economy.

Given the specialist nature of the Group's lending, it is not exposed across all areas and sectors of the UK economy. However, key areas such as consumer confidence and affordability, house prices, levels of economic activity impacting commercial and corporate profitability as well as business confidence will impact levels of demand for the Group's products and services. Which in turn influences performance of its credit portfolios and achievable returns.

Inflation and cost of living have proven elevated in 2025. Unemployment has started to rise again while economic activity reflected in GDP growth has remained subdued. While this has been counterbalanced by the Bank of England's reductions of Base Rate to now 3.75% the outlook for 2026 remains of cautious optimism at best. Further influences to be considered include the overall health of the UK economy: Geopolitical risks, US- Tariffs volatility, government policies, and indebtedness influencing mortgage rates and consumer behaviour.

Given the prudent approach taken by the Group towards credit risk, these factors are tracked closely through ongoing portfolio monitoring and required changes in lending parameters are undertaken on a proactive basis.

The Group monitors the look forward strategic risk via regular analysis of forecast economic data as part of its review of impairment assumptions and in its annual ICAAP and ILAAP processes. In addition to direct economic factors, the Group is also exposed to the general operating environment in the UK for a regulated business.

The Supreme Court judgment and the subsequent FCA consultation about the motor finance commissions redress scheme have been the subject of intense scrutiny. The Group believes it has reflected the risk in its provision. However, the impact of the final FCA decision, expected by the end of March 2026, needs to be reviewed once issued.

In addition to these specific industry events, the Group is also tracking the various consultation papers relating to regulatory change and engaging with industry bodies to provide input into proposed changes, as well as tracking potential impacts.

Viability and going concern

Going concern

In assessing the Group as a going concern, the Directors considered the factors likely to affect its future performance and development, recent regulatory announcements, the Group's financial position and the principal risks and uncertainties facing the Group, as set out in the Strategic Report. The Group uses various short and medium-term forecasts to monitor future capital and liquidity requirements, and these include stress-testing business planning assumptions to identify the headroom on regulatory compliance measures. The details of the forecasts and stress tests are explained in the Business viability section below.

Accordingly, the Directors conclude that the Company and the Group have adequate resources to continue in operational existence for a period of at least 12 months from the date of the approval of the Financial Statements and, therefore, it is appropriate to continue to adopt the going concern basis in preparing the accounts.

Business viability

In accordance with provision 31 of the UK Corporate Governance Code, the Directors have a reasonable expectation that the Company and the Group will be able to continue in operation and meet their liabilities as they fall due, for the period up to 31 December 2030. As the Group's financial planning horizon is five years, the Group considers a five-year period for its viability assessment.

The Directors are confident of the Group's viability over the longer term after considering all of the principal risks affecting the Group, including the following factors.

Furthermore, the Board considers that the circumstances required to cause the Group to fail, as demonstrated by its stress testing procedures, are sufficiently remote.

The Directors have based their assessment on the results of the following activities.

A summary of the different financial stresses are set out below:

ILAAP

The Group's 2025 ILAAP included idiosyncratic, market-wide and combined stress scenarios.

The idiosyncratic liquidity stress test assumed an operational incident within the deposits operations team leads to adverse media coverage across financial websites, newspapers and on TV. This leads to a short-term loss in customer confidence and makes it materially more challenging to retain maturing term bonds, higher notice being served and customers withdrawing Access deposits. The market-wide stress is based upon the UK economy entering a severe recession with rising unemployment and inflation, falling house and equity prices, subdued wage growth and a contraction in GDP, due to prolonged economic uncertainty. Higher customer default rates (in line with the Macro ICAAP stress) and the regulators decision to allow consumer customers to take payment holidays results in lower payment inflows. Completions on consumer contracts fall, while requests for refinancing from business customers also contracts in line with reduced economic activity. The combined stress includes elements of the idiosyncratic and market stresses, whereby the UK economy enters a severe recession, and the Group suffers outflows due to poor customer services at the same time.

A combined stress includes elements of the idiosyncratic and market stresses, whereby the UK economy enters a severe recession, and the Group suffers operational issues in the deposits function at the same time.

In addition, the ILAAP includes sensitivity analysis to model the impact of adverse variances in stress assumptions used in each of these scenarios.

Reverse stress test modelling was also performed to identify the type and severity of a stress required for the Group to no longer be able to meet its liquidity requirements. Three scenarios were assessed to consider the impact of: 1) an extreme retail deposits stress leading to higher attrition and inability to raise new deposits; 2) a significant reduction in lending inflows at the same time as a full utilisation of Commercial Finance facilities; and 3) the impact of Retail Finance loans becoming ineligible for use in supporting Bank of England liquidity schemes.

ICAAP

The Group's ICAAP considered a combined PRA-published macroeconomic stress and severe idiosyncratic losses to assess the adequacy of capital resources over the 2025 to 2029 period. The macroeconomic stress included an unemployment peak of 9.0% in Q1 2027, a 28.0% property price decline by Q4 2027, and an economic recovery beginning in 2028. However, unemployment and house prices were not assumed to return to pre-stress levels before the end of the five-year scenario. At no point under the stress were the Group's minimum capital requirements not met, and capital buffers held at the start of the stress were confirmed to be adequate.

Reverse stress test modelling was also performed to assess the level of stress required for the Group to no longer be able to meet its capital requirements. This required a significantly more severe scenario, including peak unemployment of 12.5%, a sharper decline in house prices to 45.9% and multiple concurrent idiosyncratic loss events occurring at the start of the scenario.

The ICAAP also used scenario modelling for elements of the Group's Pillar 2A capital assessment to support the assessment of operational risk and credit risk.

Recovery Plan

The Group's latest Recovery Plan confirmed that the Group has sufficient recovery options available to recover from the severe stress scenarios modelled over the 2025 to 2029 period.

The combined capital stress test included peak unemployment of 10.8%, a 36.8% decline in property prices and an increase in operational losses based on the ICAAP Pillar 2A scenario modelling.

The idiosyncratic liquidity stress test assumed a loss of confidence in the Group, resulting in a run on the bank with a rapid loss of Access and ISA deposits and significantly increased Notice account outflows. In addition, it was assumed that there would be a significant increase in requests to withdraw funds from fixed term bonds prior to the original maturity date.

At the same time, to reflect a layering of liquidity risks, lending outflows were increased due to higher levels of pipeline completion.

Solvent Exit Analysis

The first SEA prepared by the Group considers a theoretical combination of macro and idiosyncratic stresses that would take the Group to a point beyond the point of recovery, but would allow minimum regulatory capital to be maintained whilst an orderly wind-down of the business activities was undertaken with Retail Deposits returned to customers. The SEA considered financial and operational resources required to achieve an orderly exit. Quantitative and qualitative indicators were calibrated to ensure a Solvent Exit Plan is achievable on a timely basis.

In future years the SEA will be updated alongside the Recovery Plan.

Directors' responsibility statement

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Financial Statements for each financial year. Under that law, the Directors are required to prepare the Group Financial Statements in accordance with UK-adopted international accounting standards. The Financial Statements also comply with International Financial Reporting Standards ('IFRSs') as issued by the IASB. The Directors have also chosen to prepare the Parent Company Financial Statements under UK-adopted international accounting standards. Under company law, the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these Financial Statements, International Accounting Standard 1 requires that Directors:

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

Responsibility statement

Each of the Directors who are in office at the date of this report, and whose names and roles are listed on the Board leadership section of the 2025 Annual Report and Accounts, confirm that to the best of their knowledge:

Consolidated statement of comprehensive income

For the year ended 31 December 2025

Consolidated and Company statement of financial position

As at 31 December 2025

The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the parent company income statement. The profit for the parent company for the year of £14.6 million is presented in the Company statement of changes in equity.

Consolidated and Company statement of changes in equity

Consolidated statement of cash flows

For the year ended 31 December 2025

Interest received was £227.0 million (2024: £246.1 million) and interest paid was £65.2 million (2024: £70.6 million).

Company statement of cash flows

For the year ended 31 December 2025

Notes to the consolidated financial statements

1. Accounting policies

The material accounting policies applied in the preparation of these consolidated financial statements are set out below, and if applicable, directly under the relevant note to the consolidated financial statements. These policies have been consistently applied to all of the years presented, unless otherwise stated.

1.1. Reporting entity

Secure Trust Bank PLC is a public limited company incorporated in England and Wales in the United Kingdom (referred to as the 'Company') and is limited by shares. The Company is registered in England and Wales and has the registered number 00541132. The registered address of the Company is Yorke House, Arleston Way, Solihull B90 4LH. The consolidated financial statements of the Company as at, and for, the year ended 31 December 2025 comprise Secure Trust Bank PLC and its subsidiaries (together referred to as the 'Group' and individually as 'subsidiaries'). The Group is primarily involved in the provision of banking and financial services.

1.2. Basis of presentation

The figures shown for the year ended 31 December 2025 are not statutory accounts within the meaning of section 435 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2025 on which the auditors have given an unqualified audit report and did not contain an adverse statement under section 498(2) or 498(3) of the Companies Act 2006 will be delivered to the Registrar of Companies after the Annual General Meeting. The figures shown for the year ended 31 December 2024 are not statutory accounts. A copy of the statutory accounts has been delivered to the Registrar of Companies, which contained an unqualified audit report and did not contain an adverse statement under section 498(2) or 498(3) of the Companies Act 2006. This announcement has been agreed with the Company's auditors for release.

1.3. Consolidation

Subsidiaries

Subsidiaries are all investees controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee, and has the ability to affect those returns through its power over the investee. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition, excluding directly attributable costs, over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

The parent company's investments in subsidiaries are recorded at cost less, where appropriate, provision for impairment. The fair value of the underlying business of the Company's only material investment was significantly higher than carrying value, and, therefore, no impairment was required.

Intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated.

The accounting policies adopted by subsidiaries are generally consistent with those adopted by the Group with minor exceptions.

Subsidiaries are de-consolidated from the date that control ceases.

Discontinued operations

Discontinued operations are a component of an entity that has been disposed of and represents a major line of business and/or is part of a single co-ordinated disposal plan. For further information please see Note 10.

1.4. Financial assets and financial liabilities accounting policy

Financial assets (with the exception of derivative financial instruments) accounting policy

The Group classifies its financial assets at inception into three measurement categories; 'amortised cost', 'Fair Value Through Other Comprehensive Income' ('FVOCI') and 'Fair Value Through Profit or Loss' ('FVTPL'). A financial asset is measured at amortised cost if both the following conditions are met and it has not been designated as at FVTPL:

The Group's current business model for all financial assets, with the exception of derivative financial instruments, is to hold to collect contractual cash flows, and all assets held give rise to cash flows on specified dates that represent SPPI on the outstanding principal amount. All of the Group's financial assets are, therefore, currently classified as amortised cost, except for derivative financial instruments which are held at FVTPL. Loans are recognised when funds are advanced to customers and are carried at amortised cost using the Effective Interest Rate ('EIR') method.

A debt instrument would be measured at FVOCI only if both the below conditions are met and it has not been designated as FVTPL:

The Group currently has no financial instruments classified as FVOCI.

See below for further details of the business model assessment and the SPPI test.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in fair value in other comprehensive income. This election would be made on an investment-by-investment basis. The Group currently holds no such investments.

All other assets are classified as FVTPL.

Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Group changes its business model for managing financial assets. The Group has not reclassified any financial assets during the reporting period.

Assessment whether contractual cash flows are SPPI

For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the cost of funds and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are SPPI, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet the condition.

In making the assessment, the Group considers:

The SPPI assessment of loans with ESG-linked features ('green loans') is judgmental. These are loans where the interest cash flows are linked to certain ESG performance metrics and where analysis of the loans needs to be undertaken to assess whether the cash flows represent solely payments of principal and interest. In May 2024, the IASB issued amendments to IFRS 9 which included amendments impacting loans that contain ESG targets. The new requirements have been endorsed by the UK Endorsement Board and apply to accounting periods beginning on or after 1 January 2026. The Group has early adopted these requirements and as a result continues to hold these loans at amortised cost. Prior to the issue of the new amendments, including for the year ended 31 December 2024, the loans may have met the criteria to be recorded at fair value, however this would not have been material in the context of the overall value of loans and advances to customers.

Business model assessment

The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are classified as FVTPL because they are neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets.

Amortised cost measurement

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition, plus or minus the cumulative amortisation using the EIR, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument, minus any reduction for impairment.

Derecognition of financial assets

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where the Group has transferred substantially all of the risks and rewards of ownership or in the event of a substantial modification. There have not been any instances where assets have only been partially derecognised.

Modification of loans

A customer's account may be modified to assist customers who are in, or have recently overcome, financial difficulties and have demonstrated both the ability and willingness to meet the current or modified loan contractual payments. Substantial loan modifications result in the derecognition of the existing loan, and the recognition of a new loan at the new origination EIR based on the expected future cash flows at origination. Determination of the origination Probability of Default ('PD') for the new loan is required, based on the PD as at the date of the modification, which is used for the calculation of the impairment provision against the new loan. Any deferred fees or deferred interest, and any difference between the carrying value of the derecognised loan and the new loan, is written-off to the income statement on recognition of the new loan.

Where the modification is not considered to be substantial, neither the origination EIR nor the origination probability of default for the modified loan changes. The net present value of changes to the future contractual cash flows adjusts the carrying amount of the original asset with the difference immediately being recognised in profit or loss. The adjusted carrying amount is then amortised over the remaining term of the modified loan using the original EIR.

Financial liabilities (with the exception of derivative financial instruments)

The Group classifies its financial liabilities as measured at amortised cost. Such financial liabilities are recognised when cash is received from depositors and carried at amortised cost using the EIR method. Financial liabilities are derecognised when they are extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires).

Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are not offset in the consolidated financial statements unless the Group has both a legally enforceable right and intention to offset.

1.5. Foreign currencies

Transactions in foreign currencies are initially recorded at the rates of exchange prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated into the Company's functional currency at the rates prevailing on the consolidated statement of financial position date. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement for the period.

2. Critical accounting judgements and key sources of estimation uncertainty

2.1. Judgements

No critical judgements have been identified.

2.2. Key sources of estimation uncertainty

Estimations that could have a material impact on the Group's financial results, and, are therefore, considered to be key sources of estimation uncertainty. Key sources of estimation can be found in:

3. Operating segments

The Group is organised into four operating segments, which consist of the different products available, as disclosed below.

Consumer Finance

Business Finance

Other

This principally includes interest receivable from central banks, interest receivable and payable on derivatives and interest payable on deposits from customers, amounts due to banks and subordinated liabilities, and operating expenses, which are not recharged to the operating segments.

The Group's chief operating decision maker, the Executive Committee, regularly reviews these segments by looking at the operating income, size of the loan books and impairments.

Interest expense is charged to the operating segments in accordance with the Group's internal funds transfer pricing policy. Operating expenses reflect costs incurred directly, and costs incurred centrally that are reallocated to the operating segment to which they can be directly attributed.

Additionally, no balance sheet items are allocated to segments other than loans and advances to customers.

All of the Group's operations are conducted wholly within the United Kingdom and geographical information is, therefore, not presented.

Exceptional items have been reallocated out to the respective operating segments for prior year to aid comparability.

4. Operating income

All items below arise from financial instruments measured at amortised cost unless otherwise stated.

4.1. Net interest income

Interest income and expense accounting policy

For all financial instruments measured at amortised cost, the EIR method is used to measure the carrying value and allocate interest income or expense. The EIR is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

In calculating the EIR for financial instruments, other than assets that were credit impaired on initial recognition, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, early redemption penalty charges and broker commissions) and anticipated customer behaviour but does not consider future credit losses.

The calculation of the EIR includes all fees received and paid that are an integral part of the loan, transaction costs and all other premiums or discounts. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial instrument.

For financial assets that are not considered to be credit-impaired ('Stage 1' and 'Stage 2' assets), interest income is recognised by applying the EIR to the gross carrying amount of the financial asset. For financial assets that become credit-impaired subsequent to initial recognition ('Stage 3' assets), from the next reporting period onwards interest income is recognised by applying the EIR to the amortised cost of the financial asset. The credit risk of financial assets that become credit-impaired are not expected to improve such that they are no longer considered credit-impaired, however, if this were to occur, the calculation of interest income would revert back to the gross basis. The Group's definition of Stage 1, Stage 2 and Stage 3 assets is set out in Note 17.

For financial assets that were credit-impaired on initial recognition ('POCI' assets), income is calculated by applying the credit adjusted EIR to the amortised cost of the asset. Collection activity costs are not included in the amortised cost of the assets, but are included in operating expenses in the income statement, and are recognised as incurred, in common with other businesses in the sector. For such financial assets the calculation of interest income will never revert to a gross basis, even if the credit risk of the asset improves.

Further details regarding when an asset becomes credit-impaired subsequent to initial recognition is provided within Note 17.

4.2. Net fee and commission income

Fees and commission income is all recognised under IFRS 15 Revenue from contracts to customers and consists principally of the following:

Fee and commission accounting policy

Fees and commission income that is not considered an integral part of the EIR of a financial instrument are recognised under IFRS 15 when the Group satisfies performance obligations by transferring promised services to customers and presented in the income statement as fee and commission income. All of the Group's fees and commissions relate to performance obligations that are recognised at a point in time.

Fees and commission income and expenses that are an integral part of the EIR of a financial instrument are included in the EIR and presented in the income statement as interest income or expense.

No significant judgements are made in evaluating when a customer obtains control of promised goods or services.

5. Fair value gains on financial instruments

Note:

1. The inception and amortisation adjustment relates to amortisation of macro fair value hedge accounting relationships derecognised and the amortisation of the fair value adjustment of underlying hedged items at the time hedge accounting relationships commenced or were redesignated. Over the life of the hedged items these adjustments are expected to off-set gains/losses on derivatives taken for hedging purposes before and after they are designated in hedge relationships.

As a part of its risk management strategy, the Group uses derivatives to economically hedge financial assets and liabilities. For further information on the Group's risk management strategy for market risk see the Group's Strategic Report in the 2025 Annual Report and Accounts.

Hedge accounting is employed by the Group to minimise the accounting volatility associated with the change in fair value of derivative financial instruments. This volatility does not reflect the economic reality of the Group's hedging strategy, the Group only uses derivatives for the hedging of risks.

5.1. Fair value gain recognised in other comprehensive income

Although the Group uses interest rate derivatives exclusively to hedge interest rate risk exposures, income statement volatility can still arise due to hedge accounting ineffectiveness or because hedge accounting is not achievable. Where such volatility arises, it will net to zero over the life of the hedging relationship. All derivatives held by the Group have been highly effective in the year, resulting in minimal hedge accounting ineffectiveness recognised in the income statement. Future ineffectiveness may arise as a result of:

How fair value and cash flow hedge accounting affect the consolidated financial statements and the main sources of the residual hedge ineffectiveness remaining in the income statement are set out as follows. Further information on the current derivative portfolio and the allocation to hedge accounting types is included in Note 18.

Derivative financial instruments accounting policy

The Group enters into derivatives to manage exposures to fluctuations in interest rates. Derivatives are not used for speculative purposes. Derivatives are carried at fair value, with movements in fair value recognised in the income statement or other comprehensive income. Derivatives are valued by discounted cash flow models using yield curves based on Overnight Indexed Swap ('OIS') rates. Derivatives are carried as assets where fair value is positive and as liabilities when fair value is negative where they are not offset. Derivatives are offset in the consolidated financial statements where the Group has both a legally enforceable right and intention to offset.

The Group does not hold contracts containing embedded derivatives.

Where cash collateral is received, to mitigate the risk inherent in the amounts due to the Group, it is included as a liability within the due to banks line within the statement of financial position. Where cash collateral is given, to mitigate the risk inherent in amounts due from the Group, it is included as an asset in the loans and advances to banks line within the statement of financial position. Where cash collateral meets the requirements of offsetting, it is included within derivatives.

Hedge accounting

Following the implementation of IFRS 9, the Group elected to apply IAS 39 for all of its hedge accounting requirements. When transactions meet specified criteria the Group can apply two types of hedge accounting:

The Group does not have hedges of net investments.

At inception of a hedge, the Group formally documents the relationship between the hedged items and hedging instruments, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values of the hedged items (i.e. the fair value offset between the hedged item and hedging instrument is within the 80-125% range).

When the European Union adopted IAS 39 in 2004, it removed certain hedge accounting requirements, commonly referred to as the EU carve-out. The relaxed requirements under the carve-out allow the Group to apply the 'bottom up' method when calculating macro‑hedge ineffectiveness. This option is not allowed under full IFRS. The Group has applied this carve-out, which is permitted under UK-adopted IAS 39, accordingly.

Fair value hedge accounting

Fair value hedge accounting results in the carrying value of the hedged item being adjusted to reflect changes in fair value attributable to the hedged risk, thereby offsetting the effect of the related movement in the fair value of the derivative. Changes in the fair value of derivatives and hedged items that are designated and qualify as fair value hedges are recorded in the income statement.

In a one-to-one hedging relationship, in which a single derivative hedges a single hedged item, the carrying value of the underlying asset or liability (the hedged item) is adjusted for the hedged risk to offset the fair value movement of the related derivative. In the case of a portfolio hedge, an adjustment is included in the fair value adjustments for portfolio hedged risk line in the statement of financial position to offset the fair value movements in the related derivative. The Group currently only designates portfolio hedges.

If the hedge no longer meets the criteria for hedge accounting, expires or is terminated, the cumulative fair value adjustment to the carrying amount of a hedged item is amortised to the income statement over the period to maturity of the previously designated hedge relationship and recorded as net interest income. If the underlying item is sold or repaid, the unamortised fair value adjustment is immediately recognised in the income statement.

Cash flow hedge accounting

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other comprehensive income and presented in the cash flow hedge reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in the income statement. Amounts recognised in the cash flow hedge reserve are subsequently reclassified to the income statement when the underlying asset or liability being hedged impacts the income statement, for example, when interest payments are recognised, and are recorded in the same income statement line in which the income or expense associated with the related hedged item is reported.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised in the periods when the hedged item affects the income statement. When a forecast transaction is no longer expected to occur (for example, the recognised hedged item is disposed of), the cumulative gain or loss previously recognised in other comprehensive income is immediately reclassified to the income statement.

The cash flow hedge reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective in cash flow hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in profit or loss only when the hedged transaction impacts the profit or loss, or is included directly in the initial cost or other carrying amount of the hedged non-financial items (basis adjustment).

6. Operating expenses

Post-retirement obligations accounting policy

The Group contributes to defined contribution schemes for the benefit of certain employees. The schemes are funded through payments to insurance companies or trustee-administered funds at the contribution rates agreed with individual employees. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due. There are no post-retirement benefits other than pensions.

Remuneration of the Auditor and its associates, excluding VAT, was as follows:

Other assurance services related to the interim independent review report and profit certifications (2024: interim independent review report and profit certification).

7. Average number of employees

8. Exceptional items

Costs associated with these activities are outside the normal course of business and are treated as exceptional.

Motor Finance commissions

During 2025, the Group updated its range of probability weighted scenarios resulting in estimated costs of £16.4 million (2024: £6.9 million, of which £6.4 million was recognised as a provision) following the release of the FCA's consultation paper in October 2025. Further details about the provision can be found in Note 31.

Borrowers in Financial Difficulty ('BiFD') Vehicle Finance collections review

As previously described, following the FCA's review of BiFD across the industry and, in response to the specific feedback we received on our own collections activities, we incurred costs relating to implementing enhanced processes, procedures and policies in our Vehicle Finance collections operations of £2.1 million (2024: £1.5 million). This work has now been completed.

Exit from Vehicle Finance business

In July 2025, the Group announced the decision to cease lending in the Vehicle Finance business. Exceptional costs arising in relation to this decision include redundancy costs, write down of the value of Cloud software development costs and costs in respect of onerous contracts.

Sale of Consumer Vehicle Finance business

In respect of the sale of the Consumer Vehicle Finance business announced in December 2025, £0.6 million of transaction costs were recognised, with the remainder of costs to be recognised in 2026. 

Organisational redesign

During 2024, the Group undertook an organisational redesign where product-specific teams were amalgamated under a single management structure resulting in the Group incurring redundancy costs of £1.5 million.

Income tax on exceptional items

Income tax on exceptional items amount to £2.9 million credit (2024: £1.0 million credit).

Exceptional items accounting policy

Exceptional items are expenses that do not relate to the Group's core activities, which are material in the context of the Group's performance.

9. Income tax expense

The tax has been calculated at the current statutory rate, which is 25.0% for the year ended 31 December 2025 (2024: 25.0%).

Income tax accounting policy

Current income tax, which is payable on taxable profits, is recognised as an expense in the period in which the profits arise.

Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

The Group is currently outside the scope of Pillar 2 (for tax purposes).

10. Discontinued operations

On 24 December 2025, the Group announced the sale of the Consumer Vehicle Finance business, which represents the majority of the Vehicle Finance business. This meets the criteria, under IFRS 5 Non‑current Assets held for sale and discontinued operations, to be classified as held for sale and disclosed as a discontinued operation. The consolidated statement of comprehensive income and Note 3 Operating segments presents the information required to be disclosed under IFRS 5 including:

As at 31 December 2025, a net cash inflow from operating activities of £45.8 million in relation to the sale of the Consumer Vehicle Finance business was attributed to discontinued operations.

IFRS 5 measurement requires that assets that meet the criteria to be classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. This results in no change to the year end valuation at 31 December 2025 as the purchase price exceeded the carrying value.

11. Earnings per ordinary share

11.1. Basic

Basic earnings per ordinary share are calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of ordinary shares as follows:

11.2. Diluted

Diluted earnings per ordinary share are calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the year, as noted above, as well as the number of dilutive share options in issue during the year, as follows: