Secure Trust Bank exits new lending in vehicle finance
The move comes as the motor finance industry faces scrutiny over commission disclosure practices in the UK.
Secure Trust Bank said its decision is expected to impact its financial results positively.
The bank plans to place its existing vehicle finance book, valued at £558.3m ($761.6m) as of December 2024, into run-off.
The vehicle finance segment generated a company loss before tax of £21.8m in FY24.
On an unaudited pro forma basis, the group anticipates an increase in adjusted profit before tax to £56.6m from £39.1m.
Additionally, the group expects an estimated 800 basis points increase in return on average equity (ROAE) before reinvesting the released capital from the motor finance business.
Secure Trust Bank said it will continue to support its existing customers and loan portfolio in vehicle finance.
As of 30 June 2025, the average consumer loan length outstanding was 37 months, with the longest contractual loan agreement being 60 months.
The unit accounted for approximately 30% of the group's adjusted operating costs in FY24, and the bank plans to save more than £25m of operating costs by 2030.
Secure Trust Bank stated it would consult with impacted colleagues, with 284 roles at risk by 2030, including 78 roles at risk in FY25.
Restructuring costs of approximately £5m are anticipated.
Vehicle finance will be reported as a non-core activity in the FY25 results and beyond.
A further update will be provided in the group's interim results for the six months ended 30 June 2025, due to release on 14 August 2025.
Secure Trust Bank CEO David McCreadie said: 'We have made the difficult decision to stop new lending in vehicle finance, our lowest-return business line, and to redeploy capital to our three higher-returning businesses of retail finance, real estate finance and commercial finance.
"This pivot will allow the group to prioritise these established specialist businesses and achieve further simplification of the group, combined with the removal of a significant level of costs. These measures will have a material positive impact on ROAE for the group and will position the group to be capital accretive."
According to the Finance and Leasing Association, the consumer new car finance market fell 7% in terms of new business value and 8% in volumes in April 2025 compared to April 2024.
However, new business volumes in the new consumer car finance market were up by 11% in the first four months of 2025 compared to the same period in 2024.
In contrast, the consumer used car finance market saw a 4% decrease in new business value in April 2025 while volumes grew by 2%.
"Secure Trust Bank exits new lending in vehicle finance" was originally created and published by Motor Finance Online, a GlobalData owned brand.
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