Helping more
consumers and
businesses
fulfil
their ambitions
Annual Report & Accounts 2025
In this report
Financial highlights
Strategic Report
About us
1
2025 Highlights
2
Group at a glance
4
Chair’s statement
7
Chief Executive’s statement
9
Key Performance Indicators
13
Financial review
14
Business review
20
Market review
28
Principal risks and uncertainties
30
Viability and going concern
40
Managing our business responsibly
42
Engaging with our stakeholders
42
Environmental, Social and
Governance strategy
45
Climate-related financial disclosures
54
Non-financial and sustainability
information statement
66
Corporate Governance
Governance at a glance
68
Chair’s introduction
70
Board leadership
72
Governance framework
75
Corporate Governance report
76
Nomination Committee report
83
Audit Committee report
86
Risk Committee report
93
Directors’ Remuneration Report
97
Proposed Directors’
Remuneration Policy
116
Directors’ report
128
Directors’ responsibility statement
134
Independent Auditor’s report to the
members of Secure Trust Bank PLC
135
Financial Statements
Consolidated statement of
comprehensive income
146
Consolidated and Company statement
of financial position
147
Consolidated and Company statement
of changes in equity
148
Consolidated statement of cash flows
149
Company statement of cash flows
150
Notes to the consolidated
financial statements
151
Five-year summary (unaudited)
195
Appendix to the Annual Report
(unaudited)
196
Other Information
Glossary
200
Corporate contacts and advisers
202
Pages 1 to 67 form the Strategic Report. It includes our marketreview, strategy, financial review
and a business review for each of the lines of business. Pages 128 to 133 form the Directors’ report.
All key performance indicators are presented on a continuing basis, unless otherwise stated.
Further information on discontinued operations is included in Note 10 to the Financial Statements.
Adjusted metrics exclude exceptional items. Further information on exceptional items are included
in Note 8 to the Financial Statements.
Cost income ratio
45.2%
2024: 47.4%
Customer lending
£3.3bn
2024: £3.1bn
New business
£2.1bn
2024: £1.8bn
Customer deposits
£3.5bn
2024: £3.2 billion
Continuing profit before tax
£59.3m
2024: £59.4m
Return on average equity
14.3%
2024: 14.6%
Total profit before tax
£27.5m
2024: £29.2m
Common Equity Tier 1 ratio
12.9%
2024: 12.3%
About us
We are an award-winning
UK specialist lender,
providing savings accounts
and lending services to
1.5 million customers.
Our purpose is to help more consumers
and businesses fulfil their ambitions
and our vision is to be the most trusted
specialist lender in the UK.
We have been helping consumers
and businesses fulfil their ambitions
for over 70 years.
Find out more about
us on our website:
securetrustbank.com
Secure Trust Bank PLC Annual Report & Accounts 2025
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Other Information
Retail Finance
Over 475k
customers registered with
the Retail Finance V12 app
Find out more about Retail Finance
on pages 20 and 21.
Real Estate Finance
£1.5bn
loans and advances to customers
Find out more about Real Estate
Finance on pages 22 and 23.
2025 highlights
Our progress
in 2025
In 2025, we moved forward in our mission
to help consumers and businesses turn
ambition into reality. We streamlined
the business, made significant strategic
decisions, and remained committed to
serving our customers.
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Customer deposits
£3.5bn
supporting lending growth
in our continuing businesses
Find out more about Savings
on page 27.
2025 highlights
continued
Digital-first approach
Over 99%
of Savings customers banking online, and new
mobile app will enhance customer experience
Find out more about Savings
on page 27.
Commercial Finance
172%
new business volume growth
Find out more about Commercial
Finance on pages 24 and 25.
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Other Information
Our strengths
Specialist
Expert
Diverse
Ambitious
Our vision
To be the most
trusted specialist
lender in the UK
Our purpose
To help more
consumers and
businesses fulfil
their ambitions
Group at a glance
Our strategy
In 2025 we undertook a strategic review to ensure the Group is positioned for long-term, sustainable
growth. This work assessed our markets, capabilities and operating model, and informs a refreshed set
of strategic priorities to be introduced in 2026.
Please see our 2025 investor presentation at
www.securetrustbank.com/investor-relations
Our values
Customer
Focused
Risk
Aware
Future
Orientated
Teamwork
Ownership
Performance
Driven
Our 2025 strategic priorities
Optimising for growth
Simplify
Focus on core business units and use technology to deliver
efficiency and better operational processes
Enhance customer experience
Improve the customer journey to increase retention and attract
new customers to gain market share
Leverage networks
Take advantage of our strong partnerships with introducers
to drive growth
Enabled by technology
Take advantage of recent investments within our technology
platforms to automate processes and streamline and enhance
customer experience for our business partners via integration and for
our end customers through self-service
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Group at a glance
continued
Our business model
Our strengths
1. Specialist
Focus on attractive returns
in our continuing markets
2. Expert
Strong market expertise,
relationships and
digital capabilities
3. Diverse
Diverse portfolios in
consumer and
business lending
4. Ambitious
Clear opportunities for
growth and strategy for
long-term value creation
Underpinned by
our values
How we do it
2025 in numbers
£3.8 billion total funding
£3,510m
Wholesale
funding
Deposits from
customers
£200m
Tier 2
debt
£90m
£3.3 billion continuing
£0.4 billion discontinued
Retail
Finance
£1,467m
Real Estate
Finance
£1,467m
Commercial
Finance
£362m
Vehicle
Finance*
£391m
Customers
Shareholders
and investors
Employees
Business
partners
Regulators
Communities
and society
Delivering value for stakeholders
Note:
*
Secure Trust Bank ceased new lending in Vehicle Finance in July 2025 and completed the sale of the Consumer Vehicle Finance business in February 2026.
Vehicle Finance*
We provided quick and easy
used car finance options at the
point of purchase
Retail Finance
We provide quick and easy finance
options at the point of purchase.
We earn interest and
fee income
Refer to pages 20 and 21.
Real Estate Finance
We lend money against residential
properties to professional landlords
and property developers.
Commercial Finance
Supporting the growth of UK
businesses by providing flexible,
asset-based financing solutions
We earn interest and
fee income
Refer to pages 22 to 25.
What we do
Consumer Finance
Business Finance
Wholesale funding
and investors
We utilise our balance sheet to raise
secured wholesale funds.
We raise and retain capital to
support the growth of our
balance sheet.
We pay interest to investors
and dividends to shareholders
Refer to page 17.
Savings
We offer a full range of customer
savings products including
Access Accounts, Fixed Term
Bonds and ISAs.
We pay interest to
our customers
Refer to page 27.
Loans and advances to customers
Refer to page 26.
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Other Information
Group at a glance
continued
Our strategic progress against 2025 priorities
Enhance customer experience
1. Improved speed of credit decisions:
90% of Retail
Finance applications auto-decisioned in 6 seconds
(2024: 6 seconds)
2. Upgraded user experience through digital
applications:
New Savings app launched in December
streamlines the customer journey and enhances
digital capabilities
3. Sustained client satisfaction:
Internal surveys recorded
strong scores across Business Finance, and Retail Finance
and Savings Trustpilot score maintained at 4.8 stars
2
(2024: 4.8)
Leverage networks
1. Sustained strong growth in new business lending:
Supported by high levels of client retention and repeat
business in Business Finance, and depth of relationships
in Retail Finance
2. Breadth of partnerships:
Partnering with c.900
retailers across thousands of outlets to drive £1.5 billion
of net lending in Retail Finance
3. Increased market reach:
Strong network of partners
and retailers achieved 8.1% growth in Business Finance
and new business market share of 15.5%
3
in Retail Finance
Simplify
1. Streamlined Group:
Accelerated exit of Vehicle Finance
business has focused capital deployment on higher
returning businesses
2. Delivered cost efficiencies:
Project Fusion, our cost
optimisation programme has delivered c. £8 million
1
of
annualised savings
3. Workplace optimisation:
Consolidation of office
spaces, driving operational efficiencies and contributing
to our ESG strategy
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’s statement from page 11.
Enabled by technology
Digital-first operating model:
Over 99% customers
registered for online banking in Savings and over 91%
opting for online account management in Retail Finance
New platforms and partners in Retail Finance:
Integration of additional platforms and partners has
enhanced the Group’s scalability and strengthened
key controls
Seamless customer experience:
Over 475,000
customers registered for the Retail Finance V12 app,
where they are able to access the full product
suite available
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.
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Other Information
Chair’s statement
Strategic change to
strengthen our business
Note:
1. Adjusted metrics exclude exceptional items of
£24.1 million (2024: £9.9 million). Details can
be found in Note 8 to the Financial Statements.
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
Adjusted
1
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,
“We are confident that the strategic decisions
taken will support the sustainable growth of our
business, deliver improved performance and
increased return on equity.”
Jim Brown
Chair
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Other Information
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, adjusted
1
return on average
equity was 10.4% (2024: 8.0%); however, if the
legacy Vehicle Finance business is excluded,
the adjusted
1
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
on page 12). 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.
Jim Brown
Chair
11 March 2026
Chair’s statement
continued
Common Equity Tier 1 ratio
12.9%
2024: 12.3%
Adjusted
1
return on average equity
10.4%
2024: 8.0%
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.
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Other Information
“The progress made positions us for stronger
financial performance and enhanced long-term
value creation.”
Ian Corfield
Chief Executive
Strategic actions taken to provide
foundations for higher sustainable returns
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 of
the 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.
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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.
Loans and advances to customers
£3.3bn
2024: £3.1bn
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, adjusted
1
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.
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.
Chief Executive’s statement
continued
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.
Return on average equity
14.3%
2024: 14.6%
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Other Information
Chief Executive’s statement
continued
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.
Regulatory and legal interventions
In October 2025, the FCA released a
consultation paper on an industry-wide
compensation scheme relating to motor
finance commissions.
New strategic priorities launched
for 2026 and beyond
Our Investor Update event will outline our refreshed strategic ambitions:
New medium-term targets:
c.10%
Annual growth in continuing businesses
>16%
Return on Average Equity
Product
expansion
Driving growth through
diversification of
product offering
Capital
discipline
Capital allocation
decisions informed by
business credit expertise
and date insights
Effective
digital solutions
Scalable, flexible
technology enables
efficiencies, widens
distribution and
enhances customer
journey
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.
Secure Trust Bank PLC Annual Report & Accounts 2025
11
Strategic Report
Corporate Governance
Financial Statements
Other Information
Chief Executive’s statement
continued
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,
T
^
y Hafan, Mind, Go Beyond and Bone
Cancer Research.
Building on our 2024 achievement of reducing
direct CO
2
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 certainty in 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.
Ian Corfield
Chief Executive
11 March 2026
Secure Trust Bank PLC Annual Report & Accounts 2025
12
Strategic Report
Corporate Governance
Financial Statements
Other Information
Key performance indicators
The following key performance indicators are the primary measures used by management to assess the performance of the Group.
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 Annual Report on pages 196
to 199.
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 on pages 14 to
19. Further explanation of the non-financial key
performance indicators is provided in the
Managing our business responsibly (pages 45
to 53) and Climate-related financial disclosures
(pages 54 to 65) sections.
The Directors’ Remuneration report, starting
on page 97, sets out how executive pay is
linked to the assessment of key financial
and non-financial performance indicators.
Financial
Non-financial
Why we measure this
Shows the growth in the Group’s lending
balances, which generate income
Why we measure this
Indicator of customer satisfaction with
the Group’s products and services
Why we measure this
Measures the Group’s ability to generate
profit from the equity available to it
Why we measure this
Indicator of employee engagement
and satisfaction
Why we measure this
Shows the interest margin earned on the
Group’s lending balances, net of funding costs
Why we measure this
Indicator of the Group’s impact
on the environment
Loans and advances to customers
(£bn)
202
3
202
4
202
5
2.8
3.1
3.3
Customer Trustpilot ratings
(Stars)
1
202
3
202
4
202
5
4.8
4.8
4.8
Employee survey trust index score
(%)
202
3
202
4
202
5
83.0
74.0
64.0
Net interest margin
(%)
202
3
202
4
202
5
4.6
4.7
4.7
Environmental intensity indicator
2
202
3
202
4
202
5
2.0
1.5
1.2
Common Equity Tier 1 (‘CET 1’) ratio
(%)
202
3
202
4
202
5
12.7
12.3
12.9
Cost of risk
(%)
202
3
202
4
202
5
1.1
0.8
1.0
Why we measure this
The CET 1 ratio demonstrates
the Group’s capital strength
Why we measure this
Measures how efficiently the Group uses its
cost base to produce income
Why we measure this
Measures how effectively the Group manages
the credit risk of its lending portfolios
Return on average equity
(%)
202
3
202
4
202
5
10.0
10.6
14.6
15.0
14.3
14.3
Adjusted figures exclude exceptional items.
For further information see Note 8 to the
Financial Statements.
Cost to income ratio
(%)
202
3
202
4
202
5
51.5
46.4
45.2
45.2
47.4
52.8
Notes:
1. Mark out of 5 based on star rating from 11,220
reviews (2024: 15,527, 2023: 4,776).
2. Total Scope 1, 2 and certain Scope 3 emissions per
£million Group operating income. See page 60 for
further details.
Secure Trust Bank PLC Annual Report & Accounts 2025
13
Strategic Report
Corporate Governance
Financial Statements
Other Information
Financial review
2025
2024
Continuing
£million
Discontinued
£million
Total
Group
£million
Continuing
£million
Discontinued
£million
Total
Group
£million
Interest income
301.8
70.2
372.0
296.8
69.2
366.0
Interest expense
(150.7)
(22.7)
(173.4)
(159.5)
(21.6)
(181.1)
Net interest income
151.1
47.5
198.6
137.3
47.6
184.9
Net fee and
commission income
14.1
0.8
14.9
18.2
0.8
19.0
Operating income
165.2
48.3
213.5
155.5
48.4
203.9
Impairment charge
(31.4)
(26.6)
(58.0)
(23.2)
(38.7)
(61.9)
Other gains/(losses)
0.1
0.1
0.2
(0.4)
0.1
(0.3)
Fair value gains on
financial instruments
0.1
–
0.1
1.2
–
1.2
Operating expenses
(74.7)
(29.5)
(104.2)
(72.2)
(31.6)
(103.8)
Profit/(loss) before
income tax before
exceptional items
59.3
(7.7)
51.6
60.9
(21.8)
39.1
Exceptional items
–
(24.1)
(24.1)
(1.5)
(8.4)
(9.9)
Profit/(loss) before
income tax
59.3
(31.8)
27.5
59.4
(30.2)
29.2
Income tax (expense)/
credit
(14.7)
4.8
(9.9)
(16.0)
6.5
(9.5)
Profit/(loss) for the
year
44.6
(27.0)
17.6
43.4
(23.7)
19.7
Basic earnings per
ordinary share
238.8
(144.5)
94.2
227.7
(124.3)
103.4
Basic earnings per
ordinary share –
adjusted
238.8
(31.1)
207.7
233.5
(83.4)
150.1
Income statement
“With the exit of Vehicle Finance delivered,
foundations are clear for enhanced and stable
financial performance.”
Rachel Lawrence ACMA
Chief Financial Officer
Secure Trust Bank PLC Annual Report & Accounts 2025
14
Strategic Report
Corporate Governance
Financial Statements
Other Information
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 Annual Report on pages 196 to 199.
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 on page 16 and discontinued operations are included in Note 10 to the
Financial Statements.
The Directors’ Remuneration report, starting on page 97, 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.
Financial review
continued
Selected key performance indicators and performance
metrics: (Continuing)
2025
%
2024
%
Percentage
point
movement
Net interest margin
4.7
4.7
–
Net revenue margin
5.2
5.3
(0.1)
Yield
9.5
10.2
(0.7)
Cost of funds
4.7
5.5
(0.8)
Adjusted cost to income ratio
45.2
46.4
(1.2)
Statutory cost to income ratio
45.2
47.4
(2.2)
Cost of risk
1.0
0.8
0.2
Adjusted return on average equity
14.3
15.0
(0.7)
Return on average equity
14.3
14.6
(0.3)
Common Equity Tier 1 ratio
12.9
12.3
0.6
Total capital ratio
15.2
14.6
0.6
Secure Trust Bank PLC Annual Report & Accounts 2025
15
Strategic Report
Corporate Governance
Financial Statements
Other Information
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).
Financial review
continued
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
on page 26. 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.
Secure Trust Bank PLC Annual Report & Accounts 2025
16
Strategic Report
Corporate Governance
Financial Statements
Other Information
Financial review
continued
1
2
4
2024: £3,608.5m
3
£1,466.5m
£1,466.9m
£362.4m
£3,686.6m
Retail Finance
1
Real Estate Finance
2
Commercial Finance
3
£3,686.6m
Total
Continuing businesses
£3,295.8m
Vehicle Finance
£390.8m
4
Loans and advances to customers
£2,526.2m
Total
1
2
4
3
Retail Finance
£1,407.0m
1
Real Estate Finance
£451.0m
2
Commercial Finance
£287.5m
£2,145.5m
3
Vehicle Finance
£380.7m
4
2024: £2,331.9m
£2,526.2m
Continuing businesses
New business volumes
Summarised balance sheet
Assets
2025
£million
2024
£million
Cash and Bank of England reserve account
528.1
445.0
Loans and advances to banks and debt securities
37.8
24.0
Loans and advances to customers
3,295.8
3,050.2
Loans and advances to customers – Discontinued
1
390.8
558.3
Fair value adjustment for portfolio hedged risk
7.3
(6.8)
Derivative financial instruments
0.2
14.3
Other assets
56.0
31.7
4,316.0
4,116.7
Liabilities
Due to banks
205.9
365.8
Deposits from customers
3,509.6
3,244.9
Fair value adjustment for portfolio hedged risk
4.7
(3.4)
Derivative financial instruments
0.1
10.0
Tier 2 subordinated liabilities
93.5
93.3
Other liabilities
127.9
45.6
3,941.7
3,756.2
Note:
1.
Vehicle Finance portfolio classified as ‘Held for Sale’ in 2025, and ‘Loans and Advances to Customers’
in 2024.
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.
Secure Trust Bank PLC Annual Report & Accounts 2025
17
Strategic Report
Corporate Governance
Financial Statements
Other Information
Financial review
continued
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:
•
The level of buffers and the capital requirement set by the Prudential Regulation
Authority (‘PRA’);
•
Estimated credit losses calculated using IFRS 9 methodology and the applicable transitional rules;
•
New business volumes; and
•
The product mix of new business.
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.
Capital
2025
£million
2024
£million
CET 1 capital, excluding IFRS 9 transitional adjustment
364.8
351.3
IFRS 9 transitional adjustment
–
0.1
CET 1 capital
364.8
351.4
Tier 2 capital
1
63.6
64.3
Total capital
428.4
415.7
Total risk exposure
2,827.5
2,855.7
Note:
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 ratios
2025
%
2024
%
CET 1 capital ratio
12.9
12.3
Total capital ratio
15.2
14.6
CET 1 capital ratio
(excluding IFRS 9 transitional adjustment)
12.9
12.3
Total capital ratio
(excluding IFRS 9 transitional adjustment)
15.2
14.6
Leverage ratio
9.4
9.5
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.
2025
£million
2024
£million
Total Capital Requirement
254.5
257.0
Capital conservation buffer
70.7
71.4
Countercyclical buffer
56.6
57.1
Total
381.8
385.5
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.
Secure Trust Bank PLC Annual Report & Accounts 2025
18
Strategic Report
Corporate Governance
Financial Statements
Other Information
Financial review
continued
Liquidity
Management of liquidity
The Group uses a number of measures to manage liquidity risk. These include:
•
The Overall Liquidity Adequacy Requirement (‘OLAR’), which is the Board’s view of the
Group’s liquidity needs, as set out in the Board-approved Internal Liquidity Adequacy
Assessment Process (‘ILAAP’);
•
The Liquidity Coverage Ratio (‘LCR’), which is a regulatory measure that assesses
net 30-day cash outflows as a proportion of High Quality Liquid Assets (‘HQLA’);
•
Total funding ratio, as defined in the Appendix to the Annual Report; and
•
‘HQLA’ are held in the Bank of England Reserve Account and gilts. For LCR purposes,
the HQLA excludes gilts that are pledged as collateral.
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.
Liquid assets
2025
£million
2024
£million
Aaa–Aa3
529.1
445.0
A1–A2
31.7
24.0
Total
560.8
469.0
We continue to attract customer deposits to support balance sheet growth. The composition of
customer deposits is shown in the table below:
Customer deposits
2025
%
2024
%
Fixed term bonds
43
47
ISAs
34
26
Access accounts
22
25
Notice accounts
1
2
Total
100
100
Secure Trust Bank PLC Annual Report & Accounts 2025
19
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Corporate Governance
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Other Information
Business review
Consumer Finance
Retail Finance
We provide quick and
easy finance options at
the point of purchase.
What we do
• We provide a market-leading online
e-commerce service to retailers, providing
unsecured, interest-free and interest-bearing
prime lending products to UK customers to
facilitate the purchase of a wide range of
consumer products, including furniture,
jewellery, dental, leisure items and football
season tickets. These retailers include a large
number of household names.
• Products are available to purchase in store or
online, using our market-leading origination
platform, which provides fast decision
making, with 90% of applications agreed
in an average of six seconds.
• The customer proposition and the integrated
platform support the growth of UK retailers
and the real economy.
2025 performance
• New business lending increased 9.1%
(2024: 8.8%), contributing to record lending
balances. Retail Finance continued to hold a
strong market position, with market share of
new business at 15.5%
1
(2024: 13.6%).
• Growth was focused in high-quality sectors
such as furniture, and we continued to serve
a diverse retailer mix across sectors and sizes.
• Improved net interest margin to 6.9%
(2024: 6.8%) reflects disciplined pricing in a
competitive environment. Risk adjusted
margin fell to 5.8% (2024: 6.0%) reflecting
the benefit of model enhancements in 2024.
• The portfolio remained focused on
interest-free lending, which accounted
for 86.1% of balances (2024: 86.7%).
•
Over 475,000 mobile app registrations,
enabling greater self-service and access
to our full product and retailer offering.
• We anticipate further growth with both
new and existing retailers in 2026, with
a focus on expansion within the Home
improvement sector.
2025 Mobile app registrations
Over 475k
Launched December 2024
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.
“Another strong year
for the V12 business,
with a notable uplift in
lending balances and
profit before tax.”
Andrew Phillips
Managing Director,
Retail Finance
Net interest margin
(%)
202
3
202
4
202
5
6.4
6.8
6.9
Risk adjusted margin
(%)
202
3
202
4
202
5
5.3
6.0
5.8
Performance history
New business
(£m)
202
3
202
4
202
5
1,185.4
1,289.7
1,407.0
Loans and advances to customers
(£m)
202
3
202
4
202
5
1,223.2
1,357.8
1,466.5
Secure Trust Bank PLC Annual Report & Accounts 2025
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Other Information
Driving sustainable
growth: V12 and mydentist
Our long-standing partnership has been built on a
deep understanding of the business and a shared
focus on supporting sustainable growth
V12’s technology plays a key role, with a simple-to-use platform
and strong reporting capabilities that make it easy for practice
teams to engage with patient finance.
Beyond performance, V12 has supported mydentist in staying
ahead of consumer duty and regulatory requirements through
open and honest dialogue, guidance towards useful resources,
and access to supportive conversations with internal experts.
This partnership approach ensures compliance is not just met,
but embedded into everyday decision-making
“By extending our partnership with V12, we
strengthen our commitment to accessible dental
healthcare, giving more patients the flexibility they
need when it comes to financing their treatments.”
Nick Marsden
Clinical Commercial Director
mydentist
Business review
continued
Secure Trust Bank PLC Annual Report & Accounts 2025
21
Strategic Report
Corporate Governance
Financial Statements
Other Information
Business review
continued
What we do
• We provide non-regulated first charge
secured lending to specialist real estate
markets, lending to professional landlords
to enable them to improve and grow their
portfolio and provide development
facilities to property developers and
SME housebuilders to help build new
homes for sale or letting.
• Due to our specialist relationship-led
business model, we offer through the cycle
tailored underwriting and cash flow led
debt structuring.
• Finance opportunities are sourced and
supported on a relationship basis directly
and via introducers and brokers.
2025 performance
• Record levels of new lending,
with £451.0 million of new business
written throughout the year, despite
a subdued market.
• The slight reduction in net revenue
margin reflects increased lending in
lower-risk residential investment, which
represents 92.4% of the book (2024: 88.1%).
The remainder comprises development,
commercial investment and bridging
exposures.
•
Impairment charges of £8.8 million
(2024: £4.0 million) due to the impact of
two cases. This largely relates to one
legacy development case which is now
materially resolved.
• The average loan-to-value remains low at
57.3% (2024: 56.0%), below our maximum
70% offering.
•
We enter 2026 with strong positive
momentum, with growth supported by
expansion into our new Bridging product,
which enables us to offer full lifecycle funding.
Business Finance
Real Estate Finance
We lend money against
residential properties to
professional landlords and
property developers.
2025 Real Estate Finance average
loan-to-value
57.3%
2024: 56.0%
Performance history
Loans and advances to customers
(£m)
202
3
202
4
202
5
1,243.8
1,341.4
1,466.9
Net revenue margin
(%)
202
3
202
4
202
5
2.6
2.6
2.4
New business
(£m)
202
3
202
4
202
5
434.0
383.5
451.0
Risk adjusted margin
(%)
202
3
202
4
202
5
2.2
2.3
1.8
“We have seen strong
levels of demand in
2025, and continue to
expand our product
suite to strengthen
our business for
value creation.”
Luke Jooste
Managing Director,
Business Finance
Secure Trust Bank PLC Annual Report & Accounts 2025
22
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Corporate Governance
Financial Statements
Other Information
Business review
continued
Strengthening partnership
through refinance facility
Real Estate Finance provided a £37 million loan
to refinance a portfolio of 12 apartment blocks
situated across England.
During the year, Real Estate Finance strengthened its
long-standing relationship with leading real estate investor
Castleforge through the completion of a £37 million refinancing
facility. The refinancing consolidates previous facilities provided
by the Group since 2019, supporting Castleforge’s acquisition,
refurbishment and value‑enhancement strategy. The facility
will support the portfolio’s business plan over the next
four years.
“This refinancing consolidates our existing
arrangements into a single, efficient package
and provides the flexibility needed to continue
enhancing the quality and value of the portfolio.”
Jayan Patel
Transaction Lead
Castleforge, Real Estate Investor
Secure Trust Bank PLC Annual Report & Accounts 2025
23
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Corporate Governance
Financial Statements
Other Information
Business Finance
Commercial Finance
Supporting the growth of
UK businesses by providing
flexible, asset-based
financing solutions
What we do
• We offer a full suite of asset-based lending
solutions to SMEs and some larger
corporates who need bespoke working
capital solutions for their business.
• We operate a high-touch relationship-led
model throughout the life of a facility, where
partners and clients have direct access to
decision‑makers.
•
Our lending remains predominantly against
receivables, releasing funds of up to 90%
of qualifying invoices under invoice
discounting facilities.
•
Business is sourced and supported directly
from clients via private equity houses and
professional introducers but is not reliant
on the broker market.
2025 performance
• New business more than doubled
year‑on‑year, and low client attrition saw
net lending balances rise to £362.4 million.
• Growth in spot lending balances in line
with average lending balances, reflecting
controlled and stable growth.
• Income from one-off termination fees
was lower than in 2024, reducing net
revenue margin and risk adjusted margin,
but contributes to a more stable and
higher‑quality earnings profile over time.
•
Cost of risk of 0.9% (2024: 1.7%), whilst
improved, reflects the impact of one specific
case within the business.
•
In 2026, we look forward to supporting
businesses across our core product suite,
whilst also expanding our offering to include
selective Speciality Finance (lending to
non‑bank lenders). This represents a natural
extension of our current proposition.
2025 Commercial Finance
utilisation rate
57.4%
2024: 60.9%
“Record levels of new
business lending in
Commercial Finance
reflect the continued
strength of our
product propositions.”
Luke Jooste
Managing Director,
Business Finance
Business review
continued
Performance history
Loans and advances to customers
(£m)
202
3
202
4
202
5
381.1
351.0
362.4
Net revenue margin
(%)
202
3
202
4
202
5
7.0
7.6
6.1
New business
(£m)
202
3
202
4
202
5
214.8
105.8
287.5
Risk adjusted margin
(%)
202
3
202
4
202
5
4.7
5.9
5.2
Secure Trust Bank PLC Annual Report & Accounts 2025
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Other Information
Acquisition of Watson
Fuels backed by facility
Inspirit Capital acquired Watson Fuels, in a
corporate carve‑out, supported by a £75 million
facility provided by Commercial Finance.
Watson Fuels is recognised for its reliability, customer
service, and innovation in fuel logistics. Inspirit Capital’s
acquisition will support the company’s next phase of growth
as an independent business.
Working alongside financial advisor Interpath, Inspirit secured
a bespoke £75m facility from Commercial Finance to underpin
the acquisition and future investment plans. This ensured an
orderly ownership transition and provided Watson Fuels with
the capacity to support its next phase of growth. The facility is
the largest to date for Commercial Finance and is an example
of the focus the team has on building trusted partnerships.
“The carve‑out is fuelled by a capital‑efficient
and tailored facility with Secure Trust that has
the flexibility to support Watson Fuel’s growth
ambitions well into the future.”
Ben Smith
Director
Interpath Advisory
Business review
continued
Secure Trust Bank PLC Annual Report & Accounts 2025
25
Strategic Report
Corporate Governance
Financial Statements
Other Information
Business review
continued
Consumer Finance
Vehicle Finance
We provided quick and
easy used car finance
options at the point
of purchase.
What we do
• We provided consumer lending products,
secured against the second hand vehicle
being financed.
• We provided a vehicle stock funding product,
which was secured against dealer forecourt
used car stock; sourced from auctions,
part exchanges or trade sources.
• Finance was provided via technology
platforms, allowing us to receive
applications online from introducers;
provide an automated decision; facilitate
document production through to pay-out
to dealer; and manage in-life loan accounts.
2025 performance
• As a result of the decision to exit Vehicle
Finance, the portfolio has run-down in
the second half of the year, with lending
balances reducing to £390.8 million by the
end of 2025.
• The sale was made at a premium to book
value and was completed in February 2026.
Further information will be included in the
Group’s Interim Report for the six months
ended 30 June 2026.
• The book saw an improved risk adjusted
margin to 4.2% (2024: 1.9%), with 2025
benefitting from a more consistent
collections delivery without the adverse
impact of the Borrowers in Financial
Difficulty review that occurred in 2024.
Further details can be found in Note 8
to the Financial Statements.
• In October, the FCA published a consultation
paper on its proposed redress scheme.
As a result, the Group increased its provision.
Further details can be found in Note 31 to the
Financial Statements.
2025 Vehicle Finance lending balances
£390.8m
2024: £558.3m
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.
Net interest margin
(%)
202
3
202
4
202
5
10.3
9.4
9.1
Performance history
New business
(£m)
202
3
202
4
202
5
471.2
552.9
380.7
Loans and advances to customers
(£m)
202
3
202
4
202
5
467.2
558.3
390.8
Risk adjusted margin
(%)
202
3
202
4
202
5
7.3
1.9
4.2
Secure Trust Bank PLC Annual Report & Accounts 2025
26
Strategic Report
Corporate Governance
Financial Statements
Other Information
Savings
We look after our
customers’ savings
and provide a
competitive return.
What we do
• We offer a range of savings accounts that are
purposely simple in design, with a choice of
products from Access to 180-day notice,
and six month to seven-year fixed terms
across both Bonds and ISAs.
• Our range of savings products enables
us to access the majority of the UK
personal savings markets and compete
for significant liquidity pools, achieving a
lower marginal cost with the volume, mix
and the competitive rates offered; optimised
to the demand of our funding needs.
2025 performance
• In 2025 we delivered strong deposit
growth, increasing total balances by
8.2% to £3.5 billion (2024: £3.2 billion).
This expansion has provided a stable
source of funding to support lending
book growth.
• The Bank of England lowered the Base
Rate four times during the year, to 3.75%
by year-end.
•
The Financial Services Compensation
Scheme increased to cover 97.6%
(2024: 95.1%) of total deposits, providing
additional security and confidence for
our customers.
•
We re-launched our Savings app at the end
of 2025, improving customer experience and
strengthening our digital service offering.
• In 2026, we will continue with our focus
of building a strong savings franchise with
differentiated products and
diversified distribution.
Deposits protected by FSCS
97.6%
2024: 95.1%
Performance history
Total funds raised
(£m)
202
3
202
4
202
5
1,719.1
1,604.2
1,797.9
Total deposits
(£m)
202
3
202
4
202
5
2,871.8
3,244.9
3,509.6
Business review
continued
£3,244.9m
2024
Total deposits
(£m)
1
2
3
4
£3,244.9m
Total
Term
£1,510.0m
1
£72.4m
Notice
4
£857.3m
ISA
2
£805.2m
Access
3
£3,509.6m
2025
Total deposits
(£m)
1
2
3
4
£3,509.6m
Total
Term
£1,518.9m
1
£39.3m
Notice
4
£1,181.2m
ISA
2
£770.2m
Access
3
“In 2025, we
strengthened the
Savings franchise by
continually enhancing
our products, services,
and digital platforms
for our valued
customers.”
Rajat Mehta
Director,
Savings
Secure Trust Bank PLC Annual Report & Accounts 2025
27
Strategic Report
Corporate Governance
Financial Statements
Other Information
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
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.
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 million
1
(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.
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.
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
2024
5
. 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.
Secure Trust Bank PLC Annual Report & Accounts 2025
28
Strategic Report
Corporate Governance
Financial Statements
Other Information
Market review
continued
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 be
fairly 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.
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Other Information
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.
Principal risks and uncertainties
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:
•
First line: all employees within the business
units and associated support functions,
including Operations, Finance, Treasury,
Human Resources and Legal. The first line
has ownership of, and primary responsibility,
for their risks.
• Second line: specialist risk management
and compliance teams reporting directly
into the Chief Risk Officer, covering Credit
risk, Operational risk, Information Security,
Prudential risk, Compliance and Conduct risk,
and Financial Crime risk. The second line are
responsible for developing frameworks to
assist the first line in the management of their
risks and providing oversight and challenge
designed to ensure they are managed
within appetite.
•
Third line: is the Internal Audit function
that provides independent assurance on
the effectiveness of risk management across
the Group.
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Other Information
Principal risks and uncertainties
continued
Board and Board Committees
See Corporate Governance section on pages 75 to 82.
Assumptions
Committee
Responsible for approving
assumptions that have a
material impact on the
Group’s reporting and/or
decision-making processes.
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.
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 out on the
following pages.
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
Credit Risk
Committees
Responsible for making
decisions and providing
oversight of credit
scorecards, strategies
and modelling.
Customer and
Conduct Risk
Committee
Responsible for providing
oversight of Operational
delivery, conduct and all
other non-financial risks.
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.
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.
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 the
Chief Executive Officer. Responsible for the execution of the strategy of the Group at the direction of the Chief Executive Officer.
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Principal risks and uncertainties
continued
Description
Mitigation
Change during the year
Credit risk
The risk of loss to the Group from
the failure of clients, customers or
counterparties to honour fully their
obligations to the firm, including the
whole and timely payment of principal,
interest, collateral or other receivables.
Progress:
Stable
The Group has a defined Credit risk framework, which sets out how
Credit risk is managed and mitigated across the Group.
Risk appetite is appropriate, assessed and approved at least annually by the
business, the Risk function and the Board, with the Group focusing on sectors
and products where it has deep experience.
Specialist Credit teams are in place within each business area to enable new
lending to be originated in line with the Group’s risk appetite.
For Business Finance, lending is secured against assets, with Real Estate
Finance lending, the majority of which is at fixed rates, secured by property
at conservative loan-to-value ratios. Short dated Commercial Finance
lending is secured across a range of assets, including debtors, stock,
and plant and machinery.
For Consumer Finance, Retail Finance is unsecured, however positioned
towards lower risk sectors. The vast majority of Retail Finance lending is
interest-free for consumers, with remaining consumer lending at fixed
rates, which mitigates the direct impact of rising interest rates on
affordability. Historically, security has been taken for Vehicle Finance
lending although new business is no longer being originated. A strategic
decision was taken to withdraw from the market, and the business was
sold in February 2026.
Consumer Credit risk is assessed through a combination of risk scorecards,
credit and affordability policy rules.
Portfolio performance is tracked closely and reported via specialist
management review meetings into the Executive and Board Risk
Committees, with the ability to make changes to policy, affordability
assessments or scorecards on a dynamic basis.
Management monitors and assesses concentration risk for all lending against
control limits. The diversification of lending activities and secured nature of
larger exposures mitigates the exposure of the Group to concentration risk.
During 2025, economic conditions continued to be challenging in the UK,
including cost-of-living pressures for consumers.
The Group’s lending portfolios performed satisfactorily in 2025.
Arrears levels in Retail Finance have shown a slight reduction over 2025,
supported by a continued emphasis on robust credit risk management
and a strategic shift toward new business sectors with lower risk profiles.
Collections performance remains strong, delivering stable roll and cure
rates throughout the year.
Market conditions in Vehicle Finance remained challenging; however, successive
credit risk tightening and a return to normalised collections practices drove
improved performance among newer customer cohorts during the latter part
of 2024 and into 2025. Despite these gains, customer cure rates remain below
historic norms, which continues to impact the overall financial performance of
the product.
Real Estate Finance at a portfolio level is performing well, with continued
strong rental demand supporting performance across the portfolio. Only a
small number of cases are in active workout, and where appropriate, specific
provisions have been taken to cover the risk of loss from these exposures.
The Real Estate Finance provisions have increased through the year at a higher
than expected rate, however, this is mainly due to existing defaulted balances
being held for longer than anticipated, leading to increased non-recovery of
capital and interest.
The Commercial Finance portfolio is performing satisfactorily, with provisions
at acceptable levels. The economic backdrop in which our clients operated in
2025, remained sluggish with persistent inflationary pressures. Despite this,
the collateral values that underpin our facilities remained robust.
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Principal risks and uncertainties
continued
Description
Mitigation
Change during the year
Liquidity and Funding risk
Liquidity risk is the risk that the
Group is unable to meet its liquidity
obligations as they fall due or can only
do so at excessive cost. Funding risk is
the risk that the Group is unable to
raise or maintain funds to support
asset growth, or the risk arising from
an unstable funding profile that could
result in higher funding costs.
Progress:
Stable
Liquidity and Funding risk is managed in line with the Group’s Prudential
Risk Management Framework. The Group has a defined set of liquidity
and funding risk appetite measures that are monitored and reported,
as appropriate.
The Group manages its liquidity and funding in line with internal and
regulatory requirements, and at least annually assesses its exposure to
liquidity risks and adequacy of its liquidity resources as part of the
Group’s Internal Liquidity Adequacy Assessment Process (‘ILAAP’).
In line with the Prudential Regulation Authority’s (‘PRA’s’) self-sufficiency
rule, the Group always seeks to maintain liquid resources that are adequate,
both as to amount and quality, and managed to ensure that there is no
significant risk that its liabilities cannot be met as they fall due under
stressed conditions. The Group defines liquidity adequacy as the:
• ongoing ability to accommodate the refinancing of liabilities upon
maturity and other means of deposit withdrawal at acceptable cost;
•
ability to fund asset growth; and
• otherwise, capacity to meet contractual obligations through unconstrained
access to funding at reasonable market rates.
The Group conducts regular and comprehensive liquidity stress testing to
identify sources of potential liquidity strain and to check that the Group’s
liquidity position remains within the Board’s risk appetite and prudential
regulatory requirements.
Contingency funding plans
The Group maintains a Recovery Plan that sets out how the Group would
maintain sufficient liquidity to remain viable during a severe liquidity stress
event. The Group also maintains access to the Bank of England liquidity
schemes, including the Discount Window Facility.
The Group has maintained its liquidity and funding ratios in excess of regulatory
and internal risk appetite requirements throughout the year. A significant level
of high-quality liquid assets, held as cash at the Bank of England, continues to be
maintained so that there is no material risk that liabilities cannot be met as they
fall due.
The Group’s outstanding Term Funding Scheme with additional incentives
for SMEs (‘TFSME’) funding was repaid by the end of the first half of 2025.
The Group maintains access to the Bank of England’s Sterling Monetary
Framework, including a reserves account.
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Other Information
Principal risks and uncertainties
continued
Description
Mitigation
Change during the year
Capital risk
Capital risk is the risk that the
Group will have insufficient capital
resources to meet minimum
regulatory requirements and to
support planned levels of growth.
The Group adopts a conservative
approach to managing its capital.
It annually assesses the adequacy of
the amount and quality of capital held
under stress as part of the Group’s
Internal Capital Adequacy Assessment
Process (‘ICAAP’).
Progress:
Stable
Capital management is defined as the operational and governance
processes by which capital requirements are identified and capital
resources maintained and allocated, such that regulatory requirements
are met, while optimising returns and supporting sustainable growth.
The Group manages its capital requirements on a forward-looking basis
against minimum regulatory requirements and the Board’s risk appetite
set to enable capital resources to be sufficient to support planned levels of
growth. The Group will take opportunities to increase overall levels of capital
and to optimise its capital stack as and when appropriate. In addition to the
ICAAP, the Group performs regular budgeting and reforecasting exercises
that consider a five-year time horizon.
These forecasts are used to plan for future lending growth at a rate that both
increases year-on-year profits and maintains a healthy capital surplus, taking
into consideration the impact of known and anticipated future regulatory
changes. The Group also models various stressed scenarios looking over a
five-year time horizon, which consider a range of growth rates over those
years as part of the viability and going concern assessments.
Further information on the Group’s capital requirement is contained within
the Pillar 3 disclosures, which are published as a separate document on our
website (
www.securetrustbank.com/pillar3
).
The Group’s balance sheet and total risk exposure has reduced since the
beginning of the year following the cessation of new Vehicle Finance lending,
while the Group continues to grow its continuing businesses organically.
The Group has continued to maintain adequate capital, and all capital ratio
measures have been exceeded throughout the period. Details of the Common
Equity Tier 1 ratio, total capital ratio and leverage ratio are included in the
Financial review on page 18.
The 2025 ICAAP showed that the Group can continue to meet its minimum
regulatory capital requirements, even under extreme stress scenarios.
Additionally, the Group has assessed the capital impact in relation to the
exit of Vehicle Finance through an addendum to the 2025 ICAAP, which
demonstrated a more resilient capital position following the change.
This assessment included an additional stress reflecting our worst-case
view of potential redress payments related to historical motor commissions
(see Note 31 to the Financial Statements for further information); the Group
is satisfied it could maintain capital adequacy in such a scenario.
The Group has assessed the high-level impact of the Basel 3.1 rules and the
PRA’s Small Domestic Deposit Taker (‘SDDT’) Regime, and has taken this into
consideration as part of its capital planning. Work is underway to ensure the
Group is compliant with the SDDT Regime by 1 January 2027.
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Other Information
Principal risks and uncertainties
continued
Description
Mitigation
Change during the year
Market risk
Market risk is the risk to the
Group’s earnings and/or value from
unfavourable market movements,
such as interest rates and foreign
exchange rates. The Group’s market
risk primarily arises from interest rate
risk. Interest rate risk refers to the
exposure of the Group’s financial
position, balance sheet and earnings
to movements in interest rates.
The Group’s balance sheet is
predominantly denominated in
GBP, although a small number
of transactions are completed
in US Dollars, euros and other
currencies in support of
Commercial Finance customers.
Progress:
Stable
The Group’s principal exposure comes from the term structure of interest
rate sensitive items and the sensitivity of the Group’s current and future
earnings and economic value to movements in market interest rates.
The Group does not take significant unmatched positions through the
application of hedging strategies and does not operate a trading book.
The main contributors to interest rate risk are:
• the mismatch, or duration, between repricing dates of assets and
liabilities; and
•
customer optionality, for example, early repayment of loans in advance
of contractual maturity dates.
The Group uses an interest rate sensitivity gap analysis that informs the
Group of any significant mismatched interest rate risk positions that require
hedging. This takes into consideration the behavioural assumptions for
optionality as approved by ALCO. Risk positions are managed through the
structural matching of assets and liabilities with similar tenors and the use of
vanilla interest rate derivative instruments to hedge the residual unmatched
position and minimise the Group’s exposure to interest rate risk.
The Group has a defined set of market risk appetite measures that are
monitored monthly. Interest rate risk in the banking book is measured
from an internal management and regulatory perspective, taking into
consideration both an economic value and earnings-based approach.
The Group monitors its exposure to basis risk and any residual non-GBP
positions. Processes are in place to review and react to movements of the
Bank of England Base Rate.
The Group has no significant exposures to foreign currencies and hedges
any residual currency risks to sterling.
All such exposures are maintained within the risk appetite set by the Board
and are monitored by ALCO.
Interest rate risk and foreign exchange risk remain well managed with risk
exposures actively managed. The Group has worked on enhancing interest rate
risk management through the development of its Earnings at Risk methodology.
In 2025, the Group has also fully implemented central clearing to support
derivative activity, with the majority of the portfolio centrally cleared.
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Other Information
Principal risks and uncertainties
continued
Description
Mitigation
Change during the year
Operational risk
Operational risk is the risk that the
Group may be exposed to direct
or indirect loss arising from
inadequate or failed internal
processes, personnel and succession,
technology/ infrastructure, or from
external factors.
The scope of Operational risk is
broad and includes business process,
operational resilience, third party
risk, Change management, Human
Resources, Information Security
and IT risk.
Progress:
Stable
The Group has an Operational Risk Framework designed in accordance with
the ‘Principles for the Sound Management of Operational Risk’ issued by the
Basel Committee on Banking Supervision. The framework is supported by a
range of policies, including operational resilience, third party management,
information technology, information security and data management policies.
The Group has well-embedded processes that enable the identification,
assessment, mitigation and reporting of operational risks. Key processes
include Risk and Control Self-Assessments, risk event management, scenario
analysis and risk culture assessments.
In addition to the delivery of framework requirements, the Group has
focused on various thematic areas of operational risk in 2025, including
operational resilience where the Group met the March 2025 regulatory
deadline and continued its embedding of operational resilience.
Artificial Intelligence (‘AI’) risk was formally integrated into existing
Risk Frameworks and Policies.
The Group uses the ‘Standardised Approach’ for assessing its operational
risk capital, in recognition of the enhancements made to its framework and
embedding it across the Group. The Group continues to invest in resource,
expertise and systems to support the effective management of operational
risk. In 2025, the Group has continued to enhance these standards and has
introduced several improvements to the control frameworks in place across
its operational risks.
Model risk
Model risk is the potential for adverse
consequences from model errors or
the inappropriate use of modelled
outputs to inform business decisions.
The Group has multiple models that
are used, amongst other things, to
support pricing, strategic planning,
budgeting, forecasting, regulatory
reporting, credit risk management
and provisioning.
Progress:
Stable
The Groups approach to Model risk is aligned to the PRA’s Supervisory
Statement 1/23 Model risk management principles for banks. The Group
has a Model risk policy, inventory, risk-based assessment methodology,
model development standards and independent model validation in place.
The Group has made progress in strengthening its governance of Model risk
in 2025, through ongoing improvement of independent validation of High
and Medium-High risk models, new model developments and monitoring
for key IFRS 9 models.
A full review of the Model Risk Management Policy has been carried out,
with increased focus on model monitoring reporting requirements and
standardisation of processes for use of model adjustments.
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Other Information
Principal risks and uncertainties
continued
Description
Mitigation
Change during the year
Cyber risk*
Cyber Risk is the potential for adverse
consequences arising from a Cyber
Security event that could result in
operational disruption, financial loss,
loss of business-critical data, or other
impacts detrimental to the business.
The Group uses multiple layers of
defence, both technical and
operational, to limit the risk of a
successful cyber event occurring
or, where prevention is not possible,
to limit the extent of any material
impacts on the Group or our clients.
Progress:
Stable
*Cyber risk was previously included within
Operational Risk
The Group operates a multi-layered model of defence, which includes both
technical and operational measures. The Group’s primary defences are tested
regularly by independent third-party specialists to identify and remediate
any weaknesses, and a suite of policies and processes designed to protect the
Group are regularly monitored for compliance and updated on at least an
annual basis. The Group also aligns to the Bank of England’s (‘BOE’) CQUEST
framework and constantly works to improve compliance and reduce the
opportunities for external threats to attack the Group.
During 2025, the Group consolidated its cyber security position.
Independent testing has shown that we have strong front line defences
against cyber attacks, whilst work continues on the enhancement of our
assessment of our third-party suppliers, as recent cyber attacks have
demonstrated that attackers now favour indirect approaches by initially
compromising vendors to gain access to core systems. Work has also been
undertaken on enhancing our Cyber Security Incident Response Plan to better
reflect current attack vectors and to incorporate industry best practice.
Compliance and Conduct risk
The risk that the Group’s products
and services, and the way they are
delivered, or the Group’s failure to be
compliant with all relevant regulatory
requirements, result in poor outcomes
for customers or markets in which we
operate, or cause harm to the Group.
This could be as a direct result of
poor or inappropriate execution
of our business activities or behaviour
from our employees.
Progress:
Heightened
The Group manages this risk through its Compliance and Conduct Risk
Management Framework. The Group takes a principle-based approach,
which includes retail and commercial customers in our definition of
‘customer’, with coverage across all business units and both regulated
and unregulated activities.
Risk management activities follow the Enterprise-Wide Risk
Management Framework, through identifying, assessing and managing
risks, governance arrangements and reporting risks against Group risk
appetite. Arrangements include horizon-scanning of regulatory changes,
oversight of regulatory risk events and assurance activities conducted
by the three lines of defence, including the second line Compliance
Monitoring programme.
The Group’s horizon-scanning activities track industry and regulatory
developments, including the implementation of the Basel 3.1 standards
and the SDDT regime, Consumer Credit product sales data reporting
and regulation of Buy Now Pay Later.
The overall heightened rating for the year is driven predominantly by the
developments regarding motor finance commissions redress and its impact
on the Group. The Financial Conduct Authority (‘FCA’) consultation paper on
its proposed redress scheme was published on 7 October 2025. It is towards
the extreme end of outcomes previously expected from the Supreme Court
judgment. On 20 October 2025, the Group updated the market on its increased
motor finance redress commission provision as a result. The FCA expects to
communicate next steps by the end of March 2026.
The other Compliance and Conduct risk key area of focus during the year
was on the completion of the final stages of the Group’s review of its collections
processes, procedures and policies in Vehicle Finance, following its formal
discussions with the FCA on its Borrowers in Financial Difficulty review.
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Other Information
Principal risks and uncertainties
continued
Description
Mitigation
Change during the year
Financial Crime risk
The risk that the Group’s products
and services will be used to facilitate
financial crime, resulting in harm to its
customers, the Group or third parties,
and the Group fails to protect them by
not having effective systems and
controls. Financial Crime includes
anti-money laundering, terrorist
financing, proliferation financing,
sanctions restrictions, modern slavery,
human trafficking, fraud, the failure to
prevent fraud and the facilitation of
tax evasion.
The Group may incur significant
remediation costs to rectify issues,
reimburse losses incurred by
customers and address regulatory
censure and penalties.
Progress:
Stable
We operate in a constantly developing financial crime environment and are
exposed to financial crime risks of varying degrees across all areas of the
Group. The Group is focused on maintaining effective systems and controls,
alongside vigilance against all forms of financial crime and meeting our
regulatory obligations.
The Group has a Financial Crime Framework designed to meet regulatory
and legislative obligations, which includes:
•
mandatory annual colleague training and awareness initiatives;
• regular reviews of our suite of financial crime policies, standards and
procedures, checking they remain up to date and addressing any
legislative/regulatory change and emerging risks;
•
detection, transaction monitoring and screening technologies;
•
extensive recruitment policies to screen potential and existing employees;
• horizon-scanning and regular management information production and
analysis conducted to identify emerging threats, trends and typologies,
as well as preparing for new legislation and regulation;
• financial crime-focused governance with risk committees providing senior
management oversight, challenge and risk escalation; and
• intelligence shared through participating in key industry events such as
those hosted by UK Finance and other networks.
The Group continued to monitor developments during the year.
This included the implementation of the Economic Crime and Corporate
Transparency Act(‘ECCTA’), notably the introduction of the failure to prevent
fraud offence, further reforms to the Money Laundering Regulations, enhanced
Companies House transparency and identity-verification requirements, and the
introduction of mandatory reimbursement for authorised push payment (‘APP’)
fraud. We continue to closely monitor changes to financial crime regulation and
guidance and are responding to them accordingly.
Climate Change risk
Climate change, and society’s
response to it, present risks to the
UK financial services sector, with
some of these only fully crystallising
over an extended period. The Group
is exposed to physical and transition
risks arising from climate change.
Progress:
Stable
The Group has established processes to monitor our risk exposure to both
the potential ‘physical’ impacts of climate change and the ‘transitional’ risks
from the UK’s transition towards a carbon neutral economy. The Group’s
approach to climate risk is proportionate to its scale and nature of
its activities.
This has enabled the Group to align both its business and climate objectives.
Climate change and its management are a key part of the Group’s
Environmental, Social and Governance strategy.
The Group continues to undertake stress testing aligned to climate change
scenarios, individually, across each of our key businesses.
The tests are focused on the resilience of our portfolios and strategies,
to manage the risks and opportunities of climate change. Further detail
is provided within the Climate-related financial disclosures section of the
Annual Report and Accounts (see pages 54 to 65).
The Group’s direct exposure to the physical impacts of climate change
remains low, given its footprint and areas of operation. However, it has
maintained robust controls and oversight, designed to manage the
associated risks and continues to develop its business plans, as the risks
mature. Disclosures are made within the Climate-related financial disclosures
section of the Annual Report and Accounts in line with the guidance from the
‘Task Force on Climate-Related Financial Disclosures’, where we are aligned
to current requirements.
Specific detail on each of the key risks identified and mitigation are covered
within the Strategy section on page 56. The Group continues to actively monitor
and prepare for anticipated developments in the evolving climate requirements
and landscape, as well as in regulatory obligation and expectations, including
transition planning.
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Financial Statements
Other Information
Principal risks and uncertainties
continued
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
UKeconomy: 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.
Secure Trust Bank PLC Annual Report & Accounts 2025
39
Strategic Report
Corporate Governance
Financial Statements
Other Information
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.
• The Group has delivered solid trading profits
and sound capital management in 2025 and
the 2026 annual budget process indicates
long-term growth potential.
• Decrease in tail-risks from the cost-of-living
crisis that resulted from a prolonged period
of high inflation and high interest rates
coupled with a lag on wage growth.
• Our deposit base is made up of retail
customers and 97.6% of total deposits
are fully covered by the Financial Services
Compensation Scheme (‘FSCS’).
• Our stress testing indicates the Group’s
ability to manage its capital and liquidity
requirements through the regulator’s
prescribed financial stresses.
• Capital stress testing is conducted after
assessing the drivers of credit risk in the
business, specifically the impact of adverse
changes in economic variables that impacts
the Group’s IFRS 9 Expected Credit Loss
(‘ECL’) models: unemployment, CPI, and HPI.
The Group also considers specific business
model risks that could lead to unexpected
credit and operational losses.
• The Group has maintained capital levels
in excess of its internal risk appetites and
regulatory requirements throughout the
year and is forecast to continue to do so
over the five-year planning horizon.
• The Group increased its motor finance
redress provision to reflect the Financial
Conduct Authority’s consultation on motor
finance commission redress which closed
in December 2025. Additional potential
impacts have been considered through
stress testing.
•
In the area of climate change, the Board
recognises the long-term risks and launched
its Environmental, Social and Governance
strategy in 2023. Risks associated with
climate change are considered as part of
the annual Internal Capital Adequacy
Assessment Process (‘ICAAP’). Material
impacts of climate change on the Group’s
markets and business model will emerge
over the longer-term horizon and beyond
the period of viability assessment.
Notwithstanding this, the Group is mindful
of the need to adapt its business model to
changes in the markets it operates in as a
result of climate change.
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.
• The latest annual budget process, which
contains information on the expected
financial and capital positions and
performance of the Group over the 2026
to 2030 period.
• The Group monitors its key performance
indicators across profit, capital, liquidity,
and different risk categories to mitigate any
changes in risk outside of its risk appetite.
•
In addition to the annual budget process,
key sensitivities are measured through other
forecasting activity undertaken over the
course of the year, which would impact on
capital and liquidity over the
planning horizon.
•
The Group’s ILAAP, approved by the Board
in June 2025, provides assurance that the
Group can maintain liquidity resources that
are adequate, both as to amount and quality,
to ensure that there is no significant risk that
its liabilities cannot be met as they fall due.
This risk was tested under the financial
stresses outlined on the following page.
The Group has maintained liquidity levels
in excess of its liquidity risk appetite and
regulatory requirements throughout the
year, and is forecast to continue to do so
over the ILAAP planning horizon.
•
The Group’s ICAAP, which considered the
Prudential Regulatory Authority’s (‘PRA’s’)
published macroeconomic stress and severe
scenarios in order to assess the adequacy
of capital resources over the 2025 to 2029
period, was approved in August 2025.
An addendum to the ICAAP considering
the impact of the exit of Vehicle Finance,
announced in July 2025, and the increased
motor finance redress provision was
subsequently approved by the Board in
February 2026. Within the ICAAP, the
Group considered the extent of the credit,
operational and market risks it is exposed to,
and how such risks affect its required capital
levels. Under the macroeconomic stress, the
details of which are set out on the following
page, at no point were minimum regulatory
capital requirements breached, and capital
buffers held at the start of the stress were
confirmed to be adequate.
• The latest Group Recovery Plan was
approved in October 2025 and confirmed
that the Group has sufficient recovery
options available to recover from the severe
combined idiosyncratic and macroeconomic
stress scenario modelled over the 2025 to
2029 period. An addendum to the Group
Recovery Plan considering the impact of
the exit of Vehicle Finance and the increased
motor finance redress provision has
subsequently been prepared. The primary
recovery options are to reduce the level of
new lending, and thus slow down the rate of
growth to reduce risk weighted assets, and
raise new deposits.
Secure Trust Bank PLC Annual Report & Accounts 2025
40
Strategic Report
Corporate Governance
Financial Statements
Other Information
•
The Group’s first Solvent Exit Analysis (‘SEA’)
was approved by the Board in August 2025
in compliance with the new regulation which
was effective 1 October 2025. This analysis
goes beyond the Recovery Plan to consider
the process to achieve an orderly and timely
wind-down of the Group’s trading activities
and return of customer deposits. The primary
actions would be cessation of new business,
run-down and sale of lending portfolios.
As part of this new process the Group
assessed indicators for when a Solvent Exit
Plan would be required and executable.
The SEA supports the creation of a Solvent
Exit Plan in the event one is required,
• Consideration of the other principal risks,
as set out on pages 30 to 39, identify any
other severe, but plausible scenarios that
could threaten the Group’s business model,
future performance, solvency or liquidity.
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
Viability and going concern
continued
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.
Secure Trust Bank PLC Annual Report & Accounts 2025
41
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
Engaging with our stakeholders
Stakeholders and why we engage with them
Their priorities
How we engage
Outcomes
Customers
Our customers are the individuals and
businesses we provide finance products to.
Our purpose is to help our customers achieve
their ambitions, through our range of savings
products and loan facilities.
We engage with our customers to help us
understand their needs, which enables us
to develop products in line with their
requirements. We also engage to seek
feedback on the service we provide and
look to continually improve.
Our customers want to borrow or save
money at competitive rates and under fair
terms, with the flexibility they require.
They want high levels of customer service and
to be able to access their accounts through
a variety of channels that suit their needs.
Customers want to engage with a bank that
is financially sound, acts with integrity and
that they can trust.
We engage with our customers through a variety
of channels; our contact centres; relationship
managers; our sales teams; online services and
through our business partners.
The Board has appointed Finlay Williamson
an independent Non-Executive Director, as the
Consumer Duty Champion. He provides regular
updates to the Board on our customers and the
services we provide to them. He ensures that
the customer voice is heard in the boardroom
and that their interests are considered in our
decision making.
Ian Corfield, as the new Chief Executive Officer
(‘CEO’), has met with a number of our clients
within Business Finance.
• Trust Pilot scores of 4.8.
• New savings website and app launched
providing greater functionality for
our customers.
• Mapped our customer journeys, complete
with metrics to enhance monitoring of
outcomes delivered to customers.
• Following feedback from customers we
changed our processes to enable individuals
with power of attorneys to open accounts and
not just administer existing accounts.
Shareholders and investors
Our shareholders are the individuals and
businesses that own/invest in the Company
and provide the capital required to help
achieve our strategic objectives.
We engage to understand their priorities
and their views on the Group’s strategy,
performance, management and governance.
Our shareholders want to receive returns
on their investment through dividends,
capital returns and capital appreciation.
They want to invest in a profitable,
well-capitalised and long-term sustainable
business that has strong governance and
risk management.
Our Executive Directors, Chair and investor
relations team primarily undertake shareholder
engagement. We run investor engagement
programmes after the release of our full-year
and interim results and hold regular meetings
with shareholders on an ad-hoc basis to discuss
developments in the business, for instance our
Chair met with shareholders to discuss CEO
succession after our announcement. The Chair of
our Remuneration Committee has also engaged
with shareholders in advance of seeking approval
for our Directors’ Remuneration Policy at the 2026
Annual General Meeting (‘AGM’). Following any
shareholder engagement, the Board are provided
with an update on shareholder views and
items discussed.
All of our Directors are available to meet with
shareholders on request and attend the
AGM, which provides a valued opportunity
to engage with our smaller shareholders.
• 107.6% total shareholder return for 2025.
• Return on average equity of 14.3%.
• Common Equity Tier 1 (‘CET 1’) of 12.9%.
• Sale of the Consumer Vehicle Finance business
announced in December 2025.
Secure Trust Bank PLC Annual Report & Accounts 2025
42
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Engaging with our stakeholders
Stakeholders and why we engage with them
Their priorities
How we engage
Outcomes
Employees
Our people are key to our success and help us
deliver the service our customers expect.
We engage with them to understand their
views and priorities to help us retain, develop,
motivate and recruit high-performing people
who are aligned with our culture.
Our people want to work in a supportive,
diverse and inclusive environment.
They want opportunities for career and
personal development, and a competitive
remuneration and benefits package.
They want to work for an organisation
that has strong ESG practices and delivers
for stakeholders.
We have an employee council and this is
chaired by the designated Director for workforce
engagement; Victoria Mitchell, who was appointed
to the role this year. The Council comprises
nominated representatives from key business
areas and discusses employee views on a wide
range of subjects. Following each meeting, Victoria
Mitchell provides an update to the Board on items
discussed and employee views.
This year, following Board meetings in our Solihull
and Cardiff offices, we held staff engagement
sessions with our Non-Executive Directors,
enabling them to meet with a wider range of
employees, discuss their views and answer
their questions.
Our new CEO has introduced frequent team
briefs, in our different offices, to provide updates
on the Company’s strategy, performance and
matters relevant for employees. We have strong
internal communications centred around Hive
(our intranet) and Viva Engage. The Board receive
regular updates on employee views from the CEO,
People Team and other members of leadership.
The Board reviews the results of our employee
engagement surveys and has oversight of action
plans to address items raised.
• Overall employee Trust Index score of 64%.
• Voluntary turnover rate of 16.3%.
• An average of 31 hours of training delivered
per employee during 2025.
Business partners
Our business partners includes our suppliers,
who support our operational infrastructure,
and the brokers, retailers, introducers and
dealers we have relationships with, who help
distribute our products.
We engage with them to ensure that we
maintain effective working relationships,
their services help support our delivery to
clients and that services provided deliver
value to the business and stakeholders, are
cost effective and our activities are carried
out in compliance with requirements.
Our business partners want to develop
beneficial and effective long-term business
relationships. They want us to offer a product
range that meets their clients’ requirements
including effective servicing of their accounts.
They want prompt and fair payment for
services provided and to receive feedback
to understand how they can improve their
services and processes.
Engagement with our business partners is
primarily undertaken by our management, client
teams, and individual business units or functions.
For our suppliers we also have a dedicated
procurement team who set the framework for
managing the relationships. We have effective
governance oversight teams for our key
business partners.
Our new CEO has met with a number of our
business partners since his appointment. The Board
receives regular updates from our CEO, business
units and our Chief Operating Officer who is also
responsible for the Group’s procurement team.
Any matters that require escalation are done so
through the governance framework.
• 33.9 average creditor payment days.
• An assessment of 618 suppliers within the
Group’s supply chain was undertaken in
2025, identifying 8 that presented a higher
risk of modern slavery and human trafficking.
These suppliers were required to provide
additional assurance of the programmes
they have in place to address their risks.
The assurance received highlighted
no concerns.
Secure Trust Bank PLC Annual Report & Accounts 2025
43
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Engaging with our stakeholders
Stakeholders and why we engage with them
Their priorities
How we engage
Outcomes
Regulators
Regulators are responsible for supervising their
respective financial markets, including the
entities and people working within them.
They have an interest in ensuring we deliver
good outcomes for customers, act with integrity
and transparency, are financially sound and
comply with regulatory requirements.
We engage with regulators to keep them
updated on our business and also engage with
regulators and policy makers to help develop and
understand changing regulatory requirements.
To protect the interests of customers and
the operation and stability of the financial
markets that they regulate. In order to
achieve this, they are interested in how we
protect and deliver good outcomes for our
customers, the level of capital we hold, our
governance, risk management and control
frameworks and the performance of
our business.
Our senior management, compliance and finance
teams are the primary point of contact with our
regulators. They hold meetings with the regulators
to keep them updated on developments within our
business and feedback is regularly provided to the
Board. During the year, Directors met directly with
the PRA to participate in deep-dive reviews on the
Groups Internal Capital Adequacy Assessment
Process (‘ICAAP’) and a Governance review.
In addition, we make regulatory applications,
notification and filings in line with requirements.
The Risk Committee receives updates from the
Compliance team at each meeting, which includes
details of all communications with our regulators
and ‘horizon scanning’, which identifies legal and
regulatory changes relevant to our business.
• Positive engagement and outcomes following
regulatory reviews.
• Responded to the FCA’s consultation on the
proposed redress scheme for historic motor
finance commissions to help develop
the proposals.
• CET 1 ratio of 12.9%.
• Completed the redress programme under the
FCA’s Borrowers in Financial Difficulty review.
Communities and society
We believe we have a responsibility to make
a wider contribution to the communities we
operate within and wider society, which we
primarily achieve through our Environmental
Social and Governance Strategy (‘ESG’).
We engage with our charitable partners to
understand their priorities and how we can
help them. We also engage with our business
partners to help drive enhancements in their
ESG practices (for instance, modern slavery
and carbon emissions).
The Communities in which we operate,
and wider society, cares about the impact
we have, both in minimising our impact to
the environment and having a positive
impact to society.
This includes our plans to achieve better
outcomes for all stakeholders and to support
diversity, equity and inclusion across
the industry.
We have an established Charity Committee, which
leads charitable activities across the Group and the
engagement with our charitable partners, including
through our volunteering partnership scheme.
We engage with all other stakeholder Groups on our
ESG strategy and priorities in order to understand
their views. Our website provides information to all
stakeholders and provides updates on our
ESG initiatives.
• Reduced our Scope 1 and 2 CO
2
equivalent
emissions by 18.6% against last year.
In 2024, we achieved our target of 50%
reduction in Scope 1 and Scope 2 emissions
by 2025 (since 2021). Please see our
Climate-related disclosures from page 54.
for further information.
• £126,000 of charitable donations raised
in 2025.
• 148 volunteer days donated by our staff.
• All women in Finance targets met by 2025.
Section 172 Directors’ duty
The Directors have continued to discharge their duties in accordance with section 172 of the Companies Act, which includes the need to consider the interests of the Company’s wider stakeholders.
Details of how the Directors have fulfilled their duties can be found throughout the Strategic and Governance reports with further information on how the Directors have considered stakeholder
interests in key decisions during the year on page 79.
Secure Trust Bank PLC Annual Report & Accounts 2025
44
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Environmental, Social and Governance (‘ESG’) strategy
What is our ESG strategy?
As a regulated bank, we remain committed to
aligning with external standards while ensuring
our ESG strategy goes beyond compliance.
Our strategy focuses on the areas most
material to our organisation and stakeholders,
supporting the delivery of our business strategy
and long-term success.
As it is essential that our ESG strategy aligns
with our business strategy, we are in the
process of refreshing our ESG approach to
reflect growth priorities identified at the end of
2025. This work will ensure that ESG continues
to complement and support our purpose and
strategic ambitions.
We have a robust governance framework in
place, with regular senior oversight of ESG
activities, progress, and risks. In 2025, this
framework continued to guide our approach
during a year of significant organisational
change, including our exit from the Vehicle
Finance market. These changes shaped both
progress and challenges across our ESG focus
areas. While we maintained momentum in
many areas, the impact on employee
engagement scores meant we did not achieve
one of our ED&I measures—to maintain
inclusion on the Great Place to Work
®
(‘GPTW
®
’)UK Best Workplace for Wellbeing
TM
listing. As the changes introduced in 2025 take
root and the organisation stabilises, our priority
will be on restoring the strong employee
engagement levels that have long been a
hallmark of our culture.
What progress has been made
against our ESG strategy and
priorities?
Despite these headwinds, we delivered strong
progress across our ESG priorities in 2025:
•
Climate Action/Risk
– Strengthened our
internal governance oversight for our Scope
3 financed emissions reporting to support
accurate reporting, and continued energy
efficiency improvements under our Energy
Savings Opportunity Scheme (‘ESOS’)
Action Plan.
•
Education and Skills
– Launched a new
Learning Management System to enhance
skills development and accelerate talent
planning, while evolving experiential
learning programmes.
•
Communities and Charities
– Achieved
major fundraising milestones for our
charity partners, although volunteering
and engagement initiatives were impacted
by organisational change.
•
ED&I
– Refreshed our ED&I strategy based
on colleague feedback and retained external
recognition, including the ENEI silver TIDE
mark and Disability Confident accreditation.
•
Customer Trust
– Continued embedding
Consumer Duty principles and invested in
technology to improve customer experience,
while addressing complaints handling
through operating model reviews.
Our priorities
Delivering value for all stakeholders
C
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i
m
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t
e
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o
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/
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i
s
k
C
u
s
t
o
m
e
r
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r
u
s
t
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n
d
C
h
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r
i
t
i
e
s
C
o
m
m
u
n
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i
e
s
Climate Action/Risk
Customer Trust
Equity, Diversity and Inclusion (‘ED&I’)
Education and Skills
Communities and Charities
Acting responsibly
Sustainable Development Goals
Environmental
Social
Governance
Secure Trust Bank PLC Annual Report & Accounts 2025
45
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Environmental, Social and Governance (‘ESG’) strategy
Further details on each focus area can be found
in the following sections.
Who owns our ESG strategy?
Ultimate ownership and oversight of our ESG
strategy rests with the Board, as it supports the
business strategy set by it. The Board delegates
implementation to the Chief Executive Officer
and, through him, to the Executive Committee.
What is the governance that supports
our ESG strategy?
The Executive Committee is supported by the
Executive Risk Committee and dedicated
working groups for various ESG focus areas.
These groups report progress regularly and
help ensure alignment with regulatory
requirements and stakeholder expectations.
More broadly, we require our people to act with
integrity and provide training and resources to
support this, underpinned by policies such as
our ED&I, Wellbeing, Anti-Harassment and
Bullying, and Family Friendly policies.
Stakeholders
ESG priorities
Measures/disclosures
Progress
Governance
Environmental
Climate
Action/Risk
• Regulators
• Business partners
• Shareholders
and investors
• Communities
and society
We aim to understand the
risks to our business
associated with climate
change so that we can
maintain a strong credit
discipline, capital allocation
and risk management
capabilities that support
our specialised lending.
We also aim to minimise
the harmful impact of
our business on the
environment by reducing
Scopes 1 and 2 CO
2
e
emissions from our
operations, understand
better Scope 3 emissions
associated with our lending
activities, and to use less
and re-use more.
• Report annually on our operational
energy use and carbon emissions in line
with Streamlined Energy and Carbon
Reporting (‘SECR’) regulations.
• Scope 1 and 2 CO
2
e emissions from
our operations reduced by 50%
from 31 December 2021 to
31 December 2025.
• Climate-related disclosures (and climate
risk scenarios) under the Task Force for
Climate-related Financial Disclosures
(‘TCFD’) and Companies Act
requirements and related PRA
regulations/Listing Rules.
• Working to be ready to publish a
Transition plan following the Transition
Plan Taskforce Disclosure Framework
and, when applicable, related
mandatory requirements.
Page 48
Always acting
with integrity
and transparency
to deliver value
for all our
stakeholders
Social
Customer Trust
• Customers
• Employees
• Regulators
• Business partners
• Shareholders
and investors
Our aim is to build the trust
of our customers through
the way we treat them, by
enhancing our customers’
experience, achieving high
standards of customer
service excellence and
through the outcomes we
enable for them.
• Feefo Trusted Awards.
• External awards for our products
and services.
•
HM Government Cyber Essentials
Plus certification.
Page 49
Best Workplaces™ in
Large Organisations
Best Workplaces™
in Financial Services
& Insurance
Best Workplaces™
for Development
Best Workplaces™
for Women
Best Workplaces awards
Secure Trust Bank PLC Annual Report & Accounts 2025
46
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Environmental, Social and Governance (‘ESG’) strategy
Stakeholders
ESG priorities
Measures/disclosures
Progress
Governance
Social
Equity, Diversity
and Inclusion (‘ED&I’)
• Customers
• Employees
• Regulators
• Business partners
• Shareholders
and investors
• Communities and society
Our vision is to be a successful, inclusive
business where all our people feel respected
and can confidently be themselves and fulfil
their potential. We aim to develop a positive
and healthy working environment where
colleagues have the opportunities and
resources to support their own wellbeing,
and which contributes to a culture where
people feel able to be their authentic selves.
We will strive to support all the protected
characteristics and improve our gender and
ethnic diversity.
•
Maintaining inclusion on the GPTW
®
UK Best Workplace
TM
listings for Women and Wellbeing (large companies).
• Signatory to the HM Treasury Women in Finance Charter.
We have pledged to set and publicly report against gender
diversity targets annually.
•
Annually reporting on our Gender Pay Gap.
• Maintaining/improving our Employer Network for Equality and
Inclusion (‘ENEI’) TIDE Mark.
• Maintaining our Disability Confident accreditation.
Page 50
Always acting
with integrity
and transparency
to deliver value
for all our
stakeholders
Social
Education and Skills
• Customers
• Employees
• Regulators
• Business partners
• Shareholders
and investors
Through our Learning and People
Development activities we aim to help all
our colleagues build their specialisations,
increase their confidence, plan their career
progression and make it happen. We are a
specialist lender, so these activities enhance
our specialisations, support our differentiation
from others and enable us to have market
expertise and deep customer knowledge.
•
Maintaining inclusion on the GPTW
®
UK Best Workplace listings
for Development
TM
(large companies).
Page 52
Social
Communities and
Charities
• Customers
• Employees
• Regulators
• Business partners
• Shareholders
and investors
• Communities and society
We aim to make a positive contribution to the
communities in which we work and conduct
our business. We aim to build and maintain
strong links with these communities through
support of local community initiatives and
fundraising activities, prioritised by colleagues’
preferences.
• Our bi-annual report of our supplier payment period in days.
• Our annual modern slavery statement setting out the steps we
take to eradicate modern slavery in our own businesses and
supply chains.
• Total annual fundraising for charities by colleagues and matched
by Secure Trust Bank £4£.
• Provide an annual update on community volunteering and
local initiatives.
Page 53
Secure Trust Bank PLC Annual Report & Accounts 2025
47
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Environmental, Social and Governance (‘ESG’) strategy
2025 progress
Looking ahead
Climate
Action/Risk
We remain committed to supporting the government’s
ambitions to tackle climate change by minimising the
environmental impact of our operations and protecting
the Group from climate-related risks. Building on the early
achievement of our Scope 1 and 2 emissions reduction target
in 2024, we have seen further improvement in 2025 resulting
in a total 68% reduction against the 2021 baseline.
•
Scope 3 emissions reporting
– We strengthened internal
governance oversight to support accurate Scope 3 reporting,
while continuing our partnership with Partnership for Carbon
Accounting Financials (‘PCAF’) to stay aligned with
industry standards.
•
Energy efficiency initiatives
– Delivery of our ESOS Action
Plan continued, including smart metering, enhanced energy
consumption tracking at our Solihull Office, motion sensor
lighting in Cardiff, and the downsizing of our London office.
We also further progressed the transition of company
vehicles to electric.
•
Business climate strategy development
– Business
unit-specific climate strategies were developed and
embedded, complementing the Group-wide Climate
Change Action Plan, which we aim to finalise in early 2026.
•
Paper-to-digital transformation
– We continued to reduce
paper use across the business, with Savings withdrawal
communications moving to digital channels.
•
Regulatory development
– Early review of IFRS S1/S2
readiness assessment has been completed to identify gaps
against anticipated disclosure requirements. This work
positions the Group to respond quickly once formal guidance
on Transition Plans and related climate-regulatory
developments is issued.
•
Further information on the Group’s climate change strategy,
risk management, and metrics and targets, including our
CO
2
e emissions, and work undertaken during 2025 can be
found within our Climate-related financial disclosures section
on pages 54 to 65.
The key focuses in 2026 will be:
• Conducting and delivering a plan
meeting the PRA’s expectations in
relation to the capital assessment
for climate risk.
• Managing premises and vehicle
energy consumption efficiently.
• Continuing to strengthen internal
governance oversight to support
accurate Scope 3 reporting,
while continuing our partnership
with PCAF to stay aligned with
industry standards.
• Expanding digital communications
to maximise paper reduction
across all businesses.
Over recent years, we have made strong progress in reducing
our carbon footprint, supported by a wide-ranging programme
of climate-focused initiatives. A key element of this work has been
the strategic review and optimisation of our property portfolio.
In 2025 we reached another important milestone with the
successful downsizing of our London office, following the earlier
sale of our additional Solihull premises. Together, these changes
have delivered a 55% reduction in total office space since 2022.
Our new London home on King William Street not only provides
a bright, modern environment designed for collaborative and
hybrid working, but it is also powered by 100% renewable
energy, reinforcing our commitment to sustainable operations.
Our smaller footprint is complemented by a series of
environmentally conscious upgrades across our sites, including
the installation of solar panels, smart metering and motion-sensor
lighting. These improvements are helping us to reduce energy
consumption, cut emissions and embed sustainable thinking in
the way we work every day.
A greener way of working
Secure Trust Bank PLC Annual Report & Accounts 2025
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Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Environmental, Social and Governance (‘ESG’) strategy
2025 progress
Looking ahead
Customer
Trust
With a vision to become the UK’s most trusted specialist lender,
developing customer trust remains a key priority for the Group.
We continue to monitor customer experience closely through our
Consumer Duty framework and other feedback mechanisms.
•
Customer satisfaction
– Customer satisfaction in Savings and
Retail Finance remained high during the year, although Group
scores are not directly comparable to 2024 due to our exit from
Vehicle Finance. In our Business Finance division, strong client
satisfaction was reflected in our consistently high ratings in
internally facilitated surveys.
•
Awards and recognition
– Our commitment to delivering quality
products and services was recognised through industry awards in
2025, including Feefo’s Exceptional Service award and business
specific awards:
–
Savings: Five-star service award for personal savings for ease of
account opening (Moneyfacts) and Gold Trusted Service (Feefo);
–
Retail Finance: Winner of Best Retail Finance Provider for the
seventh consecutive year (Interiors Monthly), Finalist for Best
Consumer Credit Product (Credit Strategy Credit Awards) and
awarded Platinum Trusted Service Award (Feefo);
–
Commercial Finance: Winner of Alternative Funder of the Year
for the second consecutive year (Midlands Insider Dealmakers
Awards); and
–
Commercial Finance: Winner Asset Based Lender of the Year
(Real Deals Private Equity Awards).
•
Consumer Duty
– We completed a full review of Consumer
Duty metrics and thresholds in the first half of 2025, enabling
meaningful improvements in how we monitor customer outcomes.
Operating model reviews for complaints handling and operations are
underway to strengthen processes and enhance customer journeys.
•
Technology and digital experience
– We continued to invest in
technology to improve customer experience and efficiency and
retained our Cyber Essentials Plus accreditation. Initiatives such
as the Digital Savings Experience project and the roll out of vPay,
our in-house portal for debit card and Open Banking payments
sent via SMS or email link, have resulted in more streamlined
customer journeys.
The focus in 2026 will be on:
• Enhancing digital
self-service and Assisted
Service capability, including
Interactive Voice Response
and payment journey
improvements.
• Further developing Retail
Finance and Savings apps
with expanded self-service
and proactive notifications.
• Automating key Savings
processes to improve speed
and efficiency.
• Improving major customer
journeys with clearer
updates and fewer
paper communications.
• Strengthening telephony
capability, exploring Live
Chat and enhanced
intelligent call handling.
• Establishing consistent
customer satisfaction
measurement across
business areas.
• Preparing and delivering
Vehicle Finance commission
redress related activity.
• Embedding Consumer
Duty improvements across
operations, communications
and vulnerable customers.
In 2025 we re-launched our Savings mobile app, marking an
important step forward in improving customer experience and
strengthening trust in our digital services. Built entirely in-house,
the updated app provides a refreshed design, clearer navigation and
improved functionality, creating a smoother and more intuitive way
for customers to manage their savings.
From the outset, the project was shaped by customer needs.
The new platform delivers a more accessible and reliable
experience across all devices, with features specifically designed
to support vulnerable customers, including those with visual
impairments. By making everyday servicing easier and enabling
more self-service, the app reduces friction and gives customers
greater confidence and control.
Developing the app internally also gives us the flexibility to deliver
enhancements more quickly and tailor future features to what
customers tell us matters most. This approach reduces reliance on
third-party systems and enables us to deliver significant long-term
cost savings, supporting ongoing investment in improving our digital
journeys and building long-term customer trust.
Trusted by design
Secure Trust Bank PLC Annual Report & Accounts 2025
49
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Environmental, Social and Governance (‘ESG’) strategy
2025 progress
Looking ahead
ED&I
Significant organisational change in 2025 brought
both progress and challenges for ED&I and Wellbeing.
While restructuring improved senior-level diversity metrics,
it disrupted continuity in some initiatives and affected
engagement scores. Despite this, we maintained external
recognition and advanced work to refresh our ED&I strategy.
Key areas of focus for 2025 included:
•
Strategy refresh
– We undertook a comprehensive review of
our ED&I strategy, informed by colleague feedback gathered
through focus groups and a Group-wide questionnaire.
This bottom-up, top-down approach helps ensure our
priorities reflect real barriers to career development
and progression.
•
Wellbeing alignment
– Building on our commitment to
Business in the Community’s Workwell framework, we
introduced a dedicated Wellbeing Champion group and
trained nine new Mental Health First Aiders, bringing us
back
above our 5% workforce target. Although the impact
on our engagement scores meant that we did not feature in
the UK Best Workplaces for Wellbeing
TM
in 2025, our latest
Workwell Assessment score improved, elevating us to
the ‘Embedding’ level in the Inclusive Culture category.
•
External benchmarking
– we retained the ENEI silver TIDE
mark for the fourth consecutive year, reflecting our continued
commitment to diversity and inclusion.
•
Promoting inclusion
– Our Inclusioneer network continued
to champion diversity through awareness campaigns and
events, including attendance at Pride in Birmingham
and Cardiff.
•
Recognition and progress
– We retained our Disability
Confident accreditation and published our Gender Pay Gap
report early, which shows gradual improvement. However,
the shape of our workforce remains the biggest driver of the
gap and addressing this continues to be a long-term challenge.
• Our
Learning and Development
offering and colleague
recognition suite remain key to supporting attainment of
our ED&I targets and examples can be found on page 52.
The focus in 2026 will be on:
• Strengthening leadership
engagement, addressing
progression barriers, and
embedding inclusion as a core
part of our culture.
• Relaunching the ED&I Steerco
and Inclusioneers.
• Embedding the refreshed ED&I
strategy and aligning it with
regulatory developments on
diversity and inclusion.
• Continuing to strengthen
wellbeing initiatives and mental
health support.
• Expanding mentoring and reverse
mentoring programmes to support
career progression.
• Maintaining focus on diversity
within talent planning and
succession processes.
In 2025 we strengthened our commitment to ED&I by enhancing
our Menstrual Health Policy, creating a standard of support
that goes beyond what is typically offered by organisations.
A colleague-led review highlighted the need to bring all available
assistance into one place, ensuring that anyone affected by
menstrual-related health issues can easily understand what
support is available and how to access it.
The updated policy now sets out a comprehensive and clearly
defined range of support, including reasonable workplace
adjustments, flexible working options, rest breaks and stress-risk
assessments, alongside a full set of terms and definitions to improve
understanding. By formalising support previously offered on a
case-by-case basis, we have sought to create a consistent,
transparent and best-in-class approach that gives colleagues
greater confidence and reassurance.
To complement the policy, we also introduced menopause social
events to provide a safe, open forum for colleagues to share
experiences and learn from one another. These sessions are helping
to normalise important conversations, build understanding across
teams and further strengthen the inclusive culture we are working
to embed across the Group.
Best-in-class inclusive support
Secure Trust Bank PLC Annual Report & Accounts 2025
50
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Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Environmental, Social and Governance (‘ESG’) strategy
Board and Executive Management gender representation
At the year-end, the split by gender was:
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO,CFO, SID
and Chair)
Number in
Executive
Management
1
Percentage of
Executive
Management
Men
5
62.5
2
7
78
Women
3
37.5
2
2
22
Other categories
–
–
–
–
–
Not specified/prefer not to say
–
–
–
–
–
Board and Executive Management ethnic representation
2
At the year-end, the split by ethnicity was:
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO,CFO, SID
and Chair)
Number in
Executive
Management
1
Percentage of
Executive
Management
White British or other White
(including minority-White groups)
8
100
4
9
100
Mixed/Multiple ethnic groups
–
–
–
–
–
Asian/Asian British
–
–
–
–
–
Black/African/Caribbean/Black British
–
–
–
–
–
Other ethnic group
–
–
–
–
–
Not specified/prefer not to say
–
–
–
–
–
Further details on Board diversity can be found in the Nomination Committee report on pages 83 to 85.
We continue to make progress on our ED&I agenda as demonstrated by external benchmarks and our 2025 metrics show that this is
also resulting in a gradual improvement in our workforce gender diversity.
At the year-end, the split by gender
of the Group was as follows:
Directors
62.5%
37.5%
100%
Total
5
3
8
Male
Female
1
2
1
2
Senior
managers
3
Male
Female
Total
83%
17%
100%
1
2
1
2
5
1
6
Senior
management
4
& direct
reports
Male
Female
Total
59%
41%
100%
1
2
1
2
30
21
51
Total
employees
48%
52%
100%
Total
374
398
772
Male
Female
1
2
1
2
Notes:
1. In accordance with the requirement under Listing Rules LR 9.8.6R(9) and LR 14.3.33R(1), the ‘Number in Executive Management’ includes
all members of the Executive Committee (which includes the CEO and CFO, who are also Directors), and the Company Secretary.
2.
The Board and Executive Management were asked to confirm their ethnicity from the following options: White British/other White, Mixed/
Multiple ethnic groups, Asian/Asian British, Black/African/Caribbean/Black British, other ethnic group and not specified/prefer not to say.
3.
In accordance with the requirement set out in s.414C(8)(c)(ii) of the Companies Act 2006 for disclosure of Secure Trust Bank Group’s ‘senior
managers’ (as that term is defined in s.414C(9)). The number of individuals disclosed here differs from the table adjacent and that on page 69.
This is due to the definition of Senior Manager under the CA 2006 excluding individuals who are not employees of the Company whereas the
data disclosed elsewhere includes an individual engaged on an agency basis and Executive Directors being included in the pie chart above.
4. Defined within the Code as consisting of Executive Committee members including the Company Secretary.
Secure Trust Bank PLC Annual Report & Accounts 2025
51
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Environmental, Social and Governance (‘ESG’) strategy
2025 progress
Looking ahead
Education
and Skills
Our focus on education and skills is aimed at embedding
excellence in our culture and supporting both career progression
and the Group’s strategic objectives. In 2025, we continued to
evolve our approach, combining technology-driven solutions
with experiential learning to deliver greater impact. Key areas
of focus for 2025 included:
•
Management zone
- Aimed at helping people leaders to shape
team culture and drive optimum team performance.
•
Learning Management System (‘LMS’)
– A major milestone
was the successful launch of our new LMS in April, enabling
improved learning delivery, automation, and impact
measurement. This platform will also support more effective
management of one-to-ones and our performance
management framework from early 2026.
•
Management development
– The Management Development
Programme was relaunched and supported by a pilot to assess
its effectiveness. Insights from this review are shaping new
initiatives for 2026, including a dedicated induction
programme for new leaders.
•
Experiential learning
– Flagship programmes such as Blazing
My Trail are being redesigned as immersive learning journeys
to deliver longer-term impact. The Alan Karter Scholarship
continues to receive strong feedback, and the mentoring
programme is regaining momentum following earlier
organisational changes.
•
Recognition and engagement
– The Group retained its
place on the UK Best Workplaces for Development™ list,
ranking 75 out of 100. While this is a drop from 26th in 2024,
it reflects the broader impact of structural changes on
colleague sentiment. Satisfaction scores for internal learning
events remain exceptionally high at 100%.
•
Apprenticeships
– Completed apprenticeships fell slightly
during 2025, however, we remain committed to promoting
apprenticeships and educating line managers on their benefits.
The focus in 2026 will be on:
• Embedding our performance
management framework
automation across the Group.
• Conducting employee journey
training needs analysis.
• Accelerating talent and succession
planning using LMS functionality.
• Expanding experiential
learning programmes.
• Investing in career pathways
for emerging managers and
specialists, ensuring succession
readiness and organisational
continuity.
• Continuing with our mentoring
and coaching opportunities to
support career growth and
knowledge sharing across
the organisation.
• Continuing to create an
environment where every
employee can access development
opportunities. Flexible learning
formats - including digital modules,
workshops, and peer learning –
enabling our people to grow
skills to suit their roles and
learning styles.
In 2025 we introduced our new Learning Hub, a modern LMS
designed to help colleagues build the skills and confidence they
need to perform at their best. With a personalised dashboard,
clearer learning pathways and improved search tools, the platform
makes it easier for colleagues to find and complete training that
directly supports their roles and responsibilities.
The Learning Hub also provides managers with better oversight
of team development, helping them identify skills gaps and ensure
colleagues have the capabilities needed to support the Group’s
strategic priorities. As new features roll out — including tools for
setting objectives, managing performance and guiding one-to-one
conversations — the platform will offer a more consistent and
effective approach to performance management across
the organisation.
By making learning simpler, more accessible and more closely
aligned to business needs, the new Learning Hub is helping
colleagues grow in their roles today, while strengthening the skills
and capabilities the Group needs to deliver its long-term strategy.
Strategy-driven learning
Secure Trust Bank PLC Annual Report & Accounts 2025
52
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Environmental, Social and Governance (‘ESG’) strategy
2025 progress
Looking ahead
Communities
and Charities
Our commitment to communities and charities reflects our
belief that business success should go hand in hand with social
impact. In 2025, we focused on deepening relationships with
our charity partners, expanding volunteering opportunities,
and strengthening educational collaborations, all while
navigating organisational change. These efforts helped
us deliver meaningful support to local causes and lay the
groundwork for a more strategic approach to community
engagement in 2026. While fundraising was particularly
successful, some volunteering and community engagement
initiatives were impacted by organisational change during the
year. Key achievements for the year included:
•
Charity partnerships
– We extended our partnership with
T
^
y Hafan for another three years, setting a £250,000 target
for the full six-year term. Solihull established a strong
relationship with new charity partner, Birmingham Children’s
Hospital, laying the foundation for long-term collaboration
to hit a £100,000 fundraising target over three years.
Our Business Finance division delivered strong events
in support of Go Beyond and Bone Cancer Research.
•
Volunteering
– While volunteering hours were impacted by
organisational changes and operational pressures, colleagues
still delivered nearly 150 days of support. Structured support
in Cardiff helped maintain momentum, and Solihull is adopting
similar models to expand opportunities across the Group.
•
Community engagement
– We continued to work with
local education providers to support employability skills for
young people with approximately 250 students being engaged
over the year. A Group-wide strategic plan for community
engagement is being developed to enable alignment and
impact across all regions.
•
Supplier and social responsibility
– We remain committed to
timely supplier payments and maintaining robust processes to
minimise the risk of modern slavery within our own business
and supply chains.
The focus in 2026 will be on:
• Delivering upcoming fundraising
events and maintaining momentum
for long-term charity partnerships.
• Launching a volunteering calendar
to create more volunteering
opportunities across all
office locations.
• Developing and implementing a
Group-wide strategic plan for
community engagement to ensure
consistency and impact.
• Strengthening educational
partnerships to support
employability skills and broaden
colleague involvement.
•
Develop a Group-wide community
engagement strategy.
In 2025, colleagues across the Group delivered another exceptional
year of fundraising, helping raise more than £126,000 for our
charity partners, around 25% higher than in 2024. One standout
example was the Welsh Three Peaks Challenge, where a team from
our Retail Finance business tackled Yr Wyddfa, Cadair Idris and Pen
y Fan in a single day — battling heavy rain, hail and steep climbs
from 4:00am until their final descent at 8:30pm.
Supported by volunteer drivers, the team demonstrated
remarkable commitment and raised £19,000, including matched
funding from the Group. The team’s achievement reflects the spirit
seen across the Group throughout the year, with a range of events
being delivered, from sky diving and dragon boat racing to long
standing events like the annual Golf Day.
These efforts helped strengthen relationships with our charity
partners and laid the foundation for our 2026 priorities: expanding
volunteering, deepening partnerships and delivering a more
strategic, Group-wide approach to community engagement.
Reaching new heights for charity
Secure Trust Bank PLC Annual Report & Accounts 2025
53
Strategic Report
Corporate Governance
Financial Statements
Other Information
Climate change
The Climate change risk landscape has
continued to evolve at pace with heightened
government and regulatory expectations.
A collective shift in attitude and behaviour
towards the management of climate change
presents a dynamic landscape of risks and
opportunities for UK financial services.
In 2025, the Group continued to make
progress in supporting and helping to
mitigate impacts across both the
medium‑ and long‑term time horizons.
The Group remains committed to meeting
legal and regulatory requirements, whilst
staying aligned with the Group objectives.
Our progress
Across the Group, we have supported the
government’s ambition to achieve net zero
by 2050 by embedding climate change into
decision-making ensuring it remains a priority
and delivering the following key achievements
in 2025.
Each business area made significant
progress in strengthening and embedding
climate-related risks and opportunities.
We embedded climate considerations
across the Group by reviewing climate
strategies, strengthening climate-related
risk and control frameworks, and developing
consistent climate metrics and management
information. Further detail can be found on
page 60 .
• Retail Finance continued to support the
transition to a low-carbon economy through
funding for home electric vehicle (‘EV’)
chargers and e-bike sales. The business is
also exploring opportunities to expand into
the wider renewable energy market.
• Climate risk management was enhanced
by removing reliance on a third party for
scenario analysis.
• Actions undertaken in 2025 have provided
the Group with a strong foundation to meet
the PRA’s expectations in relation to the
capital assessment for climate risk.
• Climate awareness and capability was
strengthened by embedding climate into
operations and governance frameworks,
supported by targeted training designed
to ensure climate considerations remained
integrated across the Group and within our
business strategy.
Our approach
The Group remains committed to integrating
and embedding sustainability into frameworks
to create shared value for customers, business
partners and the community that is
proportionate and appropriate to our business
as a specialist lender in different sectors.
As part of our commitment to being transparent
and responsible, our climate-related disclosures
in this report outline how the Group is
managing its exposure to climate risks aligning
with the four key pillars of the ‘Task Force for
Climate-Related Disclosures’ (‘TCFD’),
Governance, Strategy, Risk management,
and Metrics and targets.
While our current approach remains aligned
with UK Listing Rule 16.3.23(R) and TCFD
requirements, we are actively preparing for
forthcoming regulatory developments to
ensure our climate strategy remains resilient
and fit for the future. We will also continue
to develop and improve skills in line with
industry best practices, ensuring our climate
methodologies and frameworks are robust
and appropriate.
Our ongoing membership of UK Finance
has seen the Group support industry‑wide
consultations and provide feedback.
This is designed to enable greater industry
collaboration. Forums include both
regulatory, strategic and government
policy design.
As a member of the PRA Climate Financial
Risk Forum, we have contributed to sessions
for banks. This has helped us to develop our
own strategy, by discussing good practice
with industry experts.
The Group is a member of Partnership for
Carbon Accounting Financials (‘PCAF’) and
actively contributes to their working groups
developing good practice in financed
emissions reporting and data collection.
As an official TCFD supporter, the Group
Annual Report and Accounts contains
climate-related disclosures consistent
with TCFD.
Affiliations
Through membership of industry bodies and initiatives, the Group plays an active role in
working to address the sustainability challenges faced across the finance industry.
Managing our business responsibly
continued
Climate-related financial disclosures
Secure Trust Bank PLC Annual Report & Accounts 2025
54
Strategic Report
Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Climate-related financial disclosures
Governance
The Group recognises the importance of climate change risk management and has continued to invest and provide resources to develop its climate strategy and ambitions. The Group has allocated the
Senior Management Function responsibility for identifying and managing the risks from climate change to the Chief Risk Officer (‘CRO’), who is also a member of the Climate Working Group (‘CWG’).
The Board oversees the Group’s Climate change risk and has delegated responsibility for management of Climate change risk to the Executive Risk Committee (‘ERC’). The ERC members include the
ChiefExecutive Officer, Chief Financial Officer and Chief Operating Officer. The Group’s risk governance structure can be found on page 31.
Disclosure
Approach and 2025 progress
Looking forward
The Board’s
oversight of
climate-related risks
and opportunities
•
The Board receives regular updates on progress against the Group’s ESG strategy which includes a focus on environmental
aspects including climate action/risk.
•
Climate change risk is reported to the ERC and then the Board Risk Committee (‘BRC’). Over the year, the ERC met on
12 occasions and the BRC met on five occasions. The Board receives reports on progress related to climate activities
(including metrics and targets).
•
The management of all risks (including climate change) is embedded into the Group’s strategy setting, business plan and
executive remuneration policies.
•
The Board will continue to provide strategic
oversight and direction on the Group’s
climate agenda, identifying accountability
and monitoring alignment with evolving
regulatory and industry expectations.
•
As the Group’s Climate change risk
management matures and becomes more
embedded, the Group will further refine its
reporting to its governance committees to
provide improved visibility of climate risks
and opportunities.
Management’s
role in assessing
and managing
climate-related risks
and opportunities
•
Ownership of Climate change risks sit with the accountable executives of the Group’s relevant business areas and quarterly
reporting is provided to the ERC.
•
Climate change risk is embedded into the annual Risk and Control Self‑Assessment (‘RCSA’) process. A full review of climate
risks and controls was conducted by first-line risk owners, with oversight from the second-line team, and annual climate
business strategy reviews were completed.
• In 2025 we continued to engage with industry bodies to improve our understanding of climate best practices which
strengthened the understanding of climate risks and opportunities within the Group.
• Management will continue to build
knowledge and further embed climate
change in decision making.
• The CRO and senior members of the risk
function, including the climate lead will
continue to partner with industry bodies to
understand management and best practice in
assessment of climate risks and opportunities.
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Other Information
Strategy
The Group’s ESG strategy includes a focus on climate risk. Cognisant of the government’s 2050 net zero target, the Group remains committed to supporting the consumers and businesses it works with
as the UK transitions to a low‑carbon economy.
Disclosure
Approach and 2025 progress
Looking forward
Climate-related risks
and opportunities
identified over the
short, medium, and
long term
•
In 2025, workshops were held across the Group’s business functions to review risks and explore related opportunities.
Climate change is embedded within the Enterprise Wide Risk Management Framework (‘EWRMF’), which aligns and
standardises risk‑management practices across the Group. As a principal risk, it is identified, escalated and monitored
through the same processes as other key risks. Management for Climate change risk remains with the relevant executives
and it continues to be embedded in the variable compensation structures for Executive Directors and other key risk takers.
Details of the Group’s key Climate risks can be found on page 59.
•
Business functions reviewed and updated their respective Climate strategies strengthening the Group’s view of the risks
and opportunities in line with each business strategy.
• Retail Finance actively explored lending opportunities that support customers in transitioning towards greener solutions.
The business partnered with retailers who offer renewable products and services, providing consumer finance that enables
customers to pursue their ambitions for a more sustainable future.
•
The Group will continue to assess climate‑related
opportunities and integrate climate‑related
decision making into its activities.
•
Work will continue in 2026 to explore
opportunities in the business where the
Group can continue to transition to a lower
carbon economy.
The impact of
climate-related risks
and opportunities
on our businesses,
strategy, and
financial planning
•
The Group identified opportunities and assessed the impact of its climate‑related risks as having little adverse impact on
its business, strategy and financial planning over a five‑year time horizon. Due to the nature of the Group’s operations any
material impacts are not expected to crystallise until the medium-term.
•
The Group recognises the evolving climate regulatory landscape, and it continues to monitor and prepare proposals on
future climate disclosure reporting. In 2025, the Group continued to raise awareness internally and upskill individuals
where appropriate.
•
The Group will continue to respond to evolving
regulatory requirements and developments.
• As businesses in the UK develop and deliver
their own Transition Plans, the Group is ready
to explore opportunities to support them and
the wider transition of the economy.
The resilience of
our strategy, taking
into consideration
different climate-
related scenarios,
including a 2°C or
lower scenario
•
The Group conducted scenario analysis exercises to test the resilience of its strategy to the impacts of climate change
and continued to integrate climate scenarios into the Internal Capital Adequacy Assessment Process (‘ICAAP’) and
IFRS 9 models.
•
The analysis undertaken in 2025 indicated that the Group remains resilient to the climate‑related stresses modelled
under both the ‘Late Action’ and ‘Early Action’ scenarios. Further detail is provided on page 58.
•
The Group developed its modelling capabilities internally, enhancing governance and reducing reliance on third parties.
•
Early review of IFRS S1/S2 readiness was completed to identify gaps against anticipated disclosure requirements.
This work positions the Group to respond quickly once formal guidance on Transition Plans (and related climate‑regulatory
developments) is issued.
•
The Group is developing its internal modelling
capabilities to embed climate scenario analysis
further into its lending decisioning and to help
ensure the Group is adequately capitalised.
•
In 2026, the Group anticipates additional PRA
supervisory expectations that will further
develop existing requirements and strengthen
the Group’s risk‑management capabilities for
managing climate-related financial risks.
Managing our business responsibly
continued
Climate-related financial disclosures
Secure Trust Bank PLC Annual Report & Accounts 2025
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Corporate Governance
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Other Information
Managing our business responsibly
continued
Climate-related financial disclosures
Risk management
The Group has established risk frameworks and policies which incorporate the approach to managing Climate change risk. Climate change risk is governed through existing risk governance structures,
including reporting to the ERC and monitoring for any new regulation through established horizon scanning processes.
Disclosure
Approach and 2025 progress
Looking forward
Our processes for
identifying and
assessing climate-
related risks
•
Climate change has been recognised as a principal risk within the Group. The identification and assessment of this risk remain
integrated and embedded within existing risk management frameworks.
• Assessment of climate-related impacts are based on transactional and portfolio level as well as through stress testing and
scenario analysis for a longer-term view.
• The potential impacts of the risks are assessed against the established hierarchy contained within our risk frameworks,
covering potential financial, regulatory/reputational impact, business disruption, customer impacts and the emerging
regulatory landscape.
•
The Group is actively developing its scenario
analysis capabilities, and future climate stress
testing will be developed internally, to support
a bespoke approach.
•
The Group will continue to develop its
understanding of climate risk, to ensure
compliance with the PRA’s requirements for
capital assessment for climate risk, standards
and other forthcoming regulations.
Our processes for
managing climate-
related risks
•
The Group uses established processes to support the management of climate‑related risks, which include monitoring and
reporting of data through the climate change working group and governance committees, driving ownership of Climate
change risk to enable regulatory developments to be understood.
• Risks are governed through existing risk governance structures, including reporting to the ERC. All risks are reported
collectively to enable the Executive Committee and the Board to understand and consider the scale and breadth of the
Climate change risk profile.
•
To strengthen ownership of climate risk and ensure regulatory developments are understood, the Group will continue to
evolve its approach by engaging with industry best practices and external forums.
• As the landscape continues to mature around
climate, the Group will continue to develop its
risk capabilities, to support and achieve its
climate ambitions.
How our processes
for identifying,
assessing and
managing climate-
related risks are
integrated into
overall risk
management
•
Climate change risk is embedded within the Group’s existing risk frameworks, with clear ownership, accountability, and
quantitative metrics reported through the ERC and BRC. Physical and transition risks are managed through the Operational
and Credit Risk Frameworks, covering identification, assessment, prioritisation, mitigation, and scenario analysis outputs.
•
The Group will continue to embed
climate change considerations into its
risk-management practices, with a
particular focus on building awareness
and understanding of climate‑related risks
across its employees to strengthen further
its climate‑risk management.
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Metrics and targets
The Group seeks to understand and quantify its climate‑related risk exposures so that, working alongside its customers and clients, it can minimise the financial risks associated with the transition to a
low-carbon economy and the potential impacts of climate change on the business.
Individual climate‑related risks continue to be monitored at the appropriate levels across the Group; the table provides an aggregated portfolio‑level view. This consolidation does not result in any loss of
material climate-risk information.
Disclosure
Approach and 2025 progress
Looking forward
The metrics used by the
organisation to assess
climate-related risks
and opportunities in
line with its strategy
and risk management
process
•
Each business area has metrics which are aligned to the Group’s risk appetite and are reported to the ERC monthly. These metrics included
vehicle emissions for our Vehicle Finance business and flood risk for our Real Estate Finance portfolio. Further details of these can be found
on pages 63 to 65.
•
In 2025, the Group undertook a comprehensive review of its climate‑related metrics so that the measures reported across governance
committees remain relevant, robust, and aligned to each business line. A decision was taken to reduce Vehicle Finance climate reporting
due to business being wound down. The Group continues to assess applicable risks and vehicle emissions for the existing fleet.
•
The Group will continue
to develop metrics and
measurements aligned to
regulatory requirements
and any potential
changes within each
business function.
Scope 1, Scope 2, and,
if appropriate, Scope 3
greenhouse gas
(‘GHG’) emissions,
and the related risks
•
The Group continues its partnership with the PCAF, to access previously unavailable data points, and enabling reporting of financed emissions
across its Real Estate Finance and Commercial Finance lending portfolios as well as for its purchased goods and services and capital goods.
• In 2024, we achieved our target of reducing direct CO
2
equivalent (‘CO
2
e’) emissions by 50% (compared to the 2021 baseline). In 2025 a
Energy Savings Opportunity Scheme (‘ESOS’) Phase 3 Action Plan was implemented, which included the delivery of a small number of residual
initiatives to reduce further CO
2
e emissions.
•
The Group will continue
working on enhancements
to the availability and
quality of data to support
future calculations
of emissions.
The targets used to
manage climate-
related risks and
opportunities and
performance
against targets
•
The Group achieved a 68% reduction in Scope 1 and Scope 2 CO
2
e emissions by December 2025, compared to the 2021 baseline. The total
reduction in Scope 1 and Scope 2 CO
2
e emissions reduced from 445.7 to 143.4 tonnes CO
2
e. Further details can be found on page 61.
•
Each of the Group’s business metrics are reported alongside appropriate thresholds. This means the Group has a clear line of sight across
each business giving governance committees’ appropriate information and insight into Climate change risk.
•
While the Group is not setting a further emissions‑reduction target at this stage, we remain committed to supporting the UK Government’s
ambition and will continue to maintain and build on the progress and improvements already achieved.
•
The Group will continue to
monitor its metrics and will
develop its targets in line
with its own climate
ambitions and the
external environment.
Stress testing/scenario analysis
To understand the potential implications climate change can have on the Group, the Group undertakes annual scenario assessments to help assess the level of risk from climate change.
Each business area has undertaken scenario analysis (see pages 63 to 65) proportionate to its risk profile, time horizons, and relevant plausible scenarios, with outputs reviewed at least
every three years. This analysis has enhanced the Group’s understanding of key risk drivers.
The scenarios are linked to the Bank of England’s Climate Biennial Exploratory Scenarios (‘CBES’) that are based on those developed by the Network for Greening the Financial System and
aredesigned to support central banks to bring greater consistency and comparability to stress testing exercises. Two routes to meeting net zero carbon dioxide emissions targets by 2050 were
considered: an ‘Early Action Scenario’ and a ‘Late Action Scenario’. The former assumes early intervention to tackle the challenge of climate change, which results in a smoother transition, while the
latter assumes a more acute fallout due to the lack of action. The outcomes from the scenarios undertaken indicate that currently there is no significant impact to Expected Credit Losses (‘ECLs’) due
to climate change factors and the Group is resilient across the scenarios assessed. The results will be factored into the Group’s 2026 ICAAP. The Group plans to develop further in 2026 the scenario
analysis undertaken and will continue to use the results to identify climate change risks/opportunities and how they may influence our business plans in line with change in regulatory requirements.
Managing our business responsibly
continued
Climate-related financial disclosures
Secure Trust Bank PLC Annual Report & Accounts 2025
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Other Information
Managing our business responsibly
continued
Climate-related financial disclosures
Climate risk management –
how we identify, assess
and manage climate-related risks
Climate risk is managed as part of the Group’s
EWRMF, as outlined on page 56. The EWRMF
provides the tools and guidance needed for
the consistent assessment and management
of climate‑related risks, providing alignment
with the overall risk management approach.
The effective management of risk is a key part
of the Group’s strategy and is underpinned by
its ‘Risk Aware’ value. The Group identifies
climate risk as one of its principal risks details
of which can be found in Principal risks and
uncertainties (pages 30 to 39).
This includes both the transitional risk to
our strategy and any physical risks arising
from climate change that could impact
the calculation and valuation of assets
and liabilities.
In 2025, climate related RCSA workshops
were conducted to support business areas in
the identification and assessment of climate
related risks. No new material climate‑related
issues were identified during the annual review.
The table shows an aggregated view of climate
risks for the Group which have been assessed as
low. Further climate related business risk
details can be found on pages 63 to 65.
Given the low climate risk rating disclosed,
the Group’s approach to climate risk is
proportionate to the scale and nature of its
activities. Climate change and its management
are a key part of the Group’s Environmental,
Social and Governance strategy.
Addressing climate risk and its environmental,
economic, and social impacts is critical, and
our ongoing work to assess related risks and
opportunities remains a key focus for the Board
and senior management.
The Group continued to assess climate‑related
risks and opportunities in 2025, making good
progress. Further details can be found of page
57 . This has enabled the Group to align both
its business and climate objectives.
During the year, we have developed a better
understanding of climate risk, strengthening
clear accountability and management.
Further details can be found for each
business on pages 63 to 65.
As members of UK Finance and PCAF,
we will continue to engage with industry
and policymakers to drive progress, stay
informed on climate developments,
and collaborate with peers.
Summary of climate change risks
Climate‑related risks are identified and assessed through the Group’s Operational
and Credit Risk Frameworks. A summary of these risks is as follows:
Climate-related risks
Business unit
Short
1
Medium
1
Long
1
Assessment
Physical
The risk that the impacts
of climate change such
as severe weather
interrupt our internal
operations and/or
supplier chain.
Group‑wide
Low
Transitional
Failure to meet evolving
climate industry
standards, customer
expectations
and regulatory
requirements.
Group‑wide
Low
There is a risk that
the impacts of climate
change could adversely
affect the value of
collateral resulting in
the failure to achieve
business objective,
financial loss and
potential regulatory
censure.
Commercial
Finance and
Real Estate
Finance
Low
Note:
1.
Short‑term 0‑5 years, medium‑term 5 to 10 years, long‑term 10 + years.
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Managing our business responsibly
continued
Climate-related financial disclosures
•
Scope 1 emissions result from activities owned and controlled by the Group. These are
direct emissions that include the combustion of natural gas for heating buildings and fuel
for Group‑leased vehicles.
•
Scope 2 emissions are indirect emissions generated from purchased electricity for the
Group’s activities but occur at sources that the Group does not own or control.
•
Scope 3 emissions are indirect emissions generated by the Group’s activities but
occur at sources that the Group does not own or control up and down the value chain.
Details of which categories are included in the 2025 and 2024 results are included on
the following page.
Data relating to Scope 1, Scope 2 and Scope 3 (excluding categories 1, 2 and 15) CO
2
e
emissions have been assured by a third party.
GHG emissions
Scope 1, 2, and 3 GHG emissions
In 2025, the Group maintained its reduced Scope 1 and 2 emissions and continued to measure and
report Scope 3 financed emissions. The Group also improved the quality and completeness of
underlying data to support more consistent measurement and observed a reduction in financed
emissions across all portfolios.
Measure
2025
CO
2
tonnes
2024
CO
2
e tonnes
Further
details
Scope 1, Scope 2 and Scope 3
(excluding categories 1, 2 and 15) CO
2
e emissions
249.8
307.4
See below
Scope 3 (1) Purchased goods and services;
and (2) Capital goods
3,005.9
3,399.9
Page 62
Scope 3 (15) Financed Emissions
223,763.0
639,300.0
Page 62
Total Scope 1, Scope 2 and Scope 3 CO
2
e emissions
227,018.7
643,007.3
Measure
2025
kwh
2024
kwh
Movement
%
Scope 1 – Building energy: gas consumption
57,971
65,926
(12.1)
Scope 1 – Business travel: Group‑leased vehicles
142,095
242,895
(41.5)
Scope 2 – UK electricity consumption
561,350
625,582
(10.3)
Scope 3 – Business travel: employee‑owned vehicles
148,319
94,502
56.9
Total energy consumption
909,735
1,028,905
(11.6)
Strengthening the Group’s reporting capabilities will remain a key focus in 2026 as the regulatory
landscape continues to mature.
The following tables set out the Group’s energy consumption and CO
2
e emissions for 2025 in
accordance with TCFD guidance and the Companies Act 2006 (Strategic Report and Directors’
Report) Regulations 2013, and the Companies (Directors’ Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations 2018.
We have calculated emissions using the GHG Protocol Corporate Accounting and Reporting
Standard (revised edition).
GHG consumption and emissions are reported as single totals, by converting them to the equivalent
amounts of kWh and CO
2
e respectively, using emission factors from the government’s GHG
Conversion Factors for Company Reporting 2025.
All energy consumption and emissions relate to the UK and cover all Group entities and, therefore,
are aligned with the financial reporting of the Group.
Measure (Location-based emissions
1
)
2025
CO
2
e tonnes
2024
CO
2
e tonnes
Movement
%
Scope 1 – Direct emissions from the combustion of
fossil fuel
44.3
68.8
(35.6)
Scope 2 – Indirect emissions from purchased electricity
99.1
129.5
(23.5)
Scope 3 – Indirect emissions from the value chain – (see
page 62 for categories included)
106.4
109.1
(2.5)
Scope 1, Scope 2 and Scope 3
(excluding categories 1, 2 and 15) CO
2
e emissions
249.8
307.4
(18.7)
Measure: Total emissions excluding financed emissions per £
million Group operating income
2025
2024
Movement
%
Group operating income (£ million)
213.5
203.9
4.7
Environmental intensity indicator
1.2
1.5
(20.0)
Note:
1. Location-based emissions are calculated by multiplying electricity consumption for all sites by the
government’s conversion factor for UK electricity.
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Other Information
Managing our business responsibly
continued
Climate-related financial disclosures
2025
Reported CO
2
emissions
1
2
4
5
6
3
2025
2021
2022
2023
2024
132.4
313.3
148.3
252.2
60.2
196.5
68.8
129.5
44.3
99.1
Scope 1 and 2 CO
2
e emissions
(tonnes)
Total CO
2
e emissions from these categories have been reduced to 249.8 tonnes CO
2
e.
This represents an 18.7% decrease against equivalent emissions reported in 2024.
•
Electricity emissions decreased by 23.5% (30 tonnes CO
2
e), following the closure and sale of
our old head office, the downsizing of our Reading office and the implementation of a range
of energy efficiency measures at our Solihull, Cardiff and London offices.
•
Company car emissions decreased by 41.5% (23 tonnes CO
2
e), supported by the ongoing
reduction of our company car fleet throughout the year.
•
Emissions from business travel by plane decreased 31.7% (19 tonnes CO
2
e). Although more
short haul European flights were made, fewer business class long‑haul flights were undertaken.
•
Emissions from business travel by train and taxi increased by 32.5% (5 tonnes CO
2
e)
and emissions from business travel by private car increased by 50.9% (12 tonnes CO
2
e).
This was mainly driven by an increase in face‑to‑face meetings at our London office and
an increase in travel between our Cardiff and Solihull offices to support the management
of our dual‑ location teams.
We set out to reduce emissions from 446 tonnes CO
2
e to 223 tonnes CO
2
e by December 2025.
After delivering an extensive programme of measures over the past four years, we have now
surpassed this goal by bringing our Scope 1 and 2 emissions down to 143.4 tonnes CO
2
e.
This reflects a 68% reduction compared with our 2021 baseline.
•
Closing four premises and downsizing a further two.
•
Switching to 100% renewable electricity and installation of solar panels at our two main offices.
•
Implementing a major energy efficient refit at our head office, including the removal of all
gas appliances.
• Implementing a range of energy efficiency measures to reduce our gas and electricity
consumption across all sites.
• Phasing out all petrol and diesel company cars and switching many from plug in hybrid to
electric vehicles.
Market-based electricity emissions
Market‑based electricity emissions reporting allows companies to report zero CO
2
e emissions
for premises that receive 100% renewable electricity.
As all except one of our premises are powered by 100% renewable electricity, our market-based
electricity emissions for 2025 are 0.1 tonnes CO
2
e for electricity, 140.4 tonnes CO
2
e for total
emissions and our intensity ratio is 0.7 tonnes CO
2
e / £1 million annual income.
Scope 1, Scope 2 and Scope 3 ( excluding categories 1, 2 and 15) CO
2
e emissions
Scope 1
Business Travel: Group‑leased vehicles
13.2%
Building energy: Gas Consumption
4.4%
Other
0.2%
Scope 2
Building energy: UK electricity
39.7%
Scope 3
Business Travel: Vehicles not owned
by the Group and public transport
38.3%
Other
4.2%
Scope 1
Scope 2
1
2
3
4
5
6
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Other Information
Scope 3 CO
2
e emissions categories
The Group has assessed the relevance and materiality for each category of Scope 3 emissions
within the table below.
Scope 3 category
Status
1
Purchased goods and services
2
2
Capital goods
2
3
Fuel and energy‑related activities (not included in Scope 1 or Scope 2)
1
4
Upstream transportation and distribution
1
5
Waste generated in operations
1
6
Business travel
1
7
Employee commuting
3
8
Upstream leased assets
1
4
9
Downstream transportation and distribution
4
10
Processing of sold products
4
11
Use of sold products
4
12
End-of-life treatment of sold products
4
13
Downstream leased assets
4
14 Franchises
4
15
Investments (Financed emissions)
2
Note:
1.
All material emissions from the leased assets are included in Scope 1 and 2 emissions.
Key
1
Included in Scope 3 reporting on page 61
2
Separately disclosed on this page
3
Not reported
4
Not applicable to the Group
Managing our business responsibly
continued
Climate-related financial disclosures
Scope 3 financed emissions
In 2025, the Group continued its work to
validate the baseline for financed emissions
associated with our key lending portfolios.
Financed emissions are the indirect emissions
attributable to the Group due to the financing
we provide to our customers.
2025
CO
2
e
tonnes
2024
CO
2
e
tonnes
Further
details
on page:
Vehicle
Finance
67,830
87,900
63
Real Estate
Finance
5,912
7,900
64
Commercial
Finance
150,021
543,500
65
Total financed
emissions
223,763
639,300
The methodologies continued to be aligned
to PCAF methodology to calculate emissions
and have been internally validated by an
independent team.
The financed emissions analysis for these
lending portfolios follows the formula
prescribed in the PCAF standard.
Scope 3 supply chain: purchased goods
and services and capital goods
2025
CO
2
e
tonnes
2024
CO
2
e
tonnes
Purchased goods (1)
and services and
capital goods (2)
3,005
3,400
This assessment has been undertaken using
data from our core purchasing system and
excludes any payments made outside of the
system such as payments to intermediaries.
The approach incorporates 84% (2024: 81%)
of supplier spend, which captures our top 108
(2024: 100 suppliers). The approach used to
calculate these emissions is shown below and
the calculations have been validated internally.
Financed
emissions
=
Attribution factor x
Emissions
Purchased
goods
and services
and capital
goods
=
Value of
purchased
goods or
service
x
Emission
factor
Emissions analysis follows the formula
prescribed in the PCAF standard.
In 2026, we will be exploring the opportunity
to use emissions data received directly from
our top suppliers, which will improve the
quality of our reporting.
Forward look
The Group is well placed to support its
customers as they transition to a low-carbon
economy and continue to invest in internal
expertise, engage with relevant bodies and
to explore climate opportunities in its range
of products.
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Other Information
Managing our business responsibly
continued
Climate-related financial disclosures
Retail Finance
Our Retail Finance business supports retailers in offering point-of-sale finance solutions to customers both in-store and online.
In 2025, Retail Finance continued to support the transition to a low-carbon economy through funding for home EV chargers and e-bike sales. The business is also exploring opportunities to expand
into the wider renewable energy market.
Scope 3: Financed emissions
Given the nature and broad product range of the Retail Finance business and data availability, calculating Scope 3 financed emissions is not currently possible.
In July 2025, the decision was made to cease new lending in Vehicle Finance. This was followed
by the announcement in December of the agreement to sell the Consumer Vehicle Finance
business. As a result, the Vehicle Finance portfolio has been running down, with lending balances
reducing to £390.8 million by the end of 2025 (further information can be found in Note 10 to
the Financial Statements). The Group continued to assess and manage climate‑related risks that
were relevant to the current operations of the Vehicle Finance business. Due to selling the
Vehicle Finance portfolio no forward looking analysis was necessary.
Metrics
Metric example
Key risk
indicator
31 December
2025
Insight provided
Average CO
2
per Km per vehicle
Tracking
154
Trends of emission
averages per vehicle
Scope 3: Financed emissions: 67,830 CO
2
e tonnes
Attribution factor:
Outstanding loan value/original vehicle value
Emissions:
Vehicle emissions annual Km x CO
2
Kg/Km)
The Group continued to measure its Scope 3 emissions for our remaining portfolio of vehicles.
Emissions were lower compared to 2024, largely due to a reduction in the volume of vehicles
and no new business originating since July 2025.
Vehicle Finance
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Managing our business responsibly
continued
Climate-related financial disclosures
Our Real Estate Finance lends money against residential properties to professional landlords
and property developers.
In Real Estate Finance, we continue to embed physical and transitional climate risks into credit
assessments and lending decisions, supported by monthly monitoring of climate exposure and
customer progress. Our lending remains aligned with energy efficiency standards and
sustainable development. While our approach follows the current standards, we are aware of
forthcoming government changes that the business will monitor.
Two key climate-related risks could affect the performance of the Real Estate Finance portfolio.
The first is physical risk, particularly flooding, which could impact properties held as security.
The second is transition risk, where property values may be affected by government-driven
energy efficiency requirements. We track both monthly, as shown in the adjacent metrics.
Over the year, exposure to properties below EPC C decreased by 4%, while exposure to
high flood risk properties remained stable.
The Group has undertaken a review of a range of scenario assessments (as described on
page 58), to help assess the longer‑term level of risk. The analysis considered the potential
economic implications of the transition to net zero and the most severe potential impacts of
flooding on property values. The analysis showed that the Group’s approach to surveying/valuing
properties and the short-term nature of the lending facilities provided, enabled us to minimise
any impact from flooding within the planning period and adapt lending policy to withstand the
most severe longer-term economic impacts. The outcomes from the analysis indicate that
currently there is no significant link to ECLs due to climate change factors.
Metrics
Metric example
Key risk
indicators
31 December
2025
%
Insight provided
Energy Performance Certificate (‘EPC’)
• C or below
• Above C rating
Tracking
20.97
79.03
EPC risk exposure
of the portfolio
Security value of properties in
high/very high flood areas, divided by
the total portfolio security value
> 8%
5.92
Understanding the impact
on portfolio of flood risk
Scope 3: Financed emissions: 5,912 CO
2
e tonnes
Attribution factor:
Outstanding loan value/Property value at loan origination
Emissions:
Property emissions (Annual property Scope 1 and 2 emissions
(tCO
2
e/year))
The business has improved its address match rate to 92.5% from 89% in 2024 of its databases for
its climate assessment with the support of a new data provider.
Real Estate Finance
Secure Trust Bank PLC Annual Report & Accounts 2025
64
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Corporate Governance
Financial Statements
Other Information
Managing our business responsibly
continued
Climate-related financial disclosures
The Group’s Commercial Finance business provides asset‑based lending across a broad range
of sectors.
Climate-transition risks could affect the ability of our clients to service their lending.
2025 annual climate‑specific risk assessments indicated that overall portfolio climate risk
remains low, as reflected in the RCSA. This is further mitigated by the portfolio’s short‑term,
self‑liquidating facilities, secured primarily against receivables and stock Commercial Finance’s
emissions data is expected to improve as more clients report emissions in their annual accounts.
In parallel, we will continue working with PCAF to refine our methodology and strengthen the
assumptions behind our data.
Metrics
Metric example
Key risk
indicators
31 December
2025
Insight provided
Number of clients with a residual
climate risk rating of ‘high’
> 1
0
Enables clear
understanding of a
business’ credentials
and impact on the
Group metrics
Disruption to the Group’s and third-party suppliers’ operational sites through climate change-related impacts, such as severe weather
The Group has reviewed the physical risks associated with the location of each of its operational sites. Similarly, we have consulted with our material suppliers about their contingency plans in the
event of flooding or other severe weather. From the flood risk data and energy performance ratings of our internal sites, and the responses from our material suppliers, we do not consider there to
be any material risks in the short term.
In strategic terms, these risks and their associated risk appetites will be assessed and can influence any proposed changes to our operational sites and the selection and onboarding processes for
any new suppliers.
Properties contained within the Commercial Finance portfolio undergo scenario assessment
using the same approach as the Real Estate Finance business. The outcomes from the analysis
indicate that currently there is no significant link to ECLs due to climate change factors.
Scope 3: Financed emissions: 150,021 CO
2
e tonnes
Attribution factor:
Outstanding loan value/Total equity + debt
Emissions:
Company emissions (Company turnover x emissions factor (tCO
2
e/£)
or disclosed emissions (tCO
2
/year))
Outputs for Commercial Finance are impacted by availability of data and timing of the
calculation. There is a reliance on information in third parties’ published accounts and
emission factors from PCAF to calculate financed emissions.
Commercial Finance has seen an overall reduction in financed emissions since 2024.
Several factors have contributed to this, including year‑on‑year reductions in emissions across a
various borrowers and decreased reliance on the Group’s funding within a few carbon‑intensive
industry sectors.
Commercial Finance
Operations
Secure Trust Bank PLC Annual Report & Accounts 2025
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Corporate Governance
Financial Statements
Other Information
Non-financial and sustainability information statement
The non-financial and sustainability information
required to be disclosed is detailed below.
Information about environmental matters,
employees, social matters, respect for human
rights and anti-corruption and anti-bribery
matters is included in the ‘Managing our
Business Responsibly’ section and certain other
information is included by reference to the
following locations in the Annual Report
and Accounts:
Reporting
requirement
Section
Pages
Description of
principal risks
and impact of
business activity
Principal
risks and
uncertainties
30 to 39
Description of the
business model
Our business
model
5
Non‑financial key
performance
indicators
Key
Performance
Indicators
13
Climate-related
financial
disclosures
Climate-
related
financial
disclosures
54 to 65
Secure Trust Bank has a range of policies
designed to support strong and effective
governance across the Group. Throughout
the year, these policies have been consistently
applied, effectively implemented and have
delivered the anticipated outcomes.
We ensure the effective implementation of
our policies by fostering a culture of integrity
and accountability, conducting regular review
and communication of the policies, and their
requirements and providing mandatory staff
training where appropriate. The effectiveness
of these policies is reviewed by our risk and
compliance teams and Internal Audit.
A summary of the Group’s relevant key
policies follows.
People policies
Equity, Diversity and Inclusion Policy
Our Equity, Diversity, and Inclusion Policy
promotes fair treatment, non-discrimination,
and an inclusive work environment. The policy
includes measures such as diversity training,
reasonable adjustments, and support for
employees with disabilities. It also emphasises
the importance of respect, dignity, and
compliance with relevant legislation like the
Equality Act 2010. Our recent employee
engagement survey scored very highly in
areas related to inclusion demonstrating
the effectiveness of these policies.
Health and Safety Policy
Our Health and Safety Policy ensures a safe
and healthy working environment for all
employees, customers, and visitors. It includes
risk assessments, regular safety training, and
compliance with health and safety regulations
to prevent accidents and injuries. The were no
material health and safety incidents during
the year.
Conflicts of Interest Policy
Our Conflicts of Interest Policy ensures that all
potential conflicts between personal interests
and professional duties are identified and
managed effectively. It includes guidelines for
recognising, disclosing, and mitigating conflicts
to maintain integrity and trust. The policy
also outlines procedures for reporting and
addressing conflicts to ensure transparency
and ethical conduct.
Whistleblowing Policy
Our Whistleblowing Policy encourages
employees to report any concerns about
unethical or illegal activities within the
organisation. It ensures confidentiality and
protection for whistleblowers including the
availability of a independent and confidential
whistleblowing line. The policy outlines clear
procedures for reporting and investigating
such concerns to maintain integrity and
transparency. During 2025, the Group
received one whistleblowing report.
Consumer policies
Credit Risk Management
Policy Framework
We have a Credit Risk Management Policy
Framework, which is comprised of a number
of policies across the Group and individual
business units to ensure responsible lending
that is fair and appropriate to the customer’s
circumstances. The policy aims to protect
customers and maintain the Group’s
financial stability.
Conduct Risk Policies and Framework
Our Conduct Risk Policies and Framework,
ensure that the Group has an effective
framework to prevent poor outcomes for
customers and to operate with integrity in
the financial markets. The oversight of these
policies has been enhanced during the year
with the establishment of a Customer and
Conduct Risk Committee who have oversight
of relevant areas and monitor metrics to ensure
the policies are operating effectively and any
issues identified promptly.
Secure Trust Bank PLC Annual Report & Accounts 2025
66
Strategic Report
Corporate Governance
Financial Statements
Other Information
Non-financial and sustainability information statement
continued
Product Governance Policy
This policy outlines the governance we
implement to ensure products and services
are designed to meet the needs, characteristics,
and objectives of the identified target market,
enabling, and supporting retail customers
to pursue their financial objectives.
The effectiveness of these policies has
been monitored through our consumer
duty dashboards.
Financial Promotions Policy
Our Group Financial Promotions Policy ensures
that all marketing and promotional materials
are clear, fair, and not misleading. It complies
with regulatory standards to protect consumers
and maintain trust.
Climate policies
Environmental Policy
The Company’s Environmental Policy commits
to minimising the environmental impact of its
operations by reducing Scope 1 and 2 emissions
by 50% from 2021 to 2025. This reduction was
achieved in 2024 and 2025 saw a further
improvement, with a reduction of 68% from
2021. The policy emphasises sustainable
practices, such as energy efficiency, waste
management, and resource conservation.
Overall, the policy reflects the Group’s
dedication to environmental stewardship
and sustainability.
Financial Crime policies
Financial Crime Policy
The Financial Crime Policy provides a
consistent, coherent, and proportionate
approach to deterring, detecting, preventing,
and reporting all types of financial crime
across the Group.
Anti-Bribery and Corruption Policy
Our Anti‑Bribery and Corruption Policy
establishes strict guidelines to prevent
bribery and corruption within the organisation.
It includes procedures for reporting and
investigating suspected bribery and corruption
and ensuring compliance with legal and
ethical standards.
Market Abuse and Inside
Information Policy
The Market Abuse and Inside Information
Policy outlines the procedures for preventing
market abuse and managing inside information.
The policy ensures compliance with UK Market
Abuse Regulations and emphasises the
importance of integrity and transparency
in financial markets.
Human right policies
Modern Slavery Policy
The Modern Slavery Policy outlines the Group’s
commitment to combating modern slavery and
human trafficking. It includes measures for
preventing these practices within its operations
and supply chain, emphasising a zero‑tolerance
approach. No incidents of Modern Slavery
have been identified within the Group or its
supply chain.
Group Data Protection Policy
Our Group Data Protection Policy outlines
the Group’s commitment to complying with
the UK GDPR and the Data Protection Act
2018. It details the principles of data protection,
including lawful processing, individual rights,
and security measures.
The Strategic Report was approved by the
Board on 11 March 2026 and signed on
its behalf by:
Ian Corfield
Chief Executive Officer
Secure Trust Bank PLC Annual Report & Accounts 2025
67
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Corporate Governance
Financial Statements
Other Information
Governance at a glance
Committee structure
Secure Trust Bank PLC Board
71% independent
Audit
Committee
100%
independent
Risk
Committee
100%
independent
Remuneration
Committee
100%
independent
Nomination
Committee
100%
independent
2025 meeting attendance
Board member
Board
Audit
Committee
Nomination
Committee
Risk
Committee
Remuneration
Committee
Ann Berresford
1
13/13
6/6
6/6
5/5
–
Jim Brown
13/13
–
6/6
–
7/7
Steve Colsell
2
9/9
4/4
3/3
–
–
Ian Corfield
3
5/5
–
–
–
–
Julie Hopes
12/13
5/6
6/6
–
7/7
Rachel Lawrence
13/13
–
–
–
–
David McCreadie
4, 5
7/8
–
–
–
–
Victoria Mitchell
13/13
–
6/6
5/5
7/7
Paul Myers
12/13
–
6/6
5/5
7/7
Finlay Williamson
13/13
6/6
6/6
5/5
–
Notes:
1. Ann Berresford stepped down from the Board, Audit, Risk and Nomination Committees on
30 December 2025.
2. Steve Colsell was appointed to the Board, Audit and Nomination Committees on 12 June 2025,
he was appointed to the Risk Committee on 30 December 2025.
3. Ian Corfield was appointed to the Board on 8 September 2025 (he also attended three additional
Board meetings in advance of his appointment, in his capacity as CEO designate).
4. David McCreadie stepped down from the Board on 8 September 2025.
5. David McCreadie did not attend a Board meeting convened to discuss the CEO succession.
Board and Committee
changes during 2025
June 2025
• Steve Colsell appointed a
Non-Executive Director and
a member of the Audit and
Nomination Committees
• Ian Corfield appointed
CEO designate
August 2025
• Paul Myers stepped down as
designated Non-Executive Director
for workforce engagement
• Victoria Mitchell appointed as
designated Non-Executive Director
for workforce engagement
September 2025
• David McCreadie retired as CEO
and stepped down from the Board
• Ian Corfield appointed CEO and
joined the Board
December 2025
• Ann Berresford retired from
the Board and stepped down as
Chair of the Audit Committee,
Senior Independent Director
and member of the Risk and
Nomination Committees
• Steve Colsell appointed Chair of
the Audit Committee and a member
of the Risk Committee
• Julie Hopes appointed Senior
Independent Director and
Deputy Chair
UK Governance Code compliance
The Company supports the principles
of corporate governance as set out in
the 2024 version of the UK Corporate
Governance Code (the ‘Code’), issued by
the Financial Reporting Council (‘FRC’),
which can be found on the FRC website
at
www.frc.org.uk
.
The Company was compliant with the
provisions of the Code throughout the
year, however:
Ann Berresford was appointed to the
Board on 22 November 2016 and,
therefore, reached her nine-year tenure
in November 2025. Ann stepped down
from the Board, as Senior Independent
Director, Chair of the Audit Committee
and the other Committees she served
on, from 30 December 2025 to enable a
smooth transition of her responsibilities.
This short period was not considered
to impact her independence.
Under the Code, companies within the
FTSE 350 should undertake an externally
facilitated Board performance review
every three years. Whilst the Company is
not within the FTSE 350 and, therefore,
does not have to comply with this
provision, the Company has always
undertaken this as best practice.
This year, due to the changes within
the Board, it was agreed to defer the
externally facilitated review to 2026.
This will enable a more informed view
of how the Board and its Committees
are working and deliver greater value
from the external review. An internally
facilitated performance review was
undertaken for 2025, and further
information can be found on page 80.
Secure Trust Bank PLC Annual Report & Accounts 2025
68
Strategic Report
Corporate Governance
Financial Statements
Other Information
Executive Directors
2
8
Total
Chair
1
1
2
3
Independence
Independent
Non-Executive
Directors
5
2
1
2
3
Board and senior management composition
As at 31 December 2025
Board
Female
3
8
Total
Male
5
1
2
Gender
1
2
Female
2
9
Total
Male
7
2
Gender
1
1
2
8
Total
White
8
1
Ethnicity
1
9
Total
White
9
2
Ethnicity
1
1
Governance at a glance
continued
Directors’ skills and experience
B
anking
S
trategy
R
isk
C
onsumer
D
igital
T
echnology
100.0%
87.5%
100.0%
62.5%
75.0%
62.5%
50.0%
25.0%
Transformation
Opera
tions
Non-Executive Directors’ tenure
1
Jim Brown
Steve Colsell
Julie Hopes
1.75
0.55
1.19
2.17
7.09
4.50
Victoria Mitchell
Paul Myers
Finlay Williamson
Senior management
Note:
1. Years as at 31 December 2025.
Secure Trust Bank PLC Annual Report & Accounts 2025
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Corporate Governance
Financial Statements
Other Information
Effective and
decisive leadership
“The Board has taken
decisive action to
improve the Group’s
performance.”
Jim Brown
Chair
I am pleased to present our
Governance report for the year
ended 31 December 2025, which
details how we have implemented
the provisions of the UK Governance
Code and provides information on
our governance framework, how it
has operated throughout the year
and the outcomes it has driven.
Code compliance
The Company has been compliant with the
Code throughout the year ended 31 December
2025. Further information on this, and some
items to note are on page 68.
Effective leadership
It has been an exceptionally busy year for the
Board. One of the most important roles of the
Board is to oversee the executive management
and to ensure and implement appropriate
succession planning for the CEO role. This year
we appointed a new CEO, Ian Corfield, to lead
the Group in the next phase of its strategic
development. This is a critical appointment to
ensure the future success of the organisation
and details of the recruitment process can be
found in the Nomination Committee report on
page 84. Ian has made a very strong start to the
role and the Board look forward to working
with him and the refreshed Executive team,
to drive forward the Group’s strategy.
As outlined in my opening statement, the
Board have taken decisive action to improve
the Group’s performance, including the decision
to cease lending within Vehicle Finance and the
Chair’s introduction
subsequent sale of the consumer part of
that business. Our stock funding business has
not been sold and will continue to be run-off.
Whilst these decisions were in the best
interests of the Company and promoted its
success for the benefit of shareholders and
other stakeholders, they were difficult decisions
to make and impacted our employees.
Further information on this can be found
on page 79 where we detail how we have
considered stakeholder interests in our
decision making.
The Board have approved a refreshed
strategy, new medium-term targets and a
new business plan, which includes investment
in the continuing business areas to expand our
product range into adjacent areas where we
see strong growth potential.
The Board has also considered legal and
regulatory developments relating to motor
finance commissions and how these have
impacted the Company including the additional
provision recognised in 2025. The Board have
overseen a robust response (supported by
analysis of our data) to the consultation,
including setting out how customers who
received competitive finance were not harmed.
The Board have also received regular updates
from our operational team on the steps taken to
prepare for implementing the redress scheme.
Full details of the activities undertaken by the
Board during the year can be found on pages 76
to 78. Details of the Board changes during the
year can be found on page 68 and in the
Nomination Committee report on page 83.
Company’s purpose, values
and culture
The Company’s purpose is to help more
consumers and businesses fulfil their
ambitions. We expect our culture and
employees’ behaviours to align with our six
core values. Our employees’ performance is
measured against these values. The Board
reviews how this culture is embedded across
the organisation through reporting from our
People, Risk and Compliance and Internal
Audit teams providing a first, second- and
third-line view of how our culture is embedded.
The Board reviews various metrics within
Board and Committee meetings to ensure our
culture is consistently applied and aligned to
our purpose and strategy.
Stakeholder engagement
Stakeholder engagement is a critical part of
good governance and we continue to seek
our stakeholders’ views. We run regular
engagement programmes with our major
investors after the announcement of our
interim and full-year results. We also engage
on arising matters, for instance the trading
statement in October and the additional
provision recognised in relation to the FCA’s
motor finance redress scheme, which had an
estimate of our potential maximum liability
under the scheme as proposed.
I met with shareholders following the
appointment of our new CEO and to discuss
other individual matters throughout the year.
Towards the end of the year, Ian Corfield,
Rachel Lawrence and I also visited the US to
meet with our major US-based shareholders
in person.
Secure Trust Bank PLC Annual Report & Accounts 2025
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Corporate Governance
Financial Statements
Other Information
Julie Hopes, as Chair of the Remuneration
Committee, engaged with shareholders and
proxy advisers regarding our Directors’
Remuneration Policy, which is due to be
renewed at the 2026 AGM (see page 127 for
further information). The Board is updated
after each engagement.
Our executive management team primarily
engage with our clients, particularly within
our business units. This year, our new CEO
also met with a number of clients and business
partners to seek views on the business and help
strengthen relationships. Finlay Williamson is
our Consumer Duty Champion, and whilst
this is no longer a FCA required role, we have
retained this role, as we believe there is benefit
in having a designated Non-Executive Director
who engages on consumer matters on a more
granular level.
The Group has also established an executive
Customer and Conduct Risk Committee, whose
primary objective is to oversee good customer
outcomes and ensure high levels of customer
service across the organisation. The Board
receives regular updates on customer feedback
and how we are discharging our duties to
consumers, and monitors dashboards, tracking
relevant metrics and the service provided to
customers. During 2025 management reviewed
how we measure our consumer outcomes,
which included mapping all of our customer
journeys and will lead to enhanced oversight
and reporting.
This year, we have held more Board meetings
in offices outside London and have held
employee engagement sessions between
Non-Executive Directors and employees
within these offices. This was a particular
focus of the Board given the level of change
across the organisation and enabled employees
to provide their views and ask questions
directly to the Board. We appointed a new
designated Non-Executive Director for
employee engagement, Victoria Mitchell,
who took over from Paul Myers when he
stepped down from this role in August 2025.
Victoria attends employee council meetings
and provides feedback to the Board following
each meeting. Our new CEO regularly visits
our offices across the UK and has increased
employee engagement hosting regular team
briefings and seeking feedback and questions
from employees. We run annual and pulse
staff engagement surveys, and whilst we
were disappointed with this year’s results,
a deterioration in scores is often experienced
when there has been significant change and
organisational restructures over the period.
The focus will be on developing action plans to
address the feedback received and continuing
to support employees through this period
of change.
Information on our engagement with all
stakeholders is on pages 42 to 44 and
how we consider stakeholders in decisions
on page 79.
Chair’s introduction
continued
Looking forward
Going forward, a key focus of the Board will
be the effective oversight of our new strategic
initiatives and ensuring they deliver the
projected growth, and that the business
performs in-line with expectations. The Board
will continue to oversee the disposal of the
consumer Vehicle Finance business through to
migration and that associated cost efficiencies
are delivered in-line with our plans. The Board
will also monitor developments relating to the
publication by the FCA of its rules for its redress
scheme for motor finance commissions, any
legal challenges to them and, once they come
into effect, their implementation with the full
cooperation of vehicle dealers and brokers.
I am looking forward to meeting with
shareholders at the Company’s AGM, which
will be held on 14 May 2026 and this year will
take place in Birmingham.
Jim Brown
Chair
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Corporate Governance
Financial Statements
Other Information
Board leadership
Board of Directors
Jim Brown
Independent Non-Executive
Director and Chair
C
Ian Corfield
Chief Executive Officer
Rachel Lawrence
Chief Financial Officer
Appointed to the Board and as CEO on 8 September 2025.
Skills and experience
Ian Corfield has spent over 25 years working in financial services.
He served as Chief Commercial Officer of NewDay Ltd from
2014 to 2023 where he helped build the Company into a leading
financial services provider. Previously, Ian served as CEO of
Aussie Home Loans and Business & Retail Banking at Bankwest,
based in Australia, and prior to this he held a number of senior
roles at HBOS Plc. Most recently, Ian has worked as an adviser
to HM Treasury and a Specialist Partner at Flint Global,
a regulatory and competition advisory firm.
Long-term contributions and reason for election
Ian brings a wealth of strategic, financial services and consumer
finance expertise, with a focus on driving innovation in customer
experience. This, coupled with his strong leadership skills and
extensive track record of delivering profitable growth across
organisations positions him well to successfully lead the Group
and manage its day-to-day activities.
Appointed as an Independent Non-Executive Director
on 31 March 2024 and Chair on 16 May 2024.
Chair of the Nomination Committee and member
of the Remuneration Committee.
Skills and experience
Jim Brown is a banking professional with many years’ experience,
gained through a number of executive positions. He was Chief
Executive Officer (‘CEO’) of Sainsbury’s Bank and a member of
the Sainsbury’s Group Operating Board until his retirement from
those roles at the end of March 2024. He is a Non-Executive
Director on the Board of Just Group plc and is also an investor
in, and adviser to, a number of Fintechs. Before this, Jim was
the CEO at Future Williams & Glyn within The Royal Bank of
Scotland (‘RBS’) Group (now NatWest Group plc) and prior to
that he was CEO, Ulster Bank Group. He held a number of senior
appointments within RBS and ABN AMRO in Asia and the
Middle East and, earlier in his career, with Citibank and Chase
AMP Bank.
Long-term contributions and reason for election
Jim Brown has extensive experience and a proven track
record as a banking executive and brings substantial wholesale,
commercial and retail banking experience to the Board. He has
held executive roles managing both retail and commercial
banking for over 35 years at country and regional level across
multiple markets and various sized businesses. Much of his
career has involved starting, growing and/or restructuring
banks and businesses, as well as mergers and acquisitions.
Jim also has significant stakeholder management experience
including boards, regulators, rating agencies, investors, suppliers,
industry bodies, professional firms, unions, politicians and media.
Other appointments include
Jim is a Non-Executive Director of Just Group plc.
Appointed to the Board and as Chief Financial Officer (‘CFO’) on
23 September 2020.
Skills and experience
Rachel Lawrence has considerable experience in financial
services gained from a career spanning more than 20 years.
She has held senior finance roles in Metro Bank PLC, where
she was part of the original team that set up the bank, and
Shawbrook Bank where she was part of the successful Initial
Public Offering. Prior to joining Secure Trust Bank, Rachel was
CFO at AIB Group (UK) plc. She brings considerable banking
experience focused on high growth start-up organisations and
wider financial services experience gained in asset management,
life, pensions and general insurance. She is a qualified chartered
management accountant.
Long-term contributions and reason for election
Rachel’s considerable experience in finance and banking proves
invaluable in her role as CFO. She has a deep understanding of
the Group’s businesses and strategy and has a strong track
record of creating shareholder value.
Committee membership
Nomination
Audit
Risk
Remuneration
Executive
C
Chair
Secure Trust Bank PLC Annual Report & Accounts 2025
72
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Corporate Governance
Financial Statements
Other Information
Julie Hopes
Senior Independent Director
and Deputy Chair
C
Victoria Mitchell
Independent
Non-Executive Director
Appointed to the Board on 24 October 2024, as Chair of the
Remuneration Committee on 31 December 2024 and as Senior
Independent Director and Deputy Chair on 30 December 2025.
Member of the Audit and Nomination Committees.
Skills and experience
Julie Hopes has over 30 years’ experience in financial
services, having served in a number of senior roles at RSA plc,
before becoming Managing Director of Insurance at Tesco
Bank until 2013. She was previously a Non-Executive Director
of Saga plc where she chaired the Remuneration Committee
and Saga Services Ltd. Julie was also the Senior Independent
Director and Deputy Chair of West Bromwich Building Society
and a Non-Executive Director of MS Amlin Underwriting
Limited, where she chaired the Risk and Solvency Committee.
Prior to this, she was Chair of Police Mutual, and a
Non-Executive Director and Chair of the Risk Committee
of Co-Operative Insurance.
Long-term contributions and reason for election
Julie’s background has given her experience in remuneration,
governance, risk, finance, accounting and corporate strategy.
She is an experienced Chair, with a strong customer focus
and her skills and experience make her an ideal Chair of the
Remuneration Committee. The insights she has gained from her
career mean that she is a strong Senior Independent Director
and an excellent addition to the Board and Committees
she serves.
Other appointments include
None.
Appointed to the Board on 1 November 2023. Member of the
Remuneration, Risk and Nomination Committees. Victoria is the
Non-Executive Director designated for workforce engagement
and the Chair of the Employee Council.
Skills and experience
Victoria Mitchell has many years of banking experience,
gained predominantly during a 20-year career with Capital One
(Europe) plc, during which she served as Chief Legal Counsel,
Chief Risk Officer and Chief Operating Officer. Victoria is the
Senior Independent Director of Vocalink Limited, where she
chairs the Risk Committee and is a member of the Audit,
Remuneration and Nomination Committees.
Victoria was previously a Non-Executive Director and member of
the Remuneration and Risk Committees of the West Bromwich
Building Society. She also served as a Non-Executive Director at
Lookers plc, which gave her considerable insight into the Motor
Finance industry. She was a member of the Audit and Risk,
Remuneration and Nomination Committees throughout her
tenure at Lookers plc, was Chair of the Remuneration Committee
from April 2021 to September 2022 and was Chair of Lookers
Motor Group Limited. Victoria was also a member of the
Audit and Risk Committee, Nomination and Governance
Committee and Chair of the Financial Services Board at
N Brown Group plc.
Long-term contributions and reason for election
Her background has given Victoria vast experience in risk,
remuneration, governance, corporate strategy, and finance,
particularly, motor finance. This experience makes her a valuable
addition to the Remuneration, Risk and Nomination Committees.
Other appointments include
Victoria is the Senior Independent Director of Vocalink Limited
where she also chairs the Risk Committee and is a member of the
Audit, Remuneration and Nomination Committees.
Board leadership
continued
Board of Directors
Committee membership
Nomination
Audit
Risk
Remuneration
Executive
C
Chair
Steve Colsell
Independent
Non-Executive Director
C
Appointed to the Board on 12 June 2025 and as Chair of the
Audit Committee on 30 December 2025. Member of the Risk
and Nomination Committees.
Skills and experience
Steve has 40 years’ experience within Financial Services,
specialising in retail and commercial banking and insurance.
During his executive career, he served as divisional CFO
(Wealth, Asset Finance & International) of Lloyds Banking
Group plc, CFO for Insurance and Investment at HBOS plc and
Group Finance Director of Kensington Group PLC. Prior to this,
he held a number of senior roles at Zurich Financial Services.
Steve also brings extensive non-executive experience and is
currently the Chair of OneFamily and a Non-Executive Director
of Pepper Money Group where he also Chairs the Audit and Risk
Committees. He was previously a Non-Executive Director of
Quilter Financial Planning where he chaired the Audit
Committee, Starling Bank and St James’s Place PLC.
Long-term contributions and reason for election
Steve’s career has given him significant experience in Financial
Services as well as a Non-Executive Director. His wealth of
accounting, risk and regulatory experience, combined with a
strategic mind-set and proven leadership skills make him a
strong addition to the Board and an excellent Chair of the
Audit Committee.
Other appointments include
Steve is Chair of OneFamily and a Non-Executive Director
of Pepper Money Group.
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Finlay Williamson
Independent
Non-Executive Director
Appointed to the Board on 30 June 2021 and as Consumer Duty
Champion on 27 October 2022. Member of the Audit,
Risk and Nomination Committees.
Skills and experience
Finlay Williamson is a qualified accountant with many years of
banking experience, gained initially at RBS (now NatWest Group
plc) and then at Virgin Money Holdings (UK) plc, where he was
CFO prior to the IPO. Finlay was previously a Non-Executive
Director at Paragon Banking Group PLC, where he was a
member of the Audit Committee and chaired the Group
and Bank Risk Committees.
Long-term contributions and reason for election
His career has given Finlay experience in retail, SME and
auto finance banking, as well as real estate domain experience.
He also has experience of corporate acquisitions and subsequent
integrations, with significant experience of change and
transformation. Finlay has developed good relationships with
the Financial Conduct Authority and Prudential Regulatory
Authority during his career, and is up to date with their priorities
and processes. He also has prior appointments on plc Boards and
Committees. The skills and experience he has gained from his
career mean that he is a strong addition to the Board and
Committees he serves.
Other appointments include
Finlay is currently the Chair of the Audit Committee and Senior
Independent Director of Hampden & Co PLC.
Board leadership
continued
Board of Directors
Committee membership
Nomination
Audit
Risk
Remuneration
Executive
C
Chair
Paul Myers
Independent
Non-Executive Director
C
Appointed to the Board on 28 November 2018 and as Chair
of the Risk Committee on 31 March 2020. Member of the
Remuneration and Nomination Committees.
Skills and experience
Paul Myers has many years of banking experience, gained initially
in Barclays, where he spent 24 years in a variety of retail banking
roles. He was part of the small team that founded and built
Aldermore Bank, where he served as Chief Operating Officer,
Corporate Development Director and on the Board as an
Executive Director. Paul had a wide range of responsibilities at
Aldermore, including IT, operations, transformation, marketing
and digital as well as building and developing the retail and SME
savings operations. Paul also has previous experience as CEO
of a FinTech new banking venture, GKBK Limited. Paul is an
Associate of the Chartered Institute of Bankers.
Long-term contributions and reason for election
Paul’s career has given him a wide range of experiences and
responsibilities, including IT, operations, transformation,
marketing and digital across retail and business banking.
His insight into banking, and particularly IT and operations,
provide a unique viewpoint that complements the Board and
the Committees he serves well. His broad experience positions
him well as Chair of the Risk Committee.
Other appointments include
None.
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Other Information
Governance framework
Executive Risk Committee
Responsible for the day-to-day management of all elements of the Group’s risk management
and compliance
Assets and Liabilities Committee
Responsible for implementing and controlling the liquidity and asset and liability management
The Board – Roles and responsibilities
The Board has a schedule of matters specifically reserved for its attention, which can be found on our website (
www.securetrustbank.com/corpgov
) and a summary of the key items can be found below:
•
Setting the Group’s purpose, culture
and values
• Establishing the Group’s strategy
and objectives
• Overseeing the Group’s operations
and management
•
Setting the Group’s Risk Appetite and
maintaining an effective system of
internal controls and risk management
• Approving the annual budget
• Approving the capital allocation,
dividend payments and other uses of
capital or changes to the Group’s
capital structure
• Deciding major acquisitions, disposals
and investments
• Approving significant
capital projects, expenditure
and borrowings
•
Approval of annual or interim
accounts, and certain regulatory
reports/plans
• Board appointments, the appointment
or removal of the Company Secretary
and ensuring appropriate succession
planning for the Board and
senior management
Note:
1. There is clear division of responsibilities between the Chair, CEO and Senior Independent Director, which are set out in writing and available on the Company’s website:
www.securetrustbank.com/corpgov
Executive Committee
•
Operates under the authority and
direction of the CEO
• Formulates and proposes strategy
to the Board and oversees the
successful execution thereof
• Oversees the day-to-day
management of the Group
Risk Committee
•
Board Committee comprises four
independent Non-Executive
Directors
• Responsible for overseeing all
elements of risk management across
the Group and the oversight of the
ICAAP and ILAAP and the Group’s
Compliance function
Read further information on its
activities on page 93
Remuneration Committee
• Board Committee comprises
three independent Non-Executive
Directors and the Board Chair who
was independent on appointment
• Responsible for overseeing the
remuneration of Executive
Directors, senior management and
Group-wide remuneration policies
Read further information on its
activities on page 97
Nomination Committee
• Board Committee comprises
all independent Non-Executive
Directors and is chaired by the
Chair of the Board
• Recommends changes to the
structure of the Board, oversees
succession planning for the Board
and senior management
Read further information on its
activities on page 83
Audit Committee
• Board Committee comprises
three independent Non-Executive
Directors
• Responsible for overseeing
financial reporting and external
and internal audit
Read further information on its
activities on page 86
Chief Executive Officer (‘CEO’)¹
•
Proposes the strategy and ensures
its execution
•
Runs the business within the
delegated authorities, risk
management and internal
control frameworks
•
Builds and maintains an effective
management team
Non-Executive Chair¹
•
Leads the Board and is responsible for
its overall effectiveness and good
governance practices
• Works with management and
Independent Non-Executive Directors
to develop and implement the Group’s
purpose, strategy and culture
• Engages with stakeholders and
ensures their views are understood by
the Board and decisions consider
their interests
Chief Financial Officer (‘CFO’)
•
All aspects of financial and capital
reporting and the integrity thereof
•
Supports the CEO in the execution of
the strategy
•
Leads on financial and capital planning
Senior Independent Director¹
•
Acts as a sounding board for the Chair
• Leads the Chair’s performance
appraisal and succession
•
Available to shareholders and Board
members, should they have concerns
not resolved through normal channels
Independent Non-Executive
Directors
• Contribute to, and constructively
challenge management on, the
development and implementation
of the strategy and firm’s culture
•
Establish the Board’s risk appetite
and monitor the control framework
• Oversee the achievement by
management of the purpose
and strategic aims of the Group
• Constitute the Board’s
Governance Committees
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Other Information
Corporate Governance report
Board activities
Item
Outcome
Stakeholder group
Strategic priorities
Strategic
Group strategy
Throughout the year, the Board has overseen a project to refresh the Group’s strategy, looking in detail at each of
the business divisions, including performance, the markets in which they operate, competitive advantage, potential
product expansion and detailed business plans with the objectives of accelerating growth and returns to shareholders.
Following this work, the Board approved expansion into adjacent products within Business and Retail Finance and a
new Group strategy with revised strategic objectives and medium-term targets. Further information on this is on
page 11.
S
C
E
B
R
Vehicle Finance
During the course of the strategy refresh, the Board made the difficult decision to cease lending within the Vehicle
Finance business. This was due to the projected length of time and growth in market share required to ensure the
division was profitable, combined with the greater growth potential and higher returns for shareholders provided
by the Group’s other business divisions. At the end of the year, the Board approved the sale of the legacy Consumer
Vehicle Finance business. This will release capital to invest in higher returning business divisions and facilitate
potential returns to shareholders. In addition, the sale of the business removed additional complexity across the
Group and enables greater focus on the continuing businesses.
S
C
E
B
R
Approval of 2026
budget and
funding plan
The Board reviewed and challenged the annual budget and funding plan for 2026. The proposed budget was then
updated to account for the additional provision taken following the FCA’s consultation on the proposed redress
scheme for motor finance commissions and, following this update, it was approved by the Board.
S
E
R
The Board held eight scheduled meetings in
2025, and five additional meetings were held
for matters that were urgent or needed
consideration before the next scheduled Board
meeting. The Board also held a one-and-a-half-
day strategy session, which was attended by all
Directors and members of senior management.
The Directors’ attendance at Board and
Committee meetings is detailed on page 68.
Should a Director be unable to attend a meeting
they review the papers and raise any questions
in advance of the meeting. The Chair engages
with the absent Director before and after the
meeting to ensure their views are represented
at the meeting and that they are briefed on the
meeting outcomes. The Chair meets with the
Non-Executive Directors in a short session
before each Board meeting and engages
regularly with all Directors outside of formal
meetings. Non-Executive Directors also met
with senior members of management on an
individual basis. The Senior Independent
Director has met with other Directors to
evaluate the Chair’s performance and consider
relevant matters.
At each meeting the Board receives an update
from the CEO and CFO, which includes a
detailed management information pack
providing an overview of Company
performance. The Committee Chairs,
including the Chair of the Employee Council
and the Consumer Duty Champion, provide
updates to the Board. Various members of the
firm’s senior management team attend part, or
all, of the Board meetings, and this includes the
General Counsel, who attends all meetings to
advise on legal and regulatory considerations.
A summary of the principal items considered
during the year and their outcomes are in the
table below, together with the impacted
stakeholder groups and strategic priorities
these discussions related to. The Board has also
reviewed, challenged and approved documents
including the Group’s results, ICAAP, ILAAP,
Recovery and Resolution plans, Solvent Exit
Analysis, Money Laundering Reporting Officer’s
report, AGM Notice, Modern Slavery
Statement, Operational Resilience Self-
Assessment and certain material contracts.
Key
C
Customers
S
Shareholders and investors
B
Business partners
Simplify
Leverage networks
E
Employees
R
Regulators
W
Communities and society
Enhance customer experience
Enabled by technology
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Other Information
Item
Outcome
Stakeholder group
Strategic priorities
IT strategy
The Board reviewed and approved a new Group-wide IT strategy, which is aligned to the Group’s refreshed strategy
and sets the Group’s target IT architecture. The key objectives of the IT strategy are to support business growth,
reduce costs and harness our data assets.
S
C
E
B
ESG strategy
The Board conducted an annual review of the current ESG strategy, deciding that no changes were required ahead of
it’s refresh in-line with the Group’s business strategy planned for early 2026.
S
C
E
R
W
Industry M&A
The Board received updates on developments within the industry, valuations of peer firms and reviewed M&A and
consolidation in the sector.
S
E
Retail Finance
strategy
The Board considered longer-term opportunities within the Retail Finance business and approved an investment
to analyse these further and develop appropriate business cases to ensure the continued growth of the business.
S
C
E
Collections strategy
The Board have continued to focus on oversight of the performance of collections in Vehicle Finance, following the
FCA’s Borrowers in Financial Difficulty review, with the project having been completed in 2025 and the Group’s wider
collection strategy.
S
C
R
Update on
motor finance
commissions
The Board received regular updates on the legal and regulatory developments relating to motor finance commissions,
including the Supreme Court’s judgment and the FCA’s consultation on a redress scheme. Following the publication
of the consultation, the Board approved an additional provision for potential redress and costs associated with
administering the scheme as proposed. Further information on this can be found on pages 180 and 181. The Board
has focused on ensuring a robust response (supported by data analysis) to the consultation was submitted by the
Company and that the Company is operationally prepared to administer the scheme once it comes into effect.
S
C
E
B
R
Performance
Business unit
spotlights
At each meeting, the Board receives an update from individual business units on a rotational basis. These updates
cover the performance of the business unit, growth plans and pipeline, strategic initiatives, customers, competitive
landscape and the management team.
S
C
E
Consumer Duty
The Board reviewed reports on the Group’s compliance with Consumer Duty and the outcomes provided to
consumers throughout the year, together with any changes or action plans to improve consumer outcomes. The Board
challenged areas identified for improvement and reiterated the need to ensure their timely implementation.
C
R
Operations
spotlight
The Board undertook a deep-dive on the Group’s Operations function including team structure and performance,
key initiatives and longer-term plans to continue to enhance customer journeys, through increased functionality,
enhanced customer service, and leveraging technology for efficient operations. The Board expressed support for
management’s proposals.
S
C
E
B
R
ESG updates
The Board receive regular updates on the Group’s ESG strategy and review the ESG dashboard twice per year,
which tracks progress across key metrics including, climate action, acting responsibly, equity, diversity and inclusion,
customer trust, education and skills and communities and charities.
S
C
E
R
W
Strategic
programmes update
The Board received updates on strategic projects across the Group, including how these were being governed,
implementation plans and progress thereon, and key risks to the successful completion of the projects. A number
of key projects have been successfully completed during the year.
S
C
E
R
Health and Safety
The Board reviewed an update on the health and safety performance of the Group and requested that a further
update be provided to the Board following completion of a few actions identified as requiring remediation within
the Group’s offices.
E
Corporate Governance report
continued
Board activities
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Other Information
Corporate Governance report
continued
Board activities
Item
Outcome
Stakeholder group
Strategic priorities
Governance
Culture
The Board received updates from the Chief People Officer on our culture and people related matters including a focus
on the results of the employee engagement survey, management follow-up actions and employee dashboards.
The Board also considered the equity, inclusion and diversity strategy and the updated employee value proposition.
S
E
R
Risk
Following the development of a refreshed strategy and approval of business plans, the Board reviewed the Group’s
Risk Appetite Statement (‘RAS’) in early 2026. Whilst there were no material changes proposed to the RAS, the Board
approved some amendments to the wording of appetite statements and agreed revised metrics further aligned to the
new strategy. During the year, the Board undertook a review of the top-down risks, considered and agreed emerging
risks and approved the enterprise-wide risk management framework.
S
C
E
R
CEO succession
The Board undertook a CEO succession process during the year and, in-line with the recommendation from the
Nomination Committee, appointed Ian Corfield as the Group’s new CEO, replacing David McCreadie who retired
from the Board.
S
C
E
R
Board appointment
and role changes
The Board approved the appointment of Steve Colsell as a Non-Executive Director and member of the Audit and
Nomination Committees in June 2025. This recruitment was part of the succession planning for the Chair of the Audit
Committee, as Ann Berresford reached her nine-year tenure in November 2025 and retired from the Board on
30 December 2025. With effect from 30 December 2025, the Board approved the appointment of Steve Colsell as
Chair of the Audit Committee and a member of the Risk Committee, and the appointment of Julie Hopes as Senior
Independent Director and Deputy Chair.
S
E
R
Governance
structure
The Board approved changes to the Group’s governance structure, which included the creation of a new Customer
and Conduct Risk Committee, replacing the Non-Financial Risk Committee and the removal of the Strategic Change
and Investment Committee. The new Customer and Conduct Risk Committee has been established to oversee that
conduct towards customers is aligned with the vision, purpose, values and strategy of the Group and has responsibility
for the oversight of operational delivery and non-financial risk management.
S
C
E
R
Defence strategy
The Board reviewed and agreed its defence strategy, in the event of an unrecommended bid for the Company.
S
E
Key
C
Customers
S
Shareholders and investors
B
Business partners
Simplify
Leverage networks
E
Employees
R
Regulators
W
Communities and society
Enhance customer experience
Enabled by technology
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Corporate Governance report
continued
Stakeholder consideration in our decision making
S.172 legal duties
Section 172 of the Companies Act 2006
requires the Directors to act in the way that
they consider, in good faith, would be most
likely to promote the success of the Company
for the benefit of its members as a whole, and in
doing so, have regard (among other matters) to:
i.
the likely consequences of any decision in
the long term;
ii.
the interests of the Company’s employees;
iii.
the need to foster the Company’s business
relationships with suppliers, customers
and others;
iv.
the impact of the Company’s operations on
the community and the environment;
v.
the desirability of the Company maintaining
a reputation for high standards of business
conduct; and
vi.
the need to act fairly as between members
of the Company.
How we consider
stakeholder interests
The Company’s section 172 statement
of compliance can be found on page 44,
together with an overview of our stakeholders,
their priorities, how we engage with them
and outcomes during the year for each
stakeholder group.
The Board considers stakeholder interests and
views, and discusses how any decisions will
impact the different stakeholder groups.
Our Executive Summary template for Board
and Committee papers includes dedicated
summary sections on customer and other
stakeholder considerations, designed to ensure
relevant issues are identified and escalated for
review and challenge.
Stakeholder interests need to be embedded
across all levels of the organisation to help
to ensure the appropriate escalation of
stakeholder considerations through the
Group’s governance framework. Our culture,
values, governance framework and training all
help to support this.
Stakeholders can have different and sometimes
competing interests, priorities and views, and
these need to be balanced with each other
and within the wider duty of the Board to
promote the long-term sustainable success
of the Company and act in accordance with
our regulatory obligations. Not all decisions
can deliver the desired outcomes for
all stakeholders.
Below are two examples of how stakeholder
interests have been considered in Board
decision making.
Vehicle Finance
In July 2025, the Board announced its decision
to cease lending in its Vehicle Finance division
and further, in December, announced the sale
of the Consumer Vehicle Finance business.
These were challenging decisions due to the
impact on our employees. The Board
considered the performance of the business,
which had underperformed against
management expectations and had been
loss making. The underperformance had been
compounded in recent years due to operational
challenges, resulting in a high level of
impairments within the business. This had
materially impacted returns generated by the
Group and increased volatility of performance.
The Board considered various potential options
which could improve the returns generated,
however, the Vehicle Finance business would
have required significant time, growth in market
share and further investment of capital to
achieve profitability. Through the review it
was identified that higher returns could be
generated by investing capital in the Group’s
other business divisions.
The Board considered the impact on employees,
customers and business partners together with
shareholder’s views and interests. Ultimately,
the Board decided that the cessation of lending
in Vehicle Finance and then its sale to LCM
Partners’ funds, best promoted the sustainable
success of the Company in the long term and
were in the best interests of shareholders.
The Group undertook due diligence on LCM
Partners to be confident of good outcomes for
customers and no detriment in service.
The Board reviewed and agreed internal and
external communication plans and the
employee engagement process and emphasised
the need to support employees throughout the
process. The Board received information and
updates on the support provided and feedback
from employees during the consultation
processes. The Board engaged directly with
groups of employees in the Solihull office after
the announcement was made.
Directors Remuneration Policy
Every three years the Company is required
to seek approval from shareholders, of its
Directors Remuneration Policy and this
approval is being sought at the 2026 AGM.
Our Remuneration Policy is designed to
promote the long-term sustainable success
of the business, which is in the interests of all
stakeholders. In developing the policy the
Remuneration Committee considered:
• views of shareholders, employees and
proxy advisers;
• the pay and policies in operation for
all employees;
• that there was alignment with the Company’s
culture and values;
• the need to retain and incentivise the
Executive Directors who are critical to the
delivery of the Group’s strategy
and performance;
• that performance metrics were sufficiently
challenging; and
• that variable remuneration would not reward
excessive risk taking.
We engaged with major shareholders and proxy
advisers to understand their views on our
remuneration structures and proposed changes
to them. There was broad support for our
proposals. The Directors Remuneration Policy,
which is recommended to shareholders for
approval at the 2026 AGM, can be found on
pages 116 to 127.
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Other Information
Corporate Governance report
continued
Board effectiveness
Outcomes
The 2025 Board performance review
demonstrated that the Board was operating
effectively and there were a number of areas
that received particularly high scores and
positive feedback. This included the Board’s
focus on strategy and long-term value creation,
oversight of strategic implementation, ensuring
views of stakeholders are understood and
considered in decision making and that the
Chair promotes open discussion, which
leverages the Board’s collective knowledge
and experience.
There were also a number of improvement
indicators identified in the report which
included the need to ensure a clear strategy for
leveraging technological innovation, improve
talent management and succession and the
need to focus on Board composition with an
improvement in diversity and additional
experience of business banking,
Update on 2024 actions
A key action identified from last year’s
performance review was the need to
strengthen relations between Board and
management and broaden the Board’s
exposure to talent across the Group.
There has been good progress in this area
with greater focus on informal engagement
and bringing a wider range of talent into formal
Board meetings. We have held Board meetings
in different offices across the UK and the
Non-Executive Directors have engaged
with employees in these locations.
Board performance review
Historically, whilst not subject to the relevant provision of the Code, which only applies to
companies within the FTSE 350, the Board has always undertaken an externally facilitated Board
performance review every three years. As the last externally facilitated review was undertaken in
2022, the Board would normally undertake an external review in 2025. However, due to the Board
changes, including a new CEO appointed in September 2025 and a new Senior Independent
Director and Chair of the Audit Committee, both appointed in December 2025, the Nomination
Committee agreed that greater value would be derived from undertaking an externally facilitated
review during 2026. This would enable the changes to fully embed and provide the opportunity for
a more forward-looking review. An internal performance review was undertaken in respect of the
2025 performance year, and the process and outcomes are outlined below.
Provider selection
A small number of platform providers submitted proposals for the annual
performance review, with the Company Secretary making a recommendation
to the Nomination Committee who approved the final selection.
01
Process approval
The Nomination Committee provided input to, and agreed, the proposed process
for the performance review, including the scope of reporting and the content of the
individual questionnaires for the Board and its Committees.
02
Questionnaires
The final questionnaires were made available to Directors on the BoardClic platform
and duly completed by the Board and key stakeholders. The questionnaires used a
mix of standard questions, enabling these to be benchmarked against peers, and
bespoke questions relevant to the Company.
03
Reporting
Following completion of the questionnaires, the Chair and Company Secretary
reviewed the outcomes and prepared reports for the Board and each of its
Committees, which were discussed at relevant meetings and formal action plans
agreed. The Chair also met with individual Directors, and the Senior Independent
Director with the Chair, to discuss performance.
04
Board oversight of strategic initiatives and
market developments has improved throughout
the year. However, the 2025 evaluation
identified the need to consolidate and enhance
reporting on these matters.
The 2024 performance review also identified
actions in relation to the development of a
revised people strategy and culture dashboard.
These have not been fully implemented due to
the need to ensure the People strategy is
aligned with the revised Group strategy and
due to changes in the Executive team. This will
be a priority for 2026 and will be led by our new
Chief People Officer.
2025 actions
• Following the onboarding of a new Chief
People Officer revise the Group’s People
Strategy and refresh the executive succession
planning following the changes to the
executive team.
• Oversee the development of a revised
Data Strategy and oversee the effective
implementation of both the IT and Data
Strategy and consider further opportunities
for technological innovation.
• Improve Board materials particularly concise
reporting on strategic change projects and
market/business intelligence.
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Other Information
Induction process
New Directors are supported in their role by a formal tailored induction process, which is designed to provide a comprehensive introduction to the Company to enable them to effectively discharge their
duties. The induction programme is comprised of meetings with key senior management and external advisers/stakeholders, together with a tailored documentation pack including access to previous
Board and relevant Committee packs and minutes, where appropriate. During the year inductions were held for Steve Colsell and Ian Corfield, as Ian Corfield joined as CEO designate he received a wider
induction, and a summary of the induction programmes is provided below. In addition, Ian Corfield and, on his appointment as Chair of the Audit Committee, Steve Colsell are Senior Managers under the
Senior Management and Certification Regime (‘SMCR’) and, therefore, a formal documented handover and meetings were held to transition the Senior Management functions in-line with the Group’s
Senior Management Handover Policy.
Meeting with
Topics for discussion
Related documents
Board and Nomination
Committee Chair
Recent key Board and Nomination discussions, decisions and priorities, views on the Group
and management and views of key stakeholders. Board and executive succession plans.
Previous Board and Nomination Committee packs and minutes.
Board governance documents including matters reserved,
forward agendas, Committee Terms of Reference.
CEO
Overview of the Group’s purpose, strategy, values and culture. Recent developments within the
business and views of stakeholders.
Group strategy and values, shareholder register and
perceptions study.
CFO
The Group’s financial performance, financial plans, prudential risks and recent developments
across the CFO’s areas of responsibility.
Current budget, funding plan, latest management information
pack and various prudential risk documents including the ICAAP
and ILAAP.
Chair of Audit Committee
Recent discussions of the Audit Committee and key areas of focus.
Previous Committee packs and minutes, and external and internal
audit documentation (as in relevant sections below).
Chair of Remuneration Committee
Recent discussions of the Remuneration Committee and key areas of focus.
Previous Committee packs, minutes and remuneration policies.
Chair of Risk Committee
Recent discussions of the Risk Committee and key areas of focus.
Previous Committee packs, minutes and risk documentation
(as in risk section below).
Business unit Managing Directors
Overview of respective business units, route to market, key clients and the team. Update on
recent business performance, initiatives and key priorities and, if relevant, Consumer Duty.
Latest business spotlights reports, performance reporting and
Consumer Duty dashboards.
Chief Operating Officer
Overview of team and areas of responsibility together with key priorities and challenges across
each of the functions and updates on key projects.
Latest operational reports and project updates.
Chief Risk Officer
Group’s risk appetite, principal risks and enterprise-wide risk management framework
(‘EWRMF’). Overview of Credit Risk and the management thereof, including overview of
credit risk models. The wider team and key priorities and challenges.
Risk appetite statement, risk register, EWRMF and recent
risk reports.
Company Secretary
Overview of Group legal structure, governance and operational matters for the Board and its
Committees. Key priorities and areas of focus for the Board, its Committees and the Company
Secretariat team. Overview of the Company’s share schemes.
Group structure, governance documentation, previous Board
and Committee packs, Market Abuse policies and procedures,
share plan summaries and rules.
Chief People Officer
and Head of Reward
Overview of firm’s culture, employee benefits and structures. Recent employee initiatives and
key priorities for the team.
Remuneration policies and people dashboards.
Head of Compliance
Overview of compliance monitoring plan, recent compliance reporting, including engagement
with regulators. Key priorities and challenges for the team.
Compliance monitoring plan and issues identified, compliance
update reports and senior management responsibilities map.
General Counsel
Executive governance structure and sustainability strategy. Overview of the legal team and
its key priorities and challenges.
Governance Manual and Sustainability Strategy.
Corporate Governance report
continued
Board effectiveness
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Other Information
Corporate Governance report
continued
Board effectiveness
Meeting with
Topics for discussion
Related documents
Chief Internal Auditor
Internal Audit plan and progress thereon including summary of recently issued reports and
outstanding management actions. Views of control environment and cultural alignment.
Overview of Internal Audit structure and team (co-sourced function).
Internal Audit Plan, recent Internal Audit reports,
and the Internal Audit Charter.
External Auditors
Introduction and overview of team. Update on the external audit plan including overview of key
audit risks and engagement with management. View of culture and internal control environment.
External Audit Plan.
Office visits
Visits to key offices.
CEO only
Strategy and Corporate
Development Director
Overview of Group strategy, key strategic projects and initiatives, the team and key priorities,
investor relations and the Group’s capital position.
ICAAP, Recovery and Resolution plans and project updates.
Group Treasurer
Overview of liquidity and funding in the Company, the team and key priorities, and an overview
of the Assets and Liabilities Committee.
ILAAP and funding plan.
Money Laundering Reporting
Officer (‘MLRO’)
Overview of financial crime requirements and future developments, policies, processes
and practices, the team and key priorities and issues.
Financial crime policy and standards, MLRO report, Modern
slavery policy and statement, anti-bribery and corruption
policy and standards.
Compliance and People Team
Overview of SMCR across the organisation.
Senior Manager Roles and Responsibilities map and
SMCR-related policies and procedures.
Non-Executive Directors
Meetings to discuss views of the Group, key priorities and issues and recent Board discussions.
Company brokers
Overview of Company’s shareholder base and views of shareholders and the market on the
Company and management. Briefing on Market Abuse regulations.
Latest shareholder report, analyst notes, shareholder
perceptions study and Market Abuse Regulation summary.
Legal advisers
Overview of legal and regulatory framework applicable to the Company including directors’
obligations in a listed Company.
Briefing on legal duties and obligations.
PR advisers and
Head of Communications
Media training, communications strategy and recent engagement and projects.
Senior management
Meeting with various members of senior management to understand their roles and
responsibilities and views on the business.
Remuneration consultants
Update on, and views of, remuneration policies and practices within the Group.
Remuneration policies.
Training
Directors receive training and education through external courses and seminars, and also through mandatory training and briefing sessions, which may be provided by external advisers and have
included briefings on regulatory developments such as provision 29 of the Code, industry trends and market views. Directors continued to deepen their understanding of the business through Board
deep dives, covering each business unit as well as updates from key Group functions including Operations, Risk, Compliance and Internal Audit. From 2026, all Directors will be required to also complete
online training in-line with employees. All Directors have access to the services of the Company Secretary, who advises the Board on governance matters, and Directors are able to obtainindependent
advice, at the Company’s expense, where this is necessary to discharge their duties effectively.
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Other Information
Ensuring a
strong
and effective Board
I am pleased to present the report
of the Nomination Committee
(the ‘Committee’) for the year ended
31 December 2025, which provides
an overview of the Committee and the
work it has undertaken during the year.
CEO succession
One of the most important roles of the Board
is to appoint and oversee the Group’s CEO.
This year the Committee, and the Board, have
overseen and implemented the succession
plans for the CEO. In June 2025, we announced
the retirement of David McCreadie and the
appointment of Ian Corfield as his successor.
David stepped down from, and Ian was
appointed to, the Board and as CEO effective
8 September 2025. Information on the
recruitment process can be found on page 84.
The Committee and Board were delighted to
have appointed Ian Corfield as CEO and he
brings a wealth of experience within retail
and business banking, strong leadership skills
and extensive strategic experience with a
deep focus on customers and delivering good
customer outcomes. He has made a strong start
to the role and the Board are pleased with the
progress he has driven since his appointment.
Board changes
There have been a number of other Board
changes overseen by the Committee during
2025. In June 2025, we announced the
appointment of Steve Colsell as an independent
Non-Executive Director and member of the
Audit and Nomination Committees. Steve is
an experienced CFO who brings extensive
non-executive and chair experience and has
been an excellent addition to the Board.
Nomination Committee report
Statement by the Chair of the Nomination Committee
“This year the
Committee, and the
Board, have overseen
and implemented the
succession plans for
the CEO.”
Jim Brown
Chair
On 31 October 2025, we announced that
Ann Berresford, who has served on the Board
for nine years, would step down as a Director
on 30 December 2025. Ann also held the
roles of Chair of the Audit Committee, Senior
Independent Director and member of the Risk
and Nomination Committees.
The Nomination Committee implemented
its succession plans for these key roles, and
appointed Julie Hopes as Senior Independent
Director and Deputy Chair, and Steve Colsell
Chair of the Audit Committee. Given the
interaction between the Audit and Risk
Committees, Steve Colsell also replaced Ann
as a member of the Risk Committee to continue
the close co-ordination between the Risk and
Audit Committees.
In addition, during the year, Paul Myers stepped
down as the designated Non-Executive
Director for workforce engagement and,
therefore, as Chair of the Group’s Employee
Council. Victoria Mitchell was appointed to
both roles and the rotation of these roles
ensures a broader range of Directors have
direct engagement with employees.
Diversity
In 2024, the Board adopted a revised diversity
policy (as detailed on page 85), which includes
consideration of diversity in its widest sense
and set ambitions for Board diversity aligned
to the listing rules namely; that 40% of the
Board are comprised of female directors,
there should be at least one female director
in a Board leadership position and that there
should be one director from an ethnic minority.
As at 31 December 2025, 38% of the Board
was comprised of female directors and there
were two female directors in Board leadership
positions, including our CFO and Senior
Independent Director.
The Board has not met the ambition to
have one director from an ethnic minority.
As part of it’s succession processes, the
Committee considered candidates from
minority ethnic backgrounds during 2025.
However, determined that alternative
candidates were better suited to those roles,
due to relevant sector experience and the
skills and attributes required.
As detailed within the Board performance
review section on page 80, the Board have
identified the need to review the composition
of the Board. Specifically to further deepen
the Board’s experience in business banking,
aligned with the Group’s refreshed strategy
and improve diversity. As part of that search
process the Nomination Committee will require
diverse lists of candidates to be considered
and ethnicity will be a key consideration
in recruitment.
Outlook
Following the appointment of a new CEO
and a refresh of the Executive Committee,
succession planning for the Group will be a
key focus during the year.
The Committee will continue to review the
composition of the Board in order to ensure
that it has the right composition of skills,
experience and diversity to drive forward
the Group’s refreshed strategy.
It has been a busy year for the Committee,
and I would like to thank the Committee’s
members for the commitment and diligence
they have shown throughout the year and to
the members of the management team who
have helped support the work of
the Committee.
Jim Brown
Chair
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Other Information
Nomination Committee report
continued
Committee Governance
The Committee met six times during the year
and members’ attendance is summarised in the
table on page 68.
Meetings of the Committee were attended
during the year by the Chief Executive Officer,
Company Secretary and Chief People Officer
to present their reports and answer questions
from the Committee as required.
The Chair of the Nomination Committee
reports to the Board on the outcome of
Committee meetings and any
recommendations to the Board agreed by the
Committee. Where appropriate full Committee
minutes are provided to the Board at the next
meeting. The Company Secretary acts as
Secretary to the Nomination Committee.
The UK Governance Code states that a
majority of members of the Committee
should be independent Non-Executive
Directors. The Committee membership,
which is comprised of all of the independent
Non-Executive Directors on the Board and
chaired by the Board Chair, who was
independent on appointment, complied
with this Code provision throughout 2025.
Key responsibilities
The Nomination Committee is responsible for
considering the structure, size and composition
of the Board; the retirement and appointment
of Directors, including Executive Directors;
succession planning for the Board and senior
management including the development of a
diverse succession pipeline; and making
recommendations to the Board on these
matters. The Committee’s roles and
responsibilities are covered in its Terms of
Reference, which were reviewed during the
year and are available on our corporate website
(www.securetrustbank.com/corpgov).
Conflicts of interest
The Company’s Articles of Association permit
the Board to consider and authorise situations
where a Director has an actual or potential
conflict of interest in relation to the Group.
All Directors are required to disclose to the
Board any outside interests that may conflict
with their duties to the Group (including any
related party transactions). The Board has a
formal system to record potential conflicts and,
if appropriate, to authorise them. Conflicts of
interest are included as a standing agenda item
at each Board and Committee meeting.
When authorising conflicts or potential
conflicts of interest, the Director concerned
may not take part in the decision making.
Key activities during the year
Board and Committee composition
The Committee reviewed the composition of
the Board and its Committees during the year,
focusing on the skills, experience and diversity
of the Directors and taking into account all
relevant governance requirements and best
practice. As reported last year, the Committee
had identified the need to focus on Board and
Committee succession planning, particularly in
relation to key roles within the Board and had
commenced the recruitment process for two
additional Non-Executive Directors. The first
focus was succession planning for the Chair
of the Remuneration Committee, which
concluded in 2024 with the appointment of
Julie Hopes. The second recruitment process
concluded in June 2025 with the appointment
of Steve Colsell, who was appointed Chair of
the Audit Committee on 30 December 2025.
The Nomination Committee will keep under
review the composition of the Board during
2026 to ensure that the Board has the right
skills and experience in line with the
refreshed strategy.
Board succession and recruitment
Non-Executive Director – Steve Colsell
The Nomination Committee appointed Per
Ardua Associates Limited (‘Per Ardua’) to assist
with the search for an additional Non-Executive
Director. Per Ardua is a member of the
Association of Executive Search Consultants
(‘AESC’) and is committed to the AESC’s Code
of Professional Practice. With the exception of
previous recruitment activities, Per Ardua had
no other connections to the Company, senior
management or the individual Directors prior
to their appointment.
The Committee and Per Ardua developed
candidate profiles, with due consideration of
the Board’s skills matrix and required
experience for the roles. Per Ardua presented
a long-list of diverse candidates, which was
reviewed by the Committee and developed
into a short list, with regular updates provided
where additional candidates were identified.
The Committee established an interview
panel consisting of the Chair, the then Senior
Independent Director and Chair of the
Remuneration Committee. Other Directors
and key stakeholders met with the preferred
candidate, prior to the Committee
recommending the appointment of Steve
Colsell to the Board.
CEO – Ian Corfield
The Committee oversees succession planning
for the Board and senior management roles and
keeps under review both internal and external
candidates available in the market.
Succession planning is an ongoing process and
Russell Reynolds (‘RR’) had been engaged to
assist in longer-term succession planning and
to undertake an external talent benchmarking
and market mapping exercise. RR is a member
of the Association of Executive Search
Consultants (‘AESC’) and, with the exception
of previous recruitment activities, had no
other connections to the Company, senior
management or the individual Directors.
The market mapping identified a small number
of individuals who had the requisite skills,
experience and cultural alignment to provide
succession options for CEO role. In anticipation
of a potential transition, the Committee Chair
and members of the Committee met with a
number of individuals identified as potential
succession options and considered outcomes
of leadership assessments undertaken.
Following David McCreadie’s decision to
retire, the Committee selected a preferred
candidate and undertook further meetings
and referencing before recommending Ian
Corfield as CEO.
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Other Information
Director re-election
In line with governance requirements, all
Directors stand for annual re-election at
the Company’s Annual General Meeting.
Each Director’s performance, including the
results of the annual Board performance
review, independence, potential conflicts
and ability to commit sufficient time to the
Company is considered by the Committee,
which recommends to the Board their
re-election. Each Director also undertakes
a detailed fitness and propriety assessment
each year in-line with the Group’s obligations
under the Senior Management and
Certification Regime.
Management succession
The Nomination Committee reviewed the
succession plans for members of the Executive
Committee and talent development across the
organisation, with a particular focus on changes
due to the organisational redesign undertaken
in 2024. The Committee considered talent
mapping across the Group and initiatives
undertaken to further develop talent, which
included the creation of a Development Centre
for senior leaders in partnership with Heidrick
and Struggles.
Board Diversity Policy
The Board is committed to promoting diversity, equity and inclusion in the boardroom and
throughout the Group. The Board believes that promoting a culture that is diverse, inclusive
and equitable creates a supportive, enjoyable and healthy working environment for our
colleagues. It also enables the Group to make the most of the different backgrounds,
experience and perspectives of our colleagues and best supports our customers to achieve
their ambitions.
The Board is supportive of this culture and believes that a diverse Board brings a broad range
of perspectives, insights and challenges, which drives effective decision making and enables
us to better respond to our stakeholder’s needs.
Appointments to the Board will be subject to a formal, rigorous and transparent procedure.
Appointments and succession plans will be based on merit and objective criteria, recognising
the benefits that diversity, in its widest interpretation, brings to the Board including in relation
to gender, ethnicity, age, sexual orientation, disability, neurodiversity, socio-economic,
educational and professional background, and geographic provenance.
When reviewing the Board composition, conducting searches for Board candidates, and
making recommendations to the Board on appointments, the Nomination Committee
will have due consideration of the benefits of diversity including, but not limited to,
the factors outlined above, in order to enable the Board to discharge its duties and
responsibilities effectively.
As part of the annual performance review of the effectiveness of the Board, Board
Committees and individual Directors, the Nomination Committee will consider the balance
of skills, experience, independence, knowledge and the diversity representation of the Board,
how the Board works together as a unit, and other factors relevant to its effectiveness.
Board and Committee
performance review
The Committee agreed the process for the
2025 internally facilitated review (further
information on which can be found on page 80).
The 2025 Committee performance review
demonstrated that the Committee was
operating effectively and particularly
commended members ability to probe and
challenge assumptions to get to the heart of
the issue, the Committee’s willingness to
engage constructively on difficult matters,
engagement with stakeholders, and committee
members knowledge of the organisation and
management team.
Update on 2024 actions
The Committee has overseen executive
capability, succession and talent development.
However, due to a number of changes across
the Executive management team this will
continue to be a key area of focus, led by the
new Chief People Officer. During 2025 the
Board were on-boarded to the Group’s new
on-line training portal, enabling required
training to be delivered on-line.
2025 actions
•
In light of executive management changes
update succession planning and
talent management.
•
Consider the composition and structure of
the Committee and interaction with the work
of the Remuneration Committee.
•
Review the Board’s skills, experience and
succession planning and ensure its aligned
with the new strategy.
Nomination Committee report
continued
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Other Information
Robust controls
through a period
of change
“The Committee
has been focused on
overseeing a robust
internal control
environment to
underpin the
sustainable growth
of the business.”
Steve Colsell
Chair of the Audit Committee
I am pleased to present the report
of the Audit Committee for the
financial year ended 31 December
2025, my first as Chair.
I was appointed a member of the Committee
in June 2025 and succeeded Ann Berresford
as Chair at the end of 2025. I would like to
extend my thanks to Ann for her support
throughout the Chair transition and on behalf
of stakeholders for her diligence and effective
stewardship of the Committee throughout
her tenure.
2025 has seen a period of strategic change
across the Group, and the Committee has been
focused on overseeing a robust internal control
environment to underpin the sustainable
growth of the business. A key element of the
three lines of defence model operated by the
Group (further information on which can be
found on page 30) is our Internal Audit function,
who are the third line, and oversight of Internal
Audit is a key responsibility of the Committee.
The Committee is responsible for approving the
Internal Audit Plan and receives regular reports
from the Chief Internal Auditor on progress
against the plan, the outcomes of recent
internal audits and updates on management
actions, which have been a focus of the
Committee to ensure closure of outstanding
actions within agreed deadlines. The Committee
also reviewed Internal Audit’s assessments of
the effectiveness of governance and control
frameworks, and the extent to which colleague
behaviour reflects the Group’s values,
recognising the relevance of these during
ongoing strategic and operating-model change.
In January 2025, new Global Internal Audit
Standards were issued by the Institute of
Internal Auditors and the Committee
considered the level of conformance with
the new standards and any actions required
to meet full compliance.
Audit Committee report
Statement by the Chair of the Audit Committee
As part of this, the Committee approved a
new Internal Audit Strategy and reviewed
the essential conditions required to enable
an effective internal audit function.
Safeguarding the integrity of our financial
disclosures and monitoring the financial
reporting process is another key responsibility
of the Committee. The Committee has reviewed
the Group’s financial and narrative reporting in
the Annual Report and Accounts for the year
ended 31 December 2025 as well as the
half-year ended 30 June 2025. The Committee
has challenged management’s approach to the
accounting judgements and estimates applied
particularly in relation to our expected credit
loss models and the impact on the Company’s
impairment and coverage provisions, items
classified as exceptional, provisions held for
potential commission related redress of Vehicle
Finance customers and the agreed sale of the
Consumer Vehicle Finance business and
disclosures for discontinued operations.
The Committee has again spent significant time
during the year considering legal and regulatory
developments relating to motor finance
commissions. Following the publication of the
FCA’s consultation on the proposed redress
scheme for motor commissions, which was
towards the extreme end of outcomes
previously expected, we increased our provision
in October 2025 by £16.4 million. As at the end
of the year we held a provision of £21.5 million,
based on our probability weighted scenarios.
If the FCA scheme were implemented exactly
as proposed, the Group would expect to
increase the provision for redress by a further
£6 million. This has been reviewed and
challenged by the Committee and further
information is on page 89.
In July, we announced our decision to cease
lending within our Vehicle Finance business
and in December announced the agreement
to sell the Consumer Vehicle Finance business,
with the transaction completing in early 2026.
The Committee focused on the accounting
treatment of the transaction and how the sale
was reflected in the Annual Report and
Accounts for the year ended 31 December
2025, given completion occurred after the
year-end and the complexities involved in the
transaction. Further information on this can be
found on page 89.
The Committee is responsible for overseeing
the independence of the Group’s External
Auditor, Deloitte LLP (‘Deloitte’) and during
2025, the Committee closely monitored the
transition of the External Audit Partner from
Neil Reed to Kieren Cooper. Deloitte are
approaching the conclusion of their eighth
year of appointment and the Committee has
assessed the quality and effectiveness of the
external audit process. The Committee remain
satisfied that the External Auditors continue to
be effective and, therefore, recommend their
reappointment to shareholders at the 2026
Annual General Meeting (‘AGM’).
The Committee retains oversight of the
whistleblowing programme and I was appointed
Whistleblowing Champion upon appointment
as Chair of the Committee. The Committee
regularly receives updates throughout the
year regarding whistleblowing cases raised and
reviews and approves the whistleblowing policy.
Finally, I want to express my thanks to the
teams within the Group and externally who
have supported the work of the Committee
throughout the year, particularly during the
transition of the Chair of the Committee.
I look forward to meeting with shareholders
and discussing the Committee’s activities at
the AGM on 14 May 2026.
Steve Colsell
Chair of the Audit Committee
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Other Information
Committee Governance
The Audit Committee met six times during the
year and members’ attendance is summarised
in the table on page 68.
Meetings of the Committee were regularly
attended during the year by the Chief Executive
Officer (‘CEO’), Chief Internal Auditor,
Company Secretary, the Chief Financial Officer
(‘CFO’) and senior members of the Finance
team, as well as the External Audit Partner and
senior members of the External Audit team.
Other members of the Board also attended
meetings at the invitation of the Committee.
The Committee maintains a close and open
dialogue with the External Auditor and Chief
Internal Auditor, routinely holding private
sessions with them following Committee
meetings and as required between meetings.
The Chair of the Audit Committee reports
to the Board on the outcome of Committee
meetings and any recommendations arising
from the Committee. The Company Secretary,
Items considered
Outcomes
Financial reporting
For further information see page 89.
Annual and
interim reporting
The Committee reviewed and recommended the approval of the Annual and Interim Reports to the Board, including that there were effective financial controls operating
across the Group to safeguard their integrity and the accounting judgements and assumptions used in their preparation.
The Committee reviewed and suggested changes to the annual and interim reports to ensure they provided a true and fair view of the Company’s position and that they
were fair, balanced and understandable.
Distributable reserves
Prior to the declaration of the interim and final dividends, the Audit Committee considered whether the Company had sufficient distributable reserves to pay a dividend
and confirmed to the Board that there were sufficient distributable reserves.
Detecting fraud in financial
reporting and prevention
of bribery
The Committee reviewed the systems, controls and procedures for detecting management fraud in financial reporting and for the prevention of bribery in place across
the Group and confirmed that these were appropriate and no significant control issues had been identified.
External Audit
For further information see page 91
External Audit reporting
The Committee received regular reporting from the External Auditors on the external audit plan, progress thereon and any matters identified in the course of the
external audit.
Audit Committee report
continued
or their alternate, acts as Secretary to the Audit
Committee. Minutes from the meetings are
made available, as appropriate, to all
Board members.
The Committee membership complied with the
Code provision for independence throughout
2025. During 2025, Committee members Ann
Berresford, Steve Colsell and Finlay Williamson
were considered by the Board to have recent
and relevant financial experience and the Audit
Committee, as a whole, has competence
relevant to the sector in which the Group
operates. The Committee continues to work
closely with the other Board Committees to
ensure a consistent and streamlined approach
to, and view of, key matters, which is supported
by cross-memberships including the Chair of
the Committee being appointed to the
Risk Committee.
Key responsibilities
The Audit Committee assists the Board in,
among other matters, discharging its
responsibilities for financial reporting, including
monitoring and reviewing the integrity of the
Company’s annual and interim financial
statements, reviewing and monitoring the
effectiveness and independence of the External
Auditors, including advising on their
appointment, reappointment, removal and
remuneration. The Committee also oversees
the effectiveness of the Company’s internal
audit activities, internal controls and risk
management systems including the Company’s
whistleblowing framework. The ultimate
responsibility for reviewing and approving the
Annual Report and Accounts and the Interim
Report remains with the Board. The Audit
Committee reviews the Annual Report before
submission to the Board for approval, and will
consider whether taken as a whole, it is fair,
balanced, and understandable and provides
the information necessary for shareholders to
assess the Company’s position, performance,
business model and strategy. The Audit
Committee assists the Board in reaching its
conclusions by reviewing significant financial
reporting judgements, including the going
concern assumption and long-term viability of
the Group and any material uncertainties, and
assessing whether the narrative reporting in
the Strategic Report accurately reflects the
financial statements. The Audit Committee is
supported in this assessment by an effective
external audit and the assessment of internal
controls by Internal Audit.
Items considered by the Committee
during the reporting period
Meetings of the Audit Committee are
scheduled to align with key dates in the Group’s
financial reporting cycle. The Committee
maintains a schedule of meetings with a
forward-look agenda that facilitates the
even distribution of items and the effective
management of Committee time.
The principal matters discussed during the year,
and up to the date of this report, are detailed in
the table below.
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Audit Committee report
continued
Items considered
Outcomes
External Audit
process effectiveness
The Committee oversaw the relationship with the External Auditors and assessed the effectiveness of the external audit process ensuring that the audit is conducted in
accordance with all applicable requirements. This was an area of focus in light of the transition in External Audit Partner. The Committee found the External Auditors to
be effective and recommended their reappointment to shareholders.
Independence
of External Auditors
At each Meeting the Committee considered the independence of the External Auditors including consideration of non-audit-related engagements and expenditure and
ensured it remained satisfied that the External Auditors continued to be independent.
External Audit fee
The Committee reviewed and challenged the proposed fees for the external audit of the Company and its subsidiaries. This year’s audit fee is £1,422,000, which included
£122,000 over run from 2024 (2024: £1,224,000) with inflationary increases and additional one-off items, such as the sale of the Consumer Vehicle Finance business and
the provision for redress and related costs for motor finance commissions, being offset by efficiencies in the audit driven by technology. Total non-audit fees paid to the
External Auditors have increased to £152,000 (2024: £88,000).
Transition of External
Audit Partner
The Committee monitored the transition of External Audit Partner to Kieren Cooper in 2025, with regular private meetings held with the Committee and, additionally,
the Chair of the Committee. The transition has proceeded smoothly and there has been good engagement with the new External Audit Partner across the organisation.
Internal Audit
For further information see page 91.
Internal Audit reporting
At each scheduled meeting, other than the single-subject meetings held in January and July, the Committee received a report from Internal Audit, which provided an update
on the internal audit plan, an overview of all internal audit reports issued during the period and an update on identified and outstanding management actions. All internal
audit reports are made available to the Board at the time they are finalised. The Committee reviewed the reports and challenged management on issues identified and any
actions that had been identified as overdue. The Committee discussed the calibration of ratings and a review of this was undertaken in Q1 2026, with some adjustments
proposed to ensure sufficient differentiation in outcomes.
Internal Audit plan
The Committee reviewed and approved the internal audit plan, which outlined an appropriate focus on higher risk areas and areas of regulatory focus. The plan ensures
coverage of all major risk areas over a multi-year cycle, with coverage of each business unit and an element of credit risk audited each year. The Committee agreed the
internal audit plan including the use of, and budget for, co-sourced providers.
Internal Audit effectiveness
A formal review of the effectiveness of the Internal Audit function was undertaken during the year. The Committee noted and agreed with the conclusion that, overall, the
Internal Audit function was effective, remained independent and that no change was required to meet the recommendations set out in the 2013 Code on Effective Internal
Audit in Financial Services (updated 2021). Earlier in the year, the Committee had considered the new Institute of Internal Auditors Global Standards and noted the internal
audit team’s assessment that it generally conformed with the new requirements and where gaps did exist had ensured these were remediated.
Internal Audit Charter
and Strategy
In Q1 2025, the Committee reviewed and agreed changes to the internal audit charter and approved the internal audit strategy following the implementation of the Global
Internal Audit Standards. The Group’s Internal Audit Charter can be found on our website
(www.securetrustbank.com/corpgov)
.
Whistleblowing
Whistleblowing
arrangements
The Committee Chair as whistleblowing champion ensures, should any whistleblowing reports be received, these are proportionately and independently investigated and
provides regular updates to the Committee on any issues raised. There was one new case during the year (2024: one). The Committee reviewed the Group’s whistleblowing
policy and arrangements including the use of a third-party independent and anonymous line available to employees, and found these to be effective.
Other
Terms of reference
The Committee reviewed its Terms of Reference to ensure they remained up to date and in accordance with best practice. A small number of amendments were approved,
primarily reflecting updates to the Audit Committee’s role in fulfilling the Company’s compliance with the updated provision 29 UK Corporate Governance Code 2024.
A full copy of the Terms of Reference can be obtained via the Group’s website
(www.securetrustbank.com/corpgov)
.
In-camera meetings
During the year, the Committee held in-camera meetings with the Chief Internal Auditor and the External Audit Partner. These meetings provided an opportunity for private
discussion with the Committee, without other members of management present, to enable an open discussion with Committee members and supported, among other
things, the Committee’s assessment of the performance of the External Auditors and Internal Audit.
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Other Information
Financial and regulatory reporting
A key responsibility of the Committee is to ensure the integrity of the Group’s financial reporting, which includes reviewing the financial control systems that identify, assess, manage and monitor financial
risks. The Committee has also assessed the Annual Report and Accounts to confirm that, taken as a whole, it is fair, balanced and understandable. The Committee reviews the accounting policies adopted
by the Group and challenges management on areas of estimation and judgement ahead of recommending the interim and year-end financial statements to the Board for approval. The Audit Committee
has reviewed the following matters in connection with the annual and interim financial statements.
Accounting policies, key judgements and assumptions used in preparing the interim and annual financial statements
Significant accounting judgements and estimates
IFRS 9 provisions for expected credit losses
Assessment of area
of judgement
The Committee has considered updates and overlays to judgements and assumptions to take account of developments in the macroeconomic environment, which includes
consideration of the macroeconomic scenarios and weightings.
Outcome
The Committee was satisfied, having engaged with the external auditors, that the judgments and provisions arrived at by management were appropriate.
Legal and regulatory developments
Assessment of area
of judgement
The Committee considered the legal and regulatory developments relating to motor finance commissions, including the FCA’s consultation on a potential redress scheme.
Further information on which can be found in Note 31 to the Financial Statements on pages 180 and 181. The outcome of these developments is uncertain, requiring
judgment about the potential for redress being payable to customers and associated operational costs.
Outcome
The Committee agreed with management’s proposed increase of the provision by £16.4 million and agreed the provision held at 31 December 2025 of £21.5 million,
based on probability weighted scenarios, remained appropriate, whilst noting the continuing level of uncertainty pending the final rules of the FCA redress scheme,
which could change the provision.
Agreed sale of Consumer Vehicle Finance business
Assessment of area
of judgement
Following the decision to sell the Vehicle Finance business announced in December 2025, the Committee has considered the overall presentation of Vehicle Finance in the
Financial Statements as well as the appropriate accounting treatment of various items arising as a consequence of the agreed sale.
Outcome
The Committee has considered whether the agreed sale of Consumer Vehicle Finance met the criteria under IFRS 5 to be reclassified as held for sale and discontinued
operations in the Financial Statements. The Committee confirmed that it met the criteria, which was aligned with the view of the External auditors, and the business has
therefore been excluded from the Group’s underlying continuing results. The Committee has further considered and approved the treatment of redundancy provisions,
onerous contracts and software as a service arising as a consequence of the sale.
Audit Committee report
continued
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Audit Committee report
continued
Significant accounting matters
Statement of viability and going concern
Assessment of area
of judgement
Under UK law and the UK Corporate Governance Code, the Board of Directors is required to opine on the Group’s ability to continue as a going concern and to include
a statement of viability in the Group’s Annual Report and Accounts. The requirement necessitates that the Directors must satisfy themselves as to the Company’s ability to
continue as a going concern for a period of 12 months from the date of the approval of the financial statements. In addition, the Company is required to provide a statement
of viability, available from page 40, which reports on the viability of the Company over a longer period, with the Company applying a five-year period.
Outcome
The Committee considered, challenged and approved the Group’s statement of viability, including the period by reference to which viability is assessed, and the preparation
of the annual and interim accounts on a going concern basis. The Committee’s assessment was supported by a number of factors including the current financial position,
the annual business planning and budgeting process, the different financial stress testing exercises and the effective management of the Principal Risks. The Committee
concluded that it was appropriate to prepare the financial statements on a going concern basis and that the Group would remain viable throughout the forecast period of
five years (further information can be found on pages 40 and 41.)
Presentation of a fair, balanced and understandable Annual Report and Accounts
Assessment of
area of judgement
The Committee assessed whether, taken as a whole, the 2025 Annual Report and Accounts was fair, balanced and understandable. To assist with the assessment of this the
Committee receives and discusses papers from management outlining changes in the application of any accounting policies together with IFRS 9 and other key judgements.
The Committee reviewed drafts of the accounts during the preparation process and near-final versions were presented at its March meeting, and throughout considered
whether the performance and position of the Group had been described in a fair, balanced and understandable way.
Outcome
The Audit Committee, having reviewed the content of the Annual Report and considering relevant matters including the presentation of material sensitive items, the
representation of significant issues, the consistency of the narrative disclosures in the Strategic Report with the Financial Statements, the overall structure of the Annual
Report and the steps taken to ensure the completeness and accuracy of the matters included, has confirmed to the Board that the 2025 Annual Report and Accounts can
be considered to include a ‘fair, balanced and understandable’ assessment of the Group and Company’s business.
Disclosure of exceptional items
Assessment of area
of judgement
The Committee reviewed and questioned management’s proposal to include a number of exceptional items. These are defined as ‘Items of income or expenditure that are
significant in size and which are not expected to repeat over the short to medium term’. Exceptional items in 2025 amounted to £24.1 million and related to costs incurred for:
•
redress and associated costs in relation to motor finance commissions;
•
the cessation and sale of the Vehicle Finance business; and
•
the FCA’s thematic review regarding Borrowers in Financial Difficulty (‘BiFD’).
Outcome
The Committee challenged management on the specific items included, especially in light of exceptional items incurred in previous years, and on the overall quantum.
The Committee concluded that these were exceptional in-line with the Group’s accounting policy, which was also supported by the Group’s External Auditors.
Change of accounting policy – investment property
Assessment of area
of judgement
The Group’s accounting policy, in respect of investment properties, was reviewed during the year in light of decisions taken to purchase investment properties held as
collateral from loans within our Real Estate Finance business. Accounting standard IAS 40 allows companies to adopt a cost or fair value model and management
recommended moving from a fair value model to a cost model.
Outcome
The Committee considered the different potential accounting treatments and noted that historic investment properties had only been held as a consequence of the Group’s
partial or previous occupation of the properties, rather than as an investment opportunity, which was a change in the Group’s business model. The Committee engaged the
External Auditors and agreed with the proposed change in accounting policy to a cost model.
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Other Information
External Audit
At a glance
Audit Firm
Deloitte LLP
Financial period audit
firm first appointed
Year ended 31
December 2018
External Audit Partner
Kieren Cooper
External Audit Partner
appointed
Year ended 31
December 2025
Audit tender last
conducted
2017
Next audit tender
required
Year ending
31 December 2027
Total statutory audit fees
£1,422,000
Total fees for
non-audit services
£152,000
Independence and effectiveness of the
External Auditor
Deloitte has confirmed to the Audit Committee
that it has policies and procedures in place to
satisfy the required standards of objectivity,
independence, and integrity, and that these
comply with the Financial Reporting Council’s
(‘FRC’) Ethical Standards for Auditors. In 2025,
Kieren Cooper succeeded Neil Reed as External
Audit Partner, following a shadowing period for
the 2024 Annual Reports and Accounts, and
this transition has been closely monitored by
the Committee. The Audit Committee has
considered matters that might impair the
independence of the External Auditor, including
the non-audit fees paid to the External Auditor
(as above and detailed in the Non-audit services
section below), and has confirmed that it was
satisfied as to the independence of the external
audit firm, Deloitte. During 2025, the
Audit Committee report
continued
Committee assessed the effectiveness of the
external audit process for 2024. The capabilities
of the external audit team, their independence
and challenge of management, the scope of the
work, the quality of their communications and
fees were all considered. The assessment
considered the views of the CFO and wider
Finance team, CEO, Chief Risk Officer, Chief
Internal Auditor and Company Secretariat.
The Committee also considered the FRC’s
Audit Quality review of Deloitte’s audits, noting
the improvements from last year’s review.
The Committee concluded that the external
audit process was satisfactory, delivering a
robust Audit and that the External Auditor
was performing effectively. The Committee
discussed areas identified for improvement,
including improved communication and
timeliness of requests and ensured feedback
was provided. The review did not highlight
any reason for the Audit Committee not
to recommend their reappointment.
The Committee remain satisfied that
Deloitte continues to be effective and are
recommending their reappointment as
External Auditor to shareholders at the
forthcoming AGM.
Non-audit services
The Group has agreed a policy on the provision
of non-audit services by its External Auditor.
The policy ensures that the engagement of the
External Auditor for such services requires
pre-approval by appropriate levels of
management or the Audit Committee and does
not impair the independence of the External
Auditor, and that such engagements are
reported to the Audit Committee on a regular
basis. The External Auditor is only selected for
such services when they are best suited to
undertake the work and there is no conflict of
interest. The total of audit and non-audit fees
paid to Deloitte during the period is set out in
Note 6 to the Financial Statements on page
159. The non-audit services fee of £152,000
(2024: £88,000) were in respect of, but not
limited to, the review of the interim financial
statements and work relating to profit
verification exercises. In the case of each
engagement, management considered it
appropriate to engage Deloitte for the work
because of their existing knowledge and
experience of the Group or where it was
expected the work be undertaken by the
Group’s External Auditors. Non-audit fees
represented 10.7% of audit fees in 2025 and
7.1% over a three-year rolling period.
Internal Audit
The Group has an independent Internal Audit
function led by the Chief Internal Auditor,
augmented by external subject matter experts
from a panel of internal audit co-source
providers. The Chief Internal Auditor reports to
the Chair of the Audit Committee and they met
frequently through the year. The primary role of
the Internal Audit function is to help the Board
and Executives protect the assets, reputation
and sustainability of the Group, by providing
independent and objective assurance on the
design and operating effectiveness of the
Group’s governance, risk management and
control frameworks and processes, following a
risk-based approach. The Committee reviews
and approves the internal audit plan each year,
and during the year it oversaw internal audit
activity, including adjustments to the approved
plan to respond to external and internal events
and priorities. In approving the 2026 internal
audit plan, the Committee was satisfied that the
team has the appropriate resource to deliver its
plans. The Committee received and considered
all Internal Audit reports and receive regular
reporting on internal audit outcomes, status
of the Internal Audit plan and updates on
management actions. The Committee reviewed
the effectiveness of the internal audit function
during the year (as detailed on page 88).
Internal Audits undertaken during 2025
addressed the following key themes:
•
Governance, Risk and Compliance including
independent assurance on the BiFD project,
effectiveness of second line functions and
financial crime risk management
•
Operations including financial crime,
customer services and operational resilience;
•
IT and Change including data governance and
management; and
•
Finance, Treasury and Prudential areas.
Percentage of non-audit fees
(three-year rolling)
7.1%
2024: 8.8%
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Audit Committee report
continued
Internal Controls Framework
The Board has overall responsibility for
maintaining the Group’s system of internal
control, including financial, operational and
compliance controls, and for reviewing its
effectiveness. This system is designed to
manage risk of failure to achieve business
objectives and to provide reasonable assurance
against the risk of material misstatement or
loss. The system of internal control was in place
throughout the financial year, and up to the
date of the approval of the Annual Report and
Accounts. The Board and the Risk Committee,
have completed a robust assessment of the
Group’s emerging and principal risks and has
included a description of its risk management
framework and principal risks as set out on
pages 30 to 39.
The Board, through the Audit and Risk
Committees, reviews the effectiveness of
the internal control framework. The Audit
Committee receives reports of reviews
undertaken by the Internal Audit function
as well as reports from the External Auditors,
Deloitte, which include details of internal
control matters they have identified as part
of their External Audit. Other key elements of
the Group’s system of internal control include
the Risk and Control Self-Assessment process,
regular meetings of the Executive and Board
Risk Committees, and monthly financial and
operational reporting.
The Audit Committee also receives an
assurance report from the Chief Internal
Auditor on the effectiveness of the internal
control environment. During 2025, the
Committee reviewed the procedures for
detecting fraud affecting financial reporting,
and a report from the Head of Financial Crime
on the systems and controls for the prevention
of bribery. The financial reporting process is
operated by suitably qualified and experienced
accountants and designed to provide assurance
regarding the reliability of financial reporting
and preparation of financial statements through
documented procedures and accounting
policies, with appropriate controls and testing
in place. It operates under the Group’s
Enterprise-Wide Risk Management framework,
where controls are in place to provide
assurance over the preparation of the financial
statements. The Annual Report and Accounts
are reviewed throughout the financial reporting
process by relevant senior managers prior to
presentation to the Audit Committee, which
provide review and challenge, before
recommending to the Board for approval.
The Committee’s review of the internal control
framework concluded that it was operating
satisfactorily and that there were satisfactory
processes in place to ensure appropriate
financial and regulatory reporting controls
over the Group and that the Group operated
a robust three lines of defence model.
Committee performance review
During the reporting period, an internal
assessment was conducted, which considered
the Committee’s effectiveness as part of the
wider Board performance review. For details
on the process followed, please see page 80.
The Committee noted that there had been
progress against a number of priorities
identified in the 2024 review, including the
development of IFRS 9 models, the effective
oversight of the transition in External Audit
Partner and updates received from the Group’s
Assumptions Committee. The Board as a whole
received an update on the Group’s plans to
comply with the new Corporate Governance
Code provisions on internal controls.
The performance review confirmed that
Committee members and other respondents
considered that the Committee was performing
effectively with strong performance in all areas.
There were a number of areas of focus
identified for 2026, which included:
•
Providing appropriate support to the
new Audit Committee Chair to ensure a
successful transition including alignment with
the work of the Board and other Committees.
•
Consideration of the Internal Audit taxonomy
and oversight of the external quality
assurance process.
•
A continued focus on improving reporting
to the Committee, particularly around
accounting judgements and with increased
participation from the CRO.
•
Consideration and preparation for the
External Audit Tender, to be undertaken
no later than 2027.
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Robust
risk
management
“Throughout the year,
the Committee has
overseen the Group’s
risk profile against a
backdrop of economic
and geopolitical
uncertainty, strategic
transformation and
regulatory change
and developments.”
Paul Myers
Chair of the Risk Committee
I am pleased to present the report of
the Risk Committee (the ‘Committee’)
for the financial year ended
31 December 2025, which provides
an overview of the Committee and the
work it has undertaken during the year.
In December 2025, Ann Berresford stepped
down as a Director and as a member of the Risk
Committee. I would like to personally thank
Ann for her significant contribution to the work
of the Committee throughout her tenure.
Also with effect from December 2025, we
welcomed Steve Colsell as a member of the
Committee. Steve has been appointed Chair of
the Group’s Audit Committee and, therefore,
his appointment to the Risk Committee
provides important continuity and oversight
between the work of the two Committees.
Throughout the year, the Committee has
overseen the Group’s risk profile against a
backdrop of economic and geopolitical
uncertainty, strategic transformation and
regulatory change and developments.
UK inflation remained elevated, interest rates
fell at a slower rate than originally forecast and
there were material reductions in growth, with
further uncertainty caused by the Autumn
Budget. The Committee continued to monitor
the risks arising from the macroeconomic
environment, particularly credit risk across
both our Consumer Finance and Business
Finance divisions. We oversaw projects to
review the end-to-end credit journey within our
consumer businesses and focused on defaulted
cases within our Real Estate Finance business
and how these were being managed.
There have been a number of strategic changes
across the Group, including decisions to exit our
Vehicle Finance business, refresh the Group’s
strategy, which has included the development of
a number of adjacent product offerings, and the
appointment of a new Chief Executive Officer.
Risk Committee report
Statement by the Chair of the Risk Committee
The Committee has monitored the risks arising
from the strategic changes and overseen how
these are managed and approved revised risk
appetite statements, which are aligned with the
refreshed Group strategy.
The Committee has overseen Consumer Duty
implementation and how we ensure and
monitor good outcomes are delivered to our
customers, particularly in light of the decision
to cease new lending within Vehicle Finance.
We continued to oversee collections activity,
with a focus on Vehicle Finance, and during the
year, the Group entered into a forward flow
debt sale agreement to help manage the level
of defaulted cases. The Committee has also
received updates before and following the
Supreme Court judgment on motor finance
commissions and the FCA’s consultation on
the potential redress scheme.
The Committee has focused on cyber risks and
IT security across the Group, with a number of
updates from both the first-line and second-line
functions. The Committee agreed a new
Information Security Strategy and oversaw
thorough testing of the Group’s security
defences by external consultants.
The Committee considered a number of
external UK cyber-attacks, reported during
the year, and the lessons that could be learnt
from these events.
There have been a number of additional
regulatory requirements commenced during
the year, which the Committee has overseen
and ensured compliance with, including the
preparation and approval of the Operational
Resilience Self-Assessment and the Solvent
Exit Analysis.
Going forward, the Committee will continue to
focus on the level of change across the Group
and ensure that this is carefully managed.
We will oversee the risks arising from the
migration of the Vehicle Finance book following
its sale, as announced in December 2025 and
monitor the risk profile of the new strategic
initiatives to help ensure continued and
well-controlled business growth.
The Committee will continue to monitor
legal and regulatory developments relating to
motor finance commissions and the Group’s
operational readiness to implement the FCA’s
redress scheme once finalised. Following the
departure of our Chief Risk Officer at the end of
December 2025, we will oversee the transition
to a new Chief Risk Officer and ensure they are
supported in their new role, which is of critical
importance to the Committee and indeed
the Group.
In addition, the Committee will help support
the Group’s compliance with provision 29 of
the Code, with ongoing monitoring of the
effectiveness of the Group’s material controls,
oversee the embedding of the Group’s
Information Security and Data Strategies
and ensure continued oversight of the Group’s
risk profile.
Further information on the activities of the
Committee during the year is provided in the
following report and additional information
about risk-related matters can be found in the
Principal risks and uncertainties section on
pages 30 to 39.
Finally, I would like to thank my Committee and
Board colleagues; their continued diligence and
dedication has greatly benefited the operation
of the Committee, and the management team
for their efforts in supporting the work of
the Committee.
Paul Myers
Chair of the Risk Committee
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Risk Committee report
continued
Committee Governance
The Committee met five times during the year
and members’ attendance is summarised in the
table on page 68.
Meetings of the Committee were regularly
attended during the year by the Chief Executive
Officer, Chief Financial Officer, Chief Risk
Officer and Chief Internal Auditor. In addition,
the Chief Operating Officer, Chief Compliance
Officer, Head of Enterprise-Wide Risk, Head of
Financial Crime and other senior managers
attended meetings to present their reports
and answer questions from the Committee.
Risk Committee meetings were also attended,
on occasion, by other Non-Executive Directors
including the Chair of the Board.
The Committee maintains a close and open
dialogue with the Chief Risk Officer, routinely
holding private sessions following Committee
meetings and as required between meetings.
The Chair of the Risk Committee reports to the
Board on the outcome of Committee meetings
and any recommendations arising.
Items considered
Outcomes
Group risk appetite
statements and key
risk indicators
The Group’s risk appetite statements and risk appetite metrics are reviewed annually by the Committee and recommended to the Board for approval. During 2025, the risk
appetite framework was reviewed in line with the new strategy and three-year financial plan. The Committee reviewed and challenged the revised risk appetite statements,
which included some minor changes to the Group’s risk appetites and some changes to the metrics and thresholds which monitor them to ensure alignment with the new
strategy and appropriate monitoring thereof. The Committee recommended the revised Risk Appetite Statements to the Board for approval, subject to a small number
of amendments.
Throughout the year, the Committee monitored performance against the risk appetite statements, reviewing any breaches and identifying trends by reference to the
agreed metrics and management information provided at each meeting. Where metrics are outside of risk appetite, actions are considered and developed in order to
bring the metrics back within tolerance.
Enterprise-Wide Risk
Management Framework
(‘EWRMF’)
The Committee is responsible for reviewing the EWRMF on an annual basis and recommending its adoption to the Board. The Committee challenged the proposed changes
in relation to policy governance to ensure that there was appropriate oversight from the Board and its Committees. The Committee requested amendments were made and
re-submitted for approval and the Committee then recommended its adoption to the Board.
Risk culture
The Committee regularly assess risk culture across the Group through its interaction with management and reporting from the first, second and third line of defences.
The Committee considered an assessment of the risk culture in place across the Group, which was prepared by the second-line functions, and demonstrated there was
a robust risk culture in place throughout the Group.
Minutes from the meetings are made available,
as appropriate to all Board members.
The Company Secretary, or their alternate,
acts as Secretary to the Committee.
The Code states that, where a Company has
a separate Risk Committee, it should be
comprised of Independent Non-Executive
Directors. The Committee membership
complied with the Code provision for
independence throughout 2025.
Key responsibilities
The purpose of the Risk Committee is to assist
the Board in its oversight of management’s
responsibility to implement an effective risk
management framework reasonably designed
to identify, assess and manage the Group’s
strategic, credit, market, conduct and
operational risks. It considers, recommends
and monitors the Group’s risk appetite in
relation to the current and future strategy
of the Group and oversees the Group’s
compliance framework and processes.
The Committee’s responsibilities also
include approval of prudential risk-related
documentation, risk policies and the review of
associated frameworks, analysis and reporting.
Items considered by the Committee
during the reporting period
The Risk Committee has a 12-month
forward-looking agenda that details agenda
items for approval, discussion or noting at each
of the scheduled meetings. It is updated in real
time to include any new or emerging issues
pertinent to the Group.
At each meeting the Committee receives reports
from the Chief Risk Officer, Chief Financial
Officer, Head of Enterprise-Wide Risk, Chief
Operating Officer, Chief Compliance Officer
and the Head of Financial Crime providing
updates relevant to their responsibilities and
within the Committee’s remit.
The Group’s Executive Risk Committee and
Assets and Liabilities Committee provide
updates to the Committee on their activities
at each meeting.
The principal matters discussed during the year,
and up to the date of this report, are detailed in
the table below.
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Items considered
Outcomes
Strategic and
operational risks
The Committee oversees the management of strategic and operational risk across the Group and reviews reports from the risk function at each meeting together with
detailed information on relevant metrics, key risk indicators and events. The Head of Enterprise-Wide Risk presented the outcomes of the Strategic and Operational Risk
Review to the Committee, together with the annual Risk and Control Self-Assessment (‘RCSA’) for 2025. The Committee undertook a top-down risk review of the Group’s
risk register and considered emerging risks, including the likelihood and impact upon the Group. The review also considered the potential impacts of the strategic changes
being implemented across the Group and how these were being mitigated, together with consideration of the internal control environment to ensure this remained robust.
The Committee observed a stable operational risk profile and continued improvements in the control environment, supported by remediation of audit and compliance
findings, simplification of processes, harmonisation of controls across functions and strengthening resilience testing.
Climate risk
Climate risk, both in relation to the Group’s direct and indirect exposure, is monitored throughout the governance structure and embedded into the Group’s EWRMF and
risk appetite statements. The Group’s risk appetite statements include climate risk metrics such as flood risk for the Real Estate Finance business and vehicle age for the
Vehicle Finance business. The Committee received a dedicated climate risk update, which detailed progress in climate risk-related matters, regulatory requirements and
future developments with an overview of the Group’s plan to ensure compliance thereon and the key areas of focus for the team over the next six-month period. For further
information on the Group’s response to climate risk, see the Group’s Climate-related financial disclosures on pages 54 to 65.
Macro risk
Updates from the Chief Risk Officer were provided to the Committee on the wider macro-economic risks to the Group particularly arising from the economic outlook,
interest rate environment, 2025 Budget and potential monetary and fiscal policy. The Committee considered potential impacts on our customers including customer
affordability, potential changes to customer sentiment and the impact of a subdued property market, particularly for our clients within Real Estate Finance and our
consumer businesses.
Credit risk
The Committee has continued to focus on credit risk across the Group and receives reports on key risk indicators for credit risk, together with quarterly assessments of
each portfolio’s credit profile, including impairments, bad debts, watch-lists, collections data, concentration risk and any policy exceptions.
The Committee received regular reports on the Group’s Vehicle Finance collections strategy and performance throughout 2025, and applied additional scrutiny following
the decision to cease new lending to ensure sufficient resources were available within the collections team and that there was no deterioration in collection activities.
The Committee noted progress in strengthening the collections strategy, including centralisation of the function, continued adoption of additional contact strategies
and digital solutions, outsourcing arrangements and the forward flow debt sale.
During the year, the Committee was also updated on end-to-end reviews of the credit risk framework within both Vehicle Finance and Retail Finance, which informed
enhancements to scorecards and governance processes.
Operational resilience and
risk, including cyber,
information security
resilience risk and business
continuity
The Committee oversees the operational risk framework, including appropriate reporting of metrics, key risk indicators and the output from the annual RCSA undertaken
by individual business units and functions.
To assist in understanding how the risk framework is embedded within the Group, and to challenge the effectiveness of the risk management function, the Committee
receives a quarterly review of material operational risk events/losses, performance against the key operational risk appetite metrics, together with the key findings from
annual RCSAs.
Operational resilience has continued to be a key area of focus for the Committee, with the development of the Group’s first Operational Resilience Self-Assessment, which
was undertaken in line with regulatory requirements. The Committee reviewed and challenged the self-assessment and considered the management actions identified in
the Internal Audit review undertaken and ensured these were actioned. The Group’s self-assessment was signed off and approved by the Board in March 2025, prior to
the regulatory deadline.
The Committee received updates from the Chief Operating Officer and Chief Information Security Officer on the strategies undertaken within the Group to understand,
identify, monitor and respond to current and upcoming cyber threats and the Group’s cyber resilience profile. Given the severity of a number of cyber-attacks in the UK
during the year, this was a particular area of focus for the Committee. The Group’s IT team engaged an external consultant to undertake an extensive test of the Group’s
cyber and physical defence practices with the results reported to the Committee. The Committee reviewed and approved a revised Information Security Strategy and
agreed revised metrics for reporting through the governance structure. There will be continued focus on this area during 2026, particularly around the Group’s response
and recovery plans.
Risk Committee report
continued
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Other Information
Risk Committee report
continued
Items considered
Outcomes
Capital and liquidity risk
The Committee has continued to monitor capital and liquidity risk and receives updates on these items at each meeting. The Committee has primary responsibility for
reviewing and making a recommendation to the Board on the Group’s ICAAP, ILAAP and the Recovery Plan and Resolution Pack, and noted the improvements in stress
testing methodologies and scenario planning that had taken place in 2025.
The Committee reviewed key assumptions, stress test scenarios and outputs used in these processes in advance of considering the final documents for recommendation
to the Board. The Committee also considered the output of Internal Audit’s reviews of the documents and the policies followed.
In addition, in-line with additional regulatory requirements implemented in 2025, the Committee reviewed and challenged the Group’s Solvent Exit Analysis, which details
the key considerations for an orderly wind-down. The Committee also considered further diversification of liquid assets, as part of strengthening liquidity resilience.
Regulatory and
conduct risk
The Committee receives reports at each meeting on key risk indicators for regulatory, reputational and conduct risk, regulatory incidents, key advisory activities of note
and the outputs of the Compliance Monitoring Plan. The reports also provide an overview of engagement with regulators, horizon scanning and actions been undertaken
to implement new and revised regulations or legislation. The Committee escalated a number of overdue compliance monitoring actions with management and ensured that
these were all closed satisfactorily. The Committee reviewed and approved the Compliance Monitoring Plan for 2026 and considered the interaction of this plan with the
Internal Audit plan to provide appropriate coverage of the Group’s risk profile.
The Committee reviewed monthly reports on the Group’s compliance with Consumer Duty and how the Group is delivering good outcomes for clients, together with
oversight of action plans to address any items identified and requiring improvement.
In addition, the Committee monitored legal and regulatory developments such as the FCA’s consultation on the redress scheme for motor finance commission,
Basel 3.1 implementation planning and the completion of outstanding actions following the FCA’s Borrowers in Financial Difficulty review.
Financial crime
The Committee received reports at each meeting from the Head of Financial Crime, covering key risk areas including sanctions, transaction monitoring, and fraud incidents.
The Committee reviewed the Annual Report from the Money Laundering Reporting Officer and the annual anti-bribery and corruption management information report,
noting continued focus on sanctions compliance, which was a rapidly evolving area, and cultural awareness across the organisation. The Committee has also approved the
Financial Crime Monitoring Plan for 2026, as part of the wider Compliance Monitoring Plan.
The Committee considered the revised government guidance in relation to modern slavery statements and agreed the approach to be adopted by the Group, before
reviewing and recommending the Group’s modern slavery statement to the Board.
Governance
The Risk Committee reviewed its Terms of Reference and approved various Group-wide policies within its remit. A full copy of the Terms of Reference for the Risk
Committee can be obtained via the Group’s website
(www.securetrustbank.com/corpgov)
.
The Committee undertook an internal review of its performance in 2025 and further information on the process followed can be found on page 80. The Committee noted
good progress on items identified in the 2024 evaluation, which included deep-dive sessions on credit risk, IT and Information Security and a detailed top-down risk review,
which included discussion and consideration of emerging risks. There have been enhancements made to reporting on operational matters, with a revised report from the
Chief Operational Officer and this will continue to be an area of focus into 2026. During the year, the Committee’s forward-look agenda was also reviewed and refreshed.
The result of the 2025 performance review demonstrated that the Committee was operating effectively and particularly commended the interaction with the Board and
other committees, the composition of the Risk Committee and the quality of discussions at meetings. The review indicated there were a number of areas which the
Committee should focus on in 2026 including:
•
The need to improve reporting to the Committee.
•
To closely monitor risks arising from the strategic refresh, particularly the migration of the Vehicle Finance book, new product capabilities and related projects.
•
Continued rigour on risks arising from cyber events and testing of response plans.
This table is not a complete list of matters considered by the Committee but highlights the most significant matters for the period in the opinion of the Risk Committee. For more information on the
framework for managing risks within the business see the Principal risks and uncertainties section on pages 30 to 39.
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Secure Trust Bank PLC Annual Report & Accounts 2025
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Other Information
On behalf of the Remuneration
Committee, I am pleased to present
the Directors’ Remuneration
Report (‘DRR’) for the year ended
31 December 2025. The Committee
also presents its proposed 2026
Directors’ Remuneration Policy (‘DRP’)
which, in-line with requirements, is due
for renewal at this year’s Annual
General Meeting (‘AGM’).
It has been a year of significant strategic
change for the Group. In June, we announced
the retirement of our former Chief Executive
Officer (‘CEO’), David McCreadie, and the
appointment of Ian Corfield as CEO designate.
In July, we announced the decision to cease
lending in our Vehicle Finance business and in
December announced the decision to sell the
Consumer Vehicle Finance business. We have
refocused our business, refreshed our strategy
to drive improved returns for shareholders and
set revised medium-term targets.
The Remuneration Committee has focused on
how our remuneration strategy is aligned with
the refreshed Group strategy and can support
its effective implementation, including setting
performance targets under the bonus plan
and long-term incentive plan (‘LTIP’) that are
stretching and which appropriately incentivise
and retain management.
2025 LTIP performance conditions
In my report last year, I outlined that the
Committee had elected to defer setting the
performance conditions for the 2025 LTIP
grants until H2 2025, given the work to refresh
our strategy. Whilst the Committee decided the
existing performance conditions were the right
measures, we have made some important
changes to the structure. The four performance
conditions based on earnings per share (‘EPS’)
growth, Return on Average Equity, (‘RoAE’),
A pivotal year
for the Group
“The Remuneration
Committee has
focused on how our
remuneration strategy
is aligned with the
refreshed Group
strategy and can
support its effective
implementation.”
Julie Hopes
Chair of the Remuneration Committee
total shareholder return (‘TSR’) and risk
management have been re-weighted.
Rather than accounting for 25% each,
the financial metrics (EPS, RoAE and TSR) have
been weighted at 30% each with the qualitative
risk management assessment, which is
determined by the Committee upon advice of
the Risk function, weighted at 10%. In addition,
the RoAE has been set as the average RoAE
over the three-year performance period, rather
than measured in the final year. Due to the
decisions taken to cease lending within Vehicle
Finance, this business will be excluded from the
calculations within the financial metrics.
However, an additional underpin to the LTIP
was created to ensure the effective
management of the run-off of this business
would be a specific consideration before any
vesting decisions are confirmed. The metrics
for each performance condition were set in
consideration of the Group’s revised strategy
and three-year plan, and the Committee
believes they will support the delivery of our
refreshed strategy and benefit all of our
stakeholders. Further information on the
metrics for the 2025 LTIP can be found on
page 108.
CEO transition
During the year, the Committee agreed the
remuneration arrangements for Ian Corfield’s
appointment as CEO and for David McCreadie’s
retirement, which were in-line with the
Directors’ Remuneration Policy approved
by shareholders in 2023. Ian’s remuneration
package comprises:
•
A base salary of £700,000 per annum
(previous CEO salary of £731,581).
• An annual bonus up to a maximum of 100%
of salary subject to performance (with 50%
of any bonus being deferred into Secure
Trust Bank PLC shares, which will vest in
three equal annual tranches).
• An annual grant of shares under the LTIP
of 100% of salary, with vesting subject to
performance conditions assessed over a
three-year performance period and with
any performance vested shares subject to a
further two-year holding period after vesting.
•
A pension allowance of 5% of salary
aligned to the allowance provided to all
other employees.
Performance and incentive
outturns for 2025
Performance
For the 2025 performance year the Group’s
adjusted profit before tax (‘PBT’) amounted to
£51.6 million, an increase of 32.0% from the
2024 outturn of £39.1 million. While this is
material year on year growth, it did fall short
of the stretching internal targets we had set
and was once again negatively impacted by
impairments within our Vehicle
Finance business.
We calculate our incentive outturns on an
adjusted continuing basis and due to the
discontinuation of the Vehicle Finance
business during 2025, adjusted continuing
PBT amounted to £59.3 million.
In deciding the 2025 bonus and LTIP
performance outturns the Committee
carefully considered the underlying
performance of the business, the experience
of shareholders, with a significant increase
in shareholder value over the period, and the
customer outcomes delivered.
Bonus outturn
Ian Corfield was appointed CEO on
8 September 2025. Due to his tenure and
limited ability to influence financial outturns
for 2025 the Committee agreed to assess
his bonus against strategic measures,
including completion of his 100 day plan,
and consideration of the Group’s financial
Directors’ Remuneration Report
Statement by Chair of the Remuneration Committee
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Directors’ Remuneration Report
continued
Statement by Chair of the Remuneration Committee
performance. This resulted in a bonus outturn
of 75%, which prorated from the date of his
appointment as CEO, results in a bonus
of £165,411.
The annual bonus scorecard for the Chief
Financial Officer (‘CFO’) and former CEO is
based on financial metrics, which account for
65% of the weighting and 35% on strategic
metrics. Based on a formulaic assessment of
performance in the period, the outturn for the
financial metrics amounted to 30.5% out of a
maximum of 65%. The Committee considered a
number of different factors in assessing this,
including the impact on employees following
the decision to cease lending in Vehicle Finance,
and the issuance of a trading statement during
the year, guiding the market to a lower profit
number. The Committee have, therefore,
applied discretion to reduce the financial
outturn from 30.5% to 20.5%.
The Committee then assessed performance
against the strategic elements of the bonus
scorecard. This assessment resulted in a total
bonus outturn of 38% for the former CEO,
which is pro-rated for the period of active
service resulting in a bonus of £196,916, and
50.5% for the CFO resulting in a bonus of
£257,474. A full disclosure of the bonus
determination process and the scorecard
outcomes is provided on pages 104 to 106.
In line with the DRP, 50% of the bonus is
deferred into shares under the Company’s
Deferred Bonus Plan (‘DBP’).
LTIP outturn
The performance period for the 2022 LTIP
award, in which the CFO and former CEO
participate, ended on 31 December 2025
with awards due to vest in April 2026.
The Committee assessed the performance
conditions attached to the 2023 LTIP,
which were based on four equally weighted
performance conditions; TSR, RoAE, EPS
and risk management. The assessment of the
performance conditions resulted in an overall
vesting level of 40%. Further information on
this can be found on page 107.
2026 remuneration
Following the year-end, the Committee
reviewed pay increases for the employee
population. This year, in light of the continuing
cost-of-living crisis, the Committee have
focused salary increases on lower grade roles,
who received a 3% increase. More senior roles
received salary increases of 2%, which included
the Executive Directors.
We have also agreed annual grants under the
Company’s executive share schemes.
Wider workforce
During the year, we approved a commitment
to pay at least the Real Living Wage to
all employees.
The Committee also considered the
performance linkage to bonus assessments
and pay reviews for those employees outside
of senior management and agreed the overall
bonus pool for the Group. The Committee
reviewed the structure of the Group’s
bonus scheme and considered potential
improvements to its operation to help
drive a high-performing culture.
In addition, the Committee received updates
on the Gender Pay Gap actions and Equity,
Diversity and Inclusion progress and initiatives
being undertaken across the Group.
Proposed Directors’ Remuneration
Policy 2026 - 2028
The Committee has reviewed the Directors’
Remuneration Policy, which is due for its
triennial renewal. This involved discussions
with the Executive Directors as well as
communication with our top shareholders,
accounting for c. 43% of the shareholding base.
In designing the 2026 DRP, we sought advice
from FIT Remuneration Consultants LLP
(‘FIT’), which incorporated changes to
regulatory requirements, market practice and
benchmarking, developments in governance
best practice and changes to investor
remuneration guidelines.
The Committee agreed that, whilst the
architecture of the policy remained
appropriate, additional headroom should
be built into the policy to increase the policy
maximums of the annual bonus and LTIP during
the next three-year policy period from 100%
to 200% of base salary. Whilst there are no
current plans to increase either award the
Committee are seeking increased flexibility to:
• support our growth plans and provide
appropriate flexibility to ensure
remuneration drives the implementation of
the refreshed strategy, which if successfully
executed, will drive shareholder value;
• enable us to attract and retain talent in
a competitive market, which is critical to
delivering our growth plans, and increasingly
important following the changes in the PRA’s
remuneration rules, which has seen other
banks adopt policies removing the ‘bankers’
bonus cap’; and
• further align management and shareholder
interests by having flexibility to increase
the weighting of our incentives towards
long-term equity.
If the new policy is approved, we will consult
further with shareholders before making any
material increases in the overall quantum of
variable pay, setting out the rationale for any
increase at that time. More detail regarding
the market positioning that informed the
Committee’s discussions on these proposed
changes to the 2026 DRP is set out on page 114.
We are also submitting our share plan rules,
which are due to expire in 2027, for approval
by shareholders at the 2026 AGM. These are
broadly in-line with the current rules but have
been refreshed to align with revised regulatory
requirements, investor guidelines and current
market practice, including:
•
the ability to pay dividends or dividend
equivalents on the Group’s LTIP and DBP,
which is in line with the amended PRA rules
and market practice;
• removing the 5% dilution sub-limit for
executive share plans, whilst retaining the
overall 10% dilution limit across all share
plans; and
• propose an open-ended life for the
Company’s all employee Save as Your Earn
Plan (‘SAYE’).
The proposed 2026 DRP and further detail on
the changes can be found on pages 116 to 127.
Outlook
The Committee looks forward to working
with our new Chief People Officer on
remuneration initiatives throughout the Group.
The Committee will review the remuneration
structures below senior management to
ensure they support our revised strategy,
desired culture and are equitable and fair pay
structures, that attract high-performing and
diverse talent into the organisation.
I would like to thank my fellow Committee
members and all those who have supported the
work of the Committee, throughout what has
been a very busy year.
The Committee welcomes all input on
remuneration and I am looking forward to
engaging with shareholders at the 2026
AGM and hearing your views directly.
Alternatively, you can email me any comments
or questions via the Company Secretary at
companysecretariat@securetrustbank.co.uk.
Julie Hopes
Chair of the Remuneration Committee
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Directors’ Remuneration Report
continued
Executive Directors: Remuneration at a glance
Salary
Pension and benefits
Annual bonus
LTIP
Minimum shareholding
requirements (‘MSR’)
Malus and clawback
Purpose
Supports attraction and
retention of Executive
Directors to deliver the
key strategic objectives.
Supports retention of
Executive Directors.
Incentivises the delivery
of key financial and
non-financial
strategic objectives.
Incentivises delivery of
the long-term sustainable
success of the Company for
shareholders. Alignment of
Executive Directors’ and
shareholders’ interests.
Ensuring alignment of
Executive Directors’ and
shareholders’ interests.
Ensuring that the Company
can reduce variable
compensation should
material adverse events
occur or come to light that
impact the appropriate
quantum of the
original award.
Key features of
current policy
Reviewed annually and
takes into account a range
of factors including:
• skills and experience of
the individual;
• benchmarking of
peer data;
• wider market and
economic conditions; and
•
the level of salary
increases in the wider
employee population.
Provision of benefits that
are competitive and linked
to market practice.
The maximum Company
pension contribution is 5%
of salary, in line with the
wider workforce.
Maximum opportunity of
100% of salary.
Balanced scorecard
approach based on financial
and non-financial metrics
approved by the
Remuneration Committee.
50% of total bonus deferred
into share awards and
vesting over three years
in annual tranches.
Payments are subject to
risk assessment and subject
to the Remuneration
Committee’s discretion.
Maximum opportunity of
100% of salary for both the
Executive Directors.
Awards are subject to
performance conditions
assessed over a three-year
performance period and are
subject to an additional
two-year holding period
post-vesting.
Vesting is subject to
risk assessment.
Executive Directors
are required to build a
minimum shareholding
equivalent to 200% of
base salary.
Post-employment
shareholding requirement
for Executive Directors for
two years.
Malus and clawback
provisions apply to all
variable remuneration
please see page 122 for
further information.
Planned
implementation for
the year ending
31 December 2026
CEO: £714,000 p.a.
2% increase.
CFO £520,047 p.a.
2% increase.
No change from prior year.
100% of salary
max opportunity.
100% of salary
annual award.
MSR will continue to be
monitored in 2026.
In line with the Directors’
Remuneration Policy.
Implementation for
the year ended
31 December 2025
CEO: £700,000 p.a.
CFO: £509,850 p.a.
Former CEO: £731,581 p.a.
Pension contribution
remains at 5% of base salary.
CEO 75% of max
(pro-rata).
CFO 50.5% of max.
Former CEO 38% of max
(pro-rata).
Vesting of 2023 LTIP at 40%
for CFO and former CEO in
April 2026.
The CEO has no LTIP awards
vesting in 2026.
Neither Executive Director
has achieved the minimum
shareholding requirement.
Details on the Executive
Directors’ shareholdings
can be found on page 109.
In line with the Directors’
Remuneration Policy.
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Directors’ Remuneration Report
continued
Items considered
Outcomes
Executive Directors’
remuneration
The Committee agreed the annual bonus outcomes for the CEO, CFO and former CEO for the 2025 performance year, as well as the salary increases for the CEO and CFO for
2026. The Committee considered the Executive Directors’ performance, Group performance, progress against strategic objectives, stakeholder experience, external factors
and benchmarking for each role. The Committee also approved the grant of LTIP and DBP options to the Executive Directors. Further information can be found from page 104
for the bonus and from page 107 for the LTIP.
The Committee agreed the remuneration for the new CEO and the terms of the remuneration for the former CEO, including his treatment as a good leaver for the purposes of
the Company’s share plans. His awards will continue to vest on the normal timeline, applying performance conditions and be pro-rated for the period of his active service.
Chair’s remuneration
The Committee considered the Chair’s fee during the year. A mechanical process was implemented in 2019 to increase the Board Chair’s fee in line with employees’ average
salary increases in the prior year and there was no deviation from this process in 2025.
Senior Managers’
remuneration
The Committee considered and approved remuneration for individual MRTs, using benchmarking data, and assessed the outcomes of scorecards to assess performance for
bonuses, taking into account stakeholder experience and other factors when considering the formulaic outturns. The Committee approved the quantum of awards used for
the LTIP and DBP grants to MRTs.
The Committee reviewed and approved remuneration packages for a number of individuals joining or moving within the organisation in MRT roles during the year.
When considering MRT remuneration packages, the Committee balances the need for packages to remain competitive, promote equity, diversity and inclusion, while
remaining appropriate for a group the size of Secure Trust Bank PLC. For MRTs leaving the Group, the Committee considered and approved their leaving terms from a
remuneration perspective including the treatment of share-based awards.
Discretionary bonus plan
During the year, the Committee considered the existing discretionary bonus plan, which has been operated across the Group for a significant period. The Committee
considered potential alternative structures, with a view to reducing discretion, creating greater consistency and transparency across the Group, and enhancing the
connection between bonus outturns and business and individual performance.
Wider workforce
remuneration
In February 2026, the Committee reviewed the proposed Group bonus pool to be paid in April 2026 in respect of performance for the 2025 financial year and the proposed
average salary increase to be effective from April 2026. The Committee, having regard to the guidelines issued by institutional investors regarding reward, regulatory
requirements and guidance, the review of the going concern and viability assessments conducted by the Audit Committee and a conduct review by the Chief Risk Officer,
concluded that the payment of a bonus to all employees who met the individual performance criteria was appropriate and in the best interests of the Group. The Committee
reviewed and agreed the proposed distribution and quantum of the Group bonus pool and also approved an average 3% salary increase for lower grade roles, 2% for senior
employees and further reviewed the Group’s benefits package. The Committee reviewed dashboard information, processes and guidelines for annual remuneration for the
entire employee workforce, including more granular information on the Compliance and Risk functions to ensure remuneration for these key control functions was
appropriate and would not promote excessive risk taking. The Committee also reviewed the outcomes of the Group’s Gender Pay Gap reporting.
Committee governance
The Remuneration Committee met seven times during the year and members’ attendance is
summarised in the table on page 68. The Committee membership complied with the Code provision
for independence throughout 2025. The Board Chair was also a member of the Committee, as he
was considered independent on appointment as Chair.
Meetings of the Committee were regularly attended during the year by the CEO, Chief People
Officer, Company Secretary, Chief Risk Officer, the external remuneration consultant and senior
members of the Reward team, as well as other members of the Board at the invitation of
the Committee.
The Chair of the Remuneration Committee reports to the Board on the outcome of Committee
meetings and any recommendations from the Committee. The Company Secretary, or their
alternate, acts as Secretary to the Remuneration Committee. Committee materials and minutes
from the meetings are made available, as appropriate, to all Board members.
A copy of the Committee’s Terms of Reference can be obtained via the Group’s website
(
www.securetrustbank.com/corpgov
).
Role of the Remuneration Committee
The Remuneration Committee assists the Board in fulfilling its responsibilities for remuneration
including, among other matters, determining the policy for the individual remuneration and benefits
packages of the Executive Directors and the Group’s Material Risk Takers (‘MRTs’). The Committee
also reviews workforce remuneration, related policies and how executive and wider workforce pay
are aligned to the culture of the Group.
Key matters considered by the Committee during the year, and up to the date of this report, were:
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Directors’ Remuneration Report
continued
Items considered
Outcomes
Discretionary share plans
and dilution
The Committee reviewed the outcome of the performance metrics for the 2023 LTIP grant, which will mature in April 2026 with a 40% vesting level. The Committee elected
not to utilise its discretion to modify the formulaic outcome of the vesting of the LTIP awards, which was considered appropriate in light of the performance of the Group and
shareholder experience. The Committee agreed the performance conditions for the 2025 LTIP grants. Further information can be found from page 107.
The Committee has reviewed and agreed the participants and quantum for the 2026 LTIP grant. These are to be structured as nil cost options and the grants will be made
using an average share price in the three days immediately prior to grant.
The Committee reviewed and approved the participants under the 2026 DBP grant and agreed the quantum of share options to be granted relative to the portion of bonus
to be deferred into shares. The Committee further agreed the vesting of tranches of the DBP under the 2023, 2024 and 2025 grants. Malus and clawback provisions were
reviewed, with relevant clauses being included in all LTIP and DBP standard documentation.
The Committee discussed the dilution impact to shareholders as a result of settling awards via issuance of new shares. Following creation of the Employee Benefit Trust (‘EBT’)
in October 2022, exercises under discretionary awards can be satisfied from shares purchased in the market by the EBT, which will not impact dilution levels. The Committee
agreed to increase the use of market purchase shares through the Company’s EBT for discretionary share plans and the grants made in 2026 will all be satisfied by market
purchase shares. The Committee will continue to monitor share plan dilution levels which, for all share plans, currently stands at 5.73% of the issued share capital and will
manage these appropriately.
All-Employee Sharesave
(‘SAYE’) plan and dilution
The Committee reviewed and approved the 2025 SAYE plan invitation to all eligible employees. The SAYE plan is popular across the Group and it provides all employees
with the opportunity to purchase shares in the Company, helping to align all employees’ interests with that of our shareholders and creating a culture of ownership.
The 2022 SAYE grant matured in November 2025 and the majority of participants have chosen to exercise their share options.
DRR and other
disclosures in the Annual
Report and Accounts
The Committee considered the DRR and other disclosures required in the Annual Report and Accounts and recommended their approval to the Board. The Committee
received advice from FIT, the Company Secretary and People Team when compiling the DRR and the additional disclosures in the Annual Report and Accounts.
Proposed 2026
Directors’
Remuneration Policy
The Committee considered the Directors’ Remuneration Policy, which will be submitted to shareholders for its triennial approval at the 2026 AGM. Further information on
the proposed policy can be found on pages 116 to 127.
Governance matters
The Committee reviewed the outcomes of the annual internal audit review of the implementation of the Remuneration Policy.
During the reporting period, a Board performance review considered the Committee’s performance as part of the wider Board effectiveness review. Please see page 80 for
further information on the process followed. The result of the performance review confirmed that the Committee was considered to be performing effectively and highlighted
the strong leadership of the Committee Chair and the Committee’s willingness to constructively engage on difficult matters. There had been good progress against the 2024
actions including the alignment with the new strategy and development of the DRP. Following the performance review there are areas identified for the Committee’s focus
in 2026, including working with the new Chief People Officer to further enhance support to the Committee and improve the quality of reporting, considering the wider
remuneration framework to support the culture of a fast growth entrepreneurial business and extending the length of meetings at key points during the Committee’s calendar.
The Committee has also reviewed a number of workforce policies, including the Application of Proportionality and Material Risk Takers policies, as well as the All-Employee
Remuneration Policy and the Remuneration Policy Statement.
This table is not a complete list of matters considered by the Committee but highlights the most significant matters for the period in the opinion of the Remuneration Committee.
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Directors’ Remuneration Report
continued
Remuneration consultant and Committee advice
During the year, the Committee received external advice from FIT. The appointment of FIT to
advise the Committee was made in September 2020 following a competitive tender process.
FIT has no other significant connection with the Group or its Directors other than the
provision of advice on executive and employee remuneration, and related matters. FIT is a
member of the Remuneration Consultants Group and abides by its code of conduct that
requires remuneration advice to be given objectively and independently. The total fee paid
for the provision of advice to the Committee during the year was £52,850 (excluding VAT)
(2024: £71,076). FIT also provided support to the People Team, Company Secretary and
Legal teams on remuneration implementation. The Committee is satisfied that the advice
provided in the year by FIT on remuneration matters is objective and independent.
The Committee also received advice on specific matters from internal advisers, management
and the Company Secretary and is satisfied that the Committee has exercised independent
judgement when evaluating the advice received from all its advisers.
Directors’ Remuneration Report
The information contained in the Directors’ Remuneration Report is subject to audit, where
indicated in the report, in accordance with The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended). The Directors’ Remuneration Report
contains the Annual Remuneration Report, which explains the operation of remuneration-related
arrangements for 2025. The 2026 DRP for Executive and Non-Executive Directors, which is subject
to approval at the 2026 AGM and an illustration of the application of that Remuneration Policy in
2026, is included from page 116.
A full copy of the existing Directors’ Remuneration Policy, which was approved by shareholders
at the 2023 AGM, can be found on the Group’s website as part of our 2022 Annual Report
and Accounts.
How we link executive remuneration to our strategy
The key principles behind the Directors’ Remuneration Policy are to:
• be simple and transparent in order to reflect the Group’s purpose;
• promote the long-term sustainable success of the Group,
with transparent and demanding performance conditions;
• provide alignment between executive reward and the Group’s values, risk appetite and
shareholder returns; and
•
have a competitive mix of base salary and short and long-term incentives, with an appropriate
proportion of the package linked to the delivery of sustainable long-term returns.
In developing and implementing the Directors’ Remuneration Policy, we have also had regard to
regulatory requirements for senior managers under the Senior Manager Regime. The Group is
currently a Level 3 firm within the classifications applied by the financial regulators for regulated
entities. This means that the Group is not required to satisfy in full all elements of the Financial
Conduct Authority (‘FCA’) and Prudential Regulation Authority (‘PRA’) remuneration codes.
Notwithstanding this, in formulating and applying the Directors’ Remuneration Policy,
the Committee has had regard to the remuneration codes when considering existing and
proposed remuneration and also the remuneration-related provisions of the UK Corporate
Governance Code.
Secure Trust Bank PLC Annual Report & Accounts 2025
103
Strategic Report
Corporate Governance
Financial Statements
Other Information
Directors’ Remuneration Report
continued
Single-figure table (audited information)
The following table sets out total remuneration earned for each Director in respect of the year ended 31 December 2025 and the prior year.
Salary and fees
1
Benefits
Annual bonus
2
Pension
Shares
3, 4
Total remuneration
Total fixed
remuneration
Total variable
remuneration
2025
£’000
2024
£’000
2025
£’000
2024
£’000
2025
£’000
2024
£’000
2025
£’000
2024
£’000
2025
£’000
2024
£’000
2025
£’000
2024
£’000
2025
£’000
2024
£’000
2025
£’000
2024
£’000
Executive Directors
I Corfield
218
–
9
–
165
–
11
–
2
–
405
–
238
–
167
–
R Lawrence
506
479
29
23
257
124
25
24
170
28
987
678
560
526
427
152
Non-Executive Directors
5
J Brown
6
250
174
–
–
–
–
–
–
–
–
250
174
250
174
–
–
J Hopes
7
104
15
–
–
–
–
–
–
–
–
104
15
104
15
–
–
S Colsell
8
46
–
–
–
–
–
–
–
–
–
46
–
46
–
–
–
P Myers
107
107
–
–
–
–
–
–
–
–
107
107
107
107
–
–
F Williamson
94
92
2
2
–
–
–
–
–
–
96
94
96
94
–
–
V Mitchell
9
92
82
–
–
–
–
–
–
–
–
92
82
92
82
–
–
Former Directors
D McCreadie
10
498
705
12
2
197
124
25
35
270
43
1,002
909
535
742
467
167
A Berresford
11
124
122
2
2
–
–
–
–
–
–
126
124
126
124
–
–
Total
2,039
1,776
54
29
619
248
61
59
442
71
3,215
2,183
2,154
1,864
1,061
319
Notes:
1.
For Ian Corfield, the 2025 base salary figure is from his appointment as Chief Executive Officer on 8 September 2025. Rachel Lawrence’s 2025 base salary figures is based on three months of salary approved in April 2024
(£495,000), and nine months of salary approved in April 2025 (£509,850). David McCreadie’s 2025 base salary figure is based on three months of salary approved in April 2024 (£710,273) and 5.5 months of salary approved
in April 2025 (£731,581).
2.
In respect of the 2025 financial year, Ian Corfield received a pro-rated bonus, from 8 September 2025, of £165,411 of which £82,705 will be deferred into share awards and Rachel Lawrence received an annual bonus of
£257,474 of which £128,737 will be deferred into share awards. David McCreadie received a pro-rated bonus, to 15 August 2025, of £196,916 of which £98,458 will be deferred into share awards.
3.
The values for the shares for David McCreadie and Rachel Lawrence reflect the performance vesting of the 2023 LTIP award where performance was measured to 31 December 2025. This award partially vested giving
David McCreadie 26,522 vested shares and Rachel Lawrence 16,647 vested shares, which for the purpose of providing an estimated value for this table, was multiplied by the average share price in the three-month period
to 31 December 2025 (1,018.95p). Details of vested awards made under the LTIP can be found on page 107.
4.
This includes the value of the SAYE option granted to Ian Corfield on 25 September 2025 (calculating the number of shares in the option (1,004 shares) multiplied by the difference in the option price (908.0p) and the market
value of the shares on 25 September 2025 (1,100.p)). Details of awards made under the SAYE scheme can be found on page 109.
5.
Non-Executive Directors are reimbursed expenses that are incurred for business reasons. Any tax that arises on these reimbursed expenses is paid by the Company. These expenses and the related tax have not been included
in benefits listed in the table above.
6.
Jim Brown was appointed a Non-Executive Director on 31 March 2024 and Chair on 16 May 2024.
7. Julie Hopes was appointed a Non-Executive Director on 24 October 2024 and Senior Independent Director and Deputy Chair on 30 December 2025.
8. Steve Colsell was appointed as a Non-Executive Director and member of the Nomination and Audit Committees on 12 June 2025. He was appointed Chair of the Audit Committee and a member of the Risk Committee on
30 December 2025.
9. Victoria Mitchell was appointed a member of the Risk Committee on 24 October 2024 and as the Non-Executive Director designated for workforce engagement on 7 August 2025.
10.
David McCreadie stepped down from the Board on 8 September 2025.
11.
Ann Berresford stepped down from the Board on 30 December 2025.
Secure Trust Bank PLC Annual Report & Accounts 2025
104
Strategic Report
Corporate Governance
Financial Statements
Other Information
Directors’ Remuneration Report
continued
The figures in the single-figure tables are derived from the following:
Salary and fees
The amount of salary/fees received in the year.
Benefits
The taxable value of benefits received in the year. These are principally private medical health insurance and travel allowances.
Annual bonus
The value of the bonus earned in respect of the financial year (including the proportion of the amount earned that is subject to deferral).
Pension
The amount of payments in lieu of Company pension contributions received in the year.
Shares
The value of LTIP awards vesting in relation to performance periods ending in 2025 and also the value of SAYE options granted during the year.
Additional disclosures in respect of the single-figure table
(audited information)
Base salary and fees
Base salaries for the Executive Directors in respect of the year ended 31 December 2024 and
31 December 2025 are as follows:
2025
base salary
£’000
2024
base salary
£’000
I Corfield
700
N/A
R Lawrence
510
495
Former Director
D McCreadie
732
710
The Executive Director base salaries are the annual salaries as agreed by the Remuneration
Committee for each year.
Bonus arrangements
For the financial year ended 31 December 2025, Executive Directors were eligible for an annual
bonus award of up to 100% of salary. For the former CEO and CFO, 65% of the bonus was subject
to financial performance metrics and 35% of the bonus was subject to a mixture of strategic,
stakeholder, operational and employee performance (‘Non-financial’) metrics. Due to the current
CEO’s appointment as CEO on 8 September 2025, and his limited ability to influence the financial
performance of the Group across the year, the Committee agreed to assess his performance
primarily on strategic metrics (as detailed on page 105), with a financial underpin applied.
Financial performance metrics
The financial performance metrics were based on the delivery of Board-agreed key performance
indicators in accordance with the schedule below. The financial performance metrics were changed
for 2025, with the addition of RoAE, which is of key importance to shareholders and measures the
returns on equity delivered by management and the removal of net interest margin from the
financial metrics. It was also agreed to remove the cost of risk and Common Equity Tier 1 ratio
targets, from the financial metrics and include these in the risk element of the non-financial metrics
(see page 105 and 106 for further information).
For 2025, and as explained in the Statement by the Chair of the Remuneration Committee on
pages 97 and 98, in consideration of the impact on employees from the decision to cease lending in
Vehicle Finance and of the overall financial performance of the Company throughout 2025, the
Committee exercised its discretion to reduce the bonus payable under the financial metrics by 10%.
Objective
1
Threshold
(25%
payable)
On-target
(50%
payable)
Stretch
(100%
payable)
Achieved
Weight
Percentage
achieved
Group underlying
continuing PBT
2
£52.22m
£61.43m
£70.65m
£59.19m
30%
13.17%
Group underlying
continuing RoAE
2
12.29%
14.46%
16.63%
14.28%
25%
11.98%
Group continuing cost:
income ratio
2
47.65%
45.38%
43.11%
45.22%
10%
5.35%
Total
30.50%
Total post Committee discretion
20.50%
Notes:
1.
Please refer to the key performance indicators on pages 13 for an explanation of why these are measured.
2.
Figures include continuing operations only, which exclude exceptional items (see Note 8 to the
Financial Statements).
Secure Trust Bank PLC Annual Report & Accounts 2025
105
Strategic Report
Corporate Governance
Financial Statements
Other Information
Directors’ Remuneration Report
continued
Non-financial metrics
Priority
Targets (summary)
Achievement
Weight
Bonus
payable
CEO
Strategy
• Effective management of Vehicle Finance run-off
•
Assess and refresh strategy and secure required approvals
• Sale of Vehicle Finance business announced in December
•
Ensured completion of a number of strategic projects and implemented all
actions arising from his 100-day review
•
Developed and obtained approval for revised Group strategy and new
medium-term targets
40%
35%
People
• Strengthen capabilities in support of strategic priorities
• Improve Colleague Trust scores
• Champion ED&I initiatives
•
Significant changes to the Executive team in support of new strategy
•
Colleague trust scores have reduced over the year. Significantly enhanced
employee engagement since appointment
•
ED&I has been an area of focus including a review of the strategy
40%
30%
Customer
•
Enhance digitalisation/self-service options
•
Deliver improvements in Consumer Duty outcomes
• Maintain positive scores on TrustPilot for consumer businesses
• New savings app and increase in self-service options delivered
• Number of initiatives to enhance customer outcomes delivered and
customer journeys have been mapped across the Group
• TrustPilot scores maintained at 4.8%
10%
5%
Risk
• Operate above minimum and buffer capital requirements
• Deliver Group cost of risk of 1.42%
• No material breaches of risk appetite
• Operated within limits and capital position improved in 2025
• Continuing cost of risk of 1.0%
• One material breach occurred due to the recognition of an additional
provision for the proposed FCA motor commission redress scheme
10%
5%
Total CEO
100%
75%
Former
CEO
Strategy
• Execute plans to refocus Vehicle Finance on higher returning segments
•
Assess and refresh strategy and secure required approvals
• These plans were executed in Q1 2026
• The former CEO led the initial programme to assess strategic options,
including the decision to exit Vehicle Finance
17.5%
8.75%
People
• Strengthen capabilities in support of strategic priorities
• Embed Talent Board processes for middle management
• Improve Colleague Trust scores
• Champion ED&I initiatives
• Capabilities were assessed and roles defined
•
Talent Boards have been developed for levels 6 and 7
•
Colleague trust scores have reduced over the year
• ED&I initiatives progressed and positive feedback on our inclusive culture
7.5%
3.75%
Customer
•
Enhance digitalisation/self-service options
•
Deliver improvements in Consumer Duty outcomes
• Maintain positive scores on TrustPilot for consumer businesses
• New savings app and increase in self-service options delivered
• Number of initiatives to enhance customer outcomes delivered
• TrustPilot scores maintained at 4.8%
5%
2.5%
Risk
• Operate above minimum and buffer capital requirements
• Deliver Group cost of risk of 1.42%
• No material breaches of risk appetite
• Operated within limits and capital position improved in 2025
• Continuing cost of risk of 1.0%
• One material breach occurred due to the recognition of an additional
provision for the proposed FCA motor commission redress scheme
5%
2.5%
Total former CEO
35%
17 .5%
Secure Trust Bank PLC Annual Report & Accounts 2025
106
Strategic Report
Corporate Governance
Financial Statements
Other Information
Priority
Targets (summary)
Achievement
Weight
Bonus
payable
CFO
Strategy
•
Establish an internal Strategy and Corporate Development function
and coordinate the strategy refresh process
• Assess and obtain approval for strategic and financial options for the
refreshed business strategy and financial plan
•
Strategy and Corporate Development function has been established with
strong performance from the team during the year, particularly in relation
to the disposal of the Consumer Vehicle Finance business
• Supported the CEO in the implementation of actions arising from
100-day review
•
Successfully completed and secured approval for the refreshed strategy
and financial plan
15%
13.5%
Capital &
Funding
• Operate above minimum and buffer capital requirements
• Effective management of capital, and strategic review of the capital
stack and options to support refreshed business plan
• Develop revised Funding plan that supports the optimisation of funding
costs in support of the refreshed business plan
•
Operated within limits and significant capital and liquidity buffers at the
end of the year
•
Capital has been effectively managed and the Company was capital
accretive in 2025, including the recognition of an additional £16.4 million
provision for the proposed FCA redress scheme for motor
finance commissions
•
Funding plan which supports the Company’s strategic ambitions has been
developed and approved
15%
13.5%
People &
Customer
•
Enhance digitalisation/self-service options
•
Deliver improvements in Consumer Duty outcomes
• Improve Colleague Trust scores
• New savings app and increase in self-service options delivered
• Number of initiatives to enhance customer outcomes delivered and
customer journeys have been mapped across the Group
•
Colleague trust scores have reduced over the year
5%
3%
Total CFO:
35%
30%
Notes:
1.
The CEO and former CEO are eligible to receive a pro-rated bonus in respect of the 2025 financial year in accordance with the Company’s annual bonus plan as detailed on page 103.
Directors’ Remuneration Report
continued
Secure Trust Bank PLC Annual Report & Accounts 2025
107
Strategic Report
Corporate Governance
Financial Statements
Other Information
Directors’ Remuneration Report
continued
2023 LTIP awards maturing by reference to 2025 performance
LTIP awards were granted on 31 March 2023 and performance conditions were measured to 31 December 2025. Awards are subject to a further two-year holding period from vesting. The 2023 awards
were subject to four metrics, which are detailed in the table below, together with the vesting levels:
Performance condition
Weighting
Vesting level
Relative TSR vs FTSE SmallCap (ex. Investment trusts)
25%
25%
RoAE
25%
0%
Core EPS
25%
0%
Risk management
25%
15%
Total:
100%
40%
Recipient
Date of grant
Basis of award
Number of shares
Vested
Performance period
R Lawrence
31 March 2023
100% of salary
41,619
16,647
1 January 2023–31 December 2025
Former Director
D McCreadie
31 March 2023
100% of salary
66,306
26,522
1 January 2023–31 December 2025
Awards exercised during the financial year (audited information)
On 7 April 2025, Rachel Lawrence exercised 12,016 DBP share options at an exercise price of 40 pence per share and sold sufficient shares to cover the transaction costs arising.
On 15 April 2025, David McCreadie exercised 18,937 DBP share options at an exercise price of 40 pence per share, settling the transaction costs arising.
Awards granted during the financial year (audited information)
2017 LTIP
Nil-cost share options were granted to Executive Directors in accordance with the rules of the LTIP as follows:
Recipient
Date of grant
Basis of award
Number of shares
Face value of
award £’000
Performance period
I Corfield
9 September 2025
100% of salary
66,141
£700,000
1
1 January 2025 –31 December 2027
R Lawrence
20 March 2025
100% of salary
88,618
£509,850
2
1 January 2025 –31 December 2027
Former Director
D McCreadie
20 March 2025
100% of salary
127,158
£731,582
2
1 January 2025 –31 December 2027
Notes:
1.
Based on a share price of £10.58 being the average mid-market price determined between 4 and 8 September 2025.
2.
Based on a share price of £5.75 being the average mid-market price determined between 17 and 19 March 2025.
Secure Trust Bank PLC Annual Report & Accounts 2025
108
Strategic Report
Corporate Governance
Financial Statements
Other Information
Directors’ Remuneration Report
continued
The Committee delayed setting the performance conditions for the LTIP awards granted in March 2025 until H2 2025, once the strategy refresh had been completed. As discussed in the Chair’s letter on
page 97 some structural changes were made to the performance conditions, which the Committee consider further align with shareholder interests and have increased the weighting of financial metrics
and reduced the weighting of the qualitative risk assessment. The performance conditions for the 2025 LTIP award is assessed over a three-year performance period, as summarised below.
Measurement basis
and % weighting
EPS (30%)
Relative TSR vs FTSE SmallCap
(ex. investment trusts) (30%)
RoAE (30%)
Risk management (10%)
Target range
Deliver three-year Compound
Annual Growth Rate (‘CAGR’) in
continuing underlying basic EPS in
the range of 12% to 14% over the
performance period.
Median to upper quartile
vesting range. Measured
against constituents of FTSE
SmallCap (excluding
investment trusts).
Deliver an average
Continuing underlying RoAE
in the range of 14-15% over
the performance period.
Maintain appropriate risk practices over the performance period
reflecting the longer-term strategic risk management of the Group,
including consideration of:
• effective operation of the Group’s Enterprise-Wide Risk
Management Framework;
• operating within agreed risk appetite parameters;
• management of the cost of risk;
•
delivery of customer outcomes in line with the Consumer Duty; and
• appropriate management of the Group’s exposure to climate change risk.
Underpin
Vesting for each of the elements is also subject to an underpin as follows:
(a)
the Board’s assessment of the Group’s general financial performance and shareholder experience over the performance period;
(b)
the Board’s assessment of the Group’s risk management performance over the performance period;
(c)
the Board’s assessment of the successful management of the run-off of the Vehicle Finance business; and
(d)
the Board’s assessment of progress against strategy, in particular, growth in responsible lending, progress on balance sheet management and customer satisfaction.
For each metric, threshold attainment is 25% of that part, with vesting on a straight-line basis to 100% for maximum attainment.
For the TSR element, TSR will be measured using a market normal three-month average TSR to the beginning and end of the performance period (which is the three-year period from 1 January 2025).
Awards vest to the extent that the performance metrics are achieved and are subject to a further two-year holding period.
2017 Deferred Bonus Plan (‘DBP’)
Nil-cost share options were granted to Executive Directors on 20 March 2025 in accordance with the rules of the DBP as follows:
Recipient
Date of grant
Number of shares
Tranche 1
Tranche 2
Tranche 3
Face value of award £
1
R Lawrence
20 March 2025
10,754
3,584
3,584
3,586
61,870
Former Director
D McCreadie
20 March 2025
10,802
3,600
3,600
3,602
62,147
Note:
1.
Based on a share price of £5.75 being the average mid-market price determined between 17 and 19 March 2025.
Statement of Directors’ shareholding and share interests (audited information)
A formal shareholding guideline requires Executive Directors to build up and maintain a shareholding of at least 200% of base salary, over time, by retaining shares from awards granted under the
Group’s share plans that vest (net of Income Tax and National Insurance).
The interests of the Directors and their connected persons in the Company’s ordinary shares as at 31 December 2025 were as set out on the following page. Any subsequent changes to a Director’s
shareholding are set out in the notes below the table.
Secure Trust Bank PLC Annual Report & Accounts 2025
109
Strategic Report
Corporate Governance
Financial Statements
Other Information
Directors’ Remuneration Report
continued
Directors’ shareholding and share interests
Director
Type
Total as at
1 January
2025
1
Shares
purchased
during
the year
Options
granted
during
the year
2
Options
exercised
during the year
Options
lapsed
during the year
Total as at
31 December
2025
3
Owned
outright
Vested but
unexercised
Unvested,
not subject to
performance
conditions
Unvested,
subject to
performance
conditions
I Corfield
4,5
Shares
6
11,287
28,296
–
–
–
39,583
39,583
–
–
–
2017 LTIP
–
–
66,141
–
–
66,141
–
–
–
66,141
2017 DBP
–
–
–
–
–
–
–
–
–
–
2017 SAYE
7
–
–
1,004
–
–
1,004
–
–
1,004
–
R Lawrence
4,5
Shares
8
20,464
9,687
–
–
–
30,151
30,151
–
–
–
2017 LTIP
154,448
–
88,618
–
(28,312)
214,754
–
13,904
–
200,850
2017 DBP
9
24,364
–
10,754
(12,016)
23,102
23,102
2017 SAYE
3,034
–
–
–
–
3,034
–
–
3,034
–
J Brown
Shares
10
29,600
90,430
–
–
–
120,030
120,030
–
–
–
J Hopes
Shares
–
–
–
–
–
–
–
–
–
–
S Colsell
Shares
–
–
–
–
–
–
–
–
–
–
P Myers
Shares
8,966
–
–
–
–
8,966
8,966
–
–
–
F Williamson
Shares
–
–
–
–
–
–
–
–
–
–
V Mitchell
Shares
–
–
–
–
–
–
–
–
–
–
Former Directors
–
–
–
–
–
A Berresford
Shares
–
–
–
–
–
–
–
–
–
–
D McCreadie
4,5
Shares
71,827
18,937
–
–
–
90,764
90,764
–
–
–
2017 LTIP
232,448
–
127,158
–
(45,106)
314,500
–
19,714
–
294,786
2017 DBP
11
38,198
–
10,802
(18,937)
–
30,063
–
–
30,063
–
2017 SAYE
3,009
–
–
(1,683)
1,326
–
–
1,326
–
Total:
597,645
147,350
304,477
(30,953)
(75,101)
943,418
289,494
33,618
58,529
561,777
Notes:
1.
As at 1 January 2025 or as at the time of joining the Board.
2.
Awards granted under LTIP and DBP rules on 20 March 2025 and 9 September 2025 are set out on page
107 and 108.
3. As at 31 December 2025 or as at the time of stepping down from the Board.
4.
Executive Directors are required to hold shares not purchased on the open market post their employment
for two years in line with the minimum shareholding requirements policy.
5.
Neither Ian Corfield nor Rachel Lawrence have achieved the required 200% of base salary shareholding
requirement. Each are calculated using the number of shares owned outright, the Group’s SAYE and 53%
of unvested and vested share awards that are not subject to performance conditions (2017 DBP and vested
2017 LTIP). As at the date of this report, shares held by Ian Corfield (79,204 shares), are worth £986,090
when using the 2025 year-end share price of £12.45 (141% of 2025 annual base salary). Shares held by
Rachel Lawrence (52,798 shares) are worth £657,335 when using the 2025 year-end share price of
£12.45 (130% of base salary). Shares held by David McCreadie (118,471) were worth £1,474,974
when using the 2025 year-end share price of £12.45 (202% of 2025 annual base salary).
6.
Ian Corfield purchased 5,641 shares on 8 July 2025, 5,646 shares on 9 July 2025 and 28,296 shares on
21 October 2025.
7. Ian Corfield participated in the 2025 SAYE plan, granted on 25 September 2025, to the maximum monthly
saving amount.
8.
A person closely associated (‘PCA’) with Rachel Lawrence, purchased 3,878 shares on 13 March 2025.
9. On 7 April 2025, Rachel Lawrence exercised 12,016 DBP share options at an exercise price of 40 pence per
share and sold sufficient shares to cover the transaction costs arising. On 23 April 2025, Rachel Lawrence
transferred 3,279 shares to a PCA with her, and each completed a ‘bed and ISA’ transaction, with the
difference in balance being sold to cover transaction costs arising.
10.
A PCA with Jim Brown, purchased 17,182 shares on 25 March 2025, 3,525 shares on 2 July 2025, 24,723
shares on 3 July 2025, 20,000 shares on 19 August 2025 and 25,000 shares on 22 October 2025.
11.
On 15 April 2025, David McCreadie exercised 18,937 DBP share options at an exercise price of 40 pence
per share, settling the transaction costs arising.
Between 31 December 2025 and the date of this report, the following changes to the above interests have
occurred: Ian Corfield purchased 19,419 shares on 5 January 2026 and 19,198 shares on 6 January 2026.
Secure Trust Bank PLC Annual Report & Accounts 2025
110
Strategic Report
Corporate Governance
Financial Statements
Other Information
Directors’ Remuneration Report
continued
0
50
100
150
200
250
Source: Datastream
31.12.2016
31.12.2024
31.12.2025
31.12.2023
31.12.2022
31.12.2021
31.12.2020
31.12.2017
31.12.2019
31.12.2018
31.12.2015
TSR Index
Date
Secure Trust Bank
FTSE SmallCap (excluding investment trusts)
Payments made to former Directors during the year (audited information)
Former CEO David McCreadie stepped down from the Board on 8 September 2025 and remains an employee until 16 June 2026. From 8 September 2025 until 31 December 2025 he received a base
salary of £227,931 pension contributions of £11,397
and benefits totalling £8,944 for the period.
Payments for loss of office made during the year (audited information)
No payments for loss of office were made during the year.
Performance graph and historical CEO remuneration outcomes
Total shareholder return (‘TSR’)
The graph below shows the TSR performance for the Company’s shares in comparison to the FTSE SmallCap Index (excluding investment trusts) for the period from 1 January 2016 to 31 December 2025.
For the purpose of the graph, TSR has been calculated as the percentage change during the period in the market price of the shares, assuming that dividends are reinvested. The graph shows the value, by
31 December 2025, of £100 invested in the Group over the period compared with £100 invested in the FTSE SmallCap Index (excluding investment trusts). The FTSE SmallCap Index (excluding investment
trusts) has been chosen as a comparator as this is the most appropriate reference point given the market capitalisation of the Company.
Secure Trust Bank PLC Annual Report & Accounts 2025
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Financial Statements
Other Information
Directors’ Remuneration Report
continued
The table below shows details of the total remuneration, bonus and share options vesting (as a percentage of the maximum opportunity) for the CEO over the last 10 financial years.
Total
remuneration
£’000
Bonus as a
% of maximum
opportunity
1
LTIP as a
% of maximum
opportunity
2
2025 (Ian Corfield)
3
405
75
N/A
2025 (David McCreadie)
3
1,002
38
40
2024
909
17.5
15
2023
4
1,079
41.04
21.25
2022
4
1,060
53.1
N/A
2021
4
1,170
74.6
N/A
2020
1,045
–
–
2019
1,804
45
15
2018
1,857
50
N/A
2017
1,657
33.3
N/A
2016
5,542
N/A
100
Notes:
1.
Pre Main Market admission, bonuses were determined by the Committee on a discretionary basis taking into account Group financial and individual performance during the financial year.
2.
No LTIP shares were eligible to vest in respect of the years 2017, 2018, 2021 and 2022.
3. David McCreadie retired as CEO on 8 September 2025 and Ian Corfield succeeded him from that date.
4. 2021, 2022, 2023 and 2024 reflect David McCreadie as CEO
Secure Trust Bank PLC Annual Report & Accounts 2025
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Corporate Governance
Financial Statements
Other Information
Directors’ Remuneration Report
continued
Directors’ pay increase in relation to all employees
The table below shows the percentage change in remuneration of the Directors and employees of the business between 2021, 2022, 2023, 2024 and 2025 financial years.
2025
Salary or
base fee
%
2025
Benefits
%
2025
Bonus
%
2024
Salary or
base fee
%
2024
Benefits
%
2024
Bonus
%
2023
Salary or
base fee
%
2023
Benefits
%
2023
Bonus
%
2022
Salary or
base fee
%
2022
Benefits
%
2022
Bonus
%
2021
Salary or
base fee
%
2021
Benefits
%
2021
Bonus
%
Employees
1,2
4.1
0.0
5.7
3.2
0
6.3
4.9
0
7.6
2.9
0
(3.3)
2.9
0
6.9
Executive Directors:
3
I Corfield
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
R Lawrence
4
3.0
26
107.3
14.4
4.5
(32.4)
3.0
0
(19.5)
3.0
0
(25.3)
2.0
N/A
N/A
Non-Executive Directors:
3
J Brown
3.0
0.0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
J Hopes
3.0
0.0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
P Myers
3.0
0.0
N/A
3.0
0
N/A
3.0
0
N/A
2.9
0
N/A
3.0
0
N/A
S Colsell
3.0
0.0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
F Williamson
3.0
0.0
N/A
3.0
0
N/A
3.0
0
N/A
2.9
0
N/A
N/A
N/A
N/A
V Mitchell
3.0
0.0
N/A
3.0
0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Former Directors:
D McCreadie
3.0
500
6
58.8
3.0
100
(56.1)
3.0
0
(21.9)
3.0
0
(25.4)
N/A
N/A
N/A
A Berresford
3.0
0.0
N/A
3.0
100
N/A
3.0
0
N/A
2.9
0
N/A
3.0
0
N/A
Notes:
1.
The strict legal requirement is only to provide details of employees of Secure Trust Bank PLC, however, we have decided voluntarily to disclose in respect of all Group employees.
2. The calculation is prepared on a full-time equivalent basis.
3.
Where figures are shown as N/A it reflects that the individual commenced a role part way through the relevant year or left during the relevant year; and accordingly, there is no comparable previous year figure.
In addition, N/A is also stated as Non-Executive Directors are not eligible for bonuses.
4.
Rachel Lawrence received an increase to salary in line with employees for 2021, adjusted to reflect her joining the Group part way through the year.
5.
Each of the Non-Executive Directors received a 3.0% increase to their base fee with effect from 1 January 2025.
6. David McCreadie’s 2025 benefits included a travel allowance.
Secure Trust Bank PLC Annual Report & Accounts 2025
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Other Information
Directors’ Remuneration Report
continued
2025 CEO pay ratio
Our finalised CEO pay ratio for 2025 is set out in the table below. These figures are on a Group-wide
basis, as per the regulations:
Year
Method
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
2025
Option A
38:1
27:1
16:1
2024
Option A
37:1
27:1
16:1
2023
Option A
35:1
26:1
17:1
2022
Option A
40:1
29:1
17:1
2021
Option A
43:1
31:1
17:1
2020
Option A
47:1
36:1
19:1
2019
Option A
96:1
71:1
36:1
Total UK employee pay and benefits figures used to calculate the CEO pay ratio for 2025:
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
Salary
28,703
30,000
66,000
Total pay and benefits
28,903
40,594
67,980
The Company has chosen Option A methodology to prepare the CEO pay ratio calculation
as this is the most statistically robust method and is in line with the general preference of
institutional investors. The value of each employee’s total pay and benefits, as at 31 December
2025, was calculated using the single-figure methodology consistent with the CEO. No elements
of pay have been omitted. Where required, remuneration was approximately adjusted to be
full-time and full-year equivalent basis based on the employee’s average full-time equivalent
hours for the year and the proportion of the year they were employed. Ian Corfield succeeded
David McCreadie on 8 September 2025 and remuneration data for the CEO role within the 2025
CEO pay ratio reflects their remuneration pro-rated to that date.
The Committee considers that the median pay ratio for 2025, which is disclosed in the above table,
is consistent with the pay, reward and progression policies for the Group’s UK employees taken as
a whole.
Spend on pay
The following table sets out the percentage change (from the financial year ended 31 December
2025) in dividends and the overall expenditure on pay (as a whole across the organisation).
2025
£million
2024
£million
Change
%
Dividends, excluding special dividends, and share buybacks
6.6
6.3
4.8
Dividends, including special dividends, and share buybacks
6.6
6.3
4.8
Overall expenditure on pay¹
60.8
60.2
1.0
Note:
1. Further information can be found in Note 6 to the Financial Statements.
Service agreements and letters of appointment
Details of the Directors’ service agreements, letters of appointment and notice periods are set out
below. The Executive Directors are the only Directors with service contracts, none of which contain
an expiry term.
Name
Commencement of current service
agreement/letter of appointment
1, 2, 3
Notice period
I Corfield
23 June 2025
12 months
R Lawrence
11 May 2020
12 months
J Brown
12 February 2026
6 months
P Myers
28 November 2018
6 months
F Williamson
30 June 2021
6 months
V Mitchell
1 November 2023
6 months
J Hopes
19 December 2025
6 months
S Colsell
19 December 2025
6 months
Notes:
1.
Each of the Non-Executive Directors’ letter of appointment was amended in 2025 by a side letter confirming
their respective Committee membership and their total fee.
2.
All Directors are subject to annual re-election by shareholders.
3.
Those Non-Executive Directors who are members of the Remuneration Committee are set out on page 68.
Secure Trust Bank PLC Annual Report & Accounts 2025
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Corporate Governance
Financial Statements
Other Information
Directors’ Remuneration Report
continued
Implementation of Directors’ Remuneration Policy for the financial year
ending 31 December 2026
Market positioning
The Committee regularly benchmarks the Group’s remuneration against peers and takes this into
consideration when developing remuneration proposals, to ensure that awards are not excessive
against peers but these also enable the Company to retain and attract talent into the Group.
We consider remuneration practices in a specialist sector group of small and selected lenders.
Within the sector group, our six-month average market cap places the Company at slightly below a
lower quartile level as shown in the chart below, which is aligned to the current on-target total
remuneration for the CEO, which is below lower quartile positioning. The chart also shows the
position for total on-target remuneration in line with the increased maximums under our proposed
Directors’ Remuneration Policy. However, this is only an illustration as at present we do not intend
to increase the incentive opportunities and will only do so following appropriate further
shareholder consultation. The illustration shows the total on-target remuneration position for the
CEO if maximum annual bonus was increased to 200% base salary (from 100% base salary) and
annual LTIP awards were increased to 200% base salary (from 100% base salary). This is the
maximum allowed under our revised policy and would move the CEO’s total on-target
remuneration to a position that is median for the sector group.
The following section provides an overview as to how each element will be applied in 2026.
Salary
As at the date of this report, Ian Corfield receives an annual base salary of £700,000.
Rachel Lawrence receives an annual base salary of £509,850. In line with the wider employee salary
increases, both Executive Directors will receive a salary increase of 2% effective 1 April 2026.
Pensions
Ian Corfield and Rachel Lawrence will each receive a 5% of base salary pension contribution,
being aligned to the rate of pensions contribution for Group employees.
Fees
The following table sets out the Non-Executive Director fee structure effective from
1 January 2026.
Role
2026 fee
£’000
Chair
1
258
Non-Executive Director (basic fee)
2
82
Senior Independent Director and Committee Chair
20
Member of Audit, Risk or Remuneration Committee
5
Designated Non-Executive Director with responsibility for workforce engagement
5
Consumer Duty Champion
5
Notes:
1. The Chair does not receive any additional fees for his membership of any of the Board’s Committees.
2. With effect from 2020, the base fee payable to the Chair and the Non-Executive Directors increases in
line with the average increase of remuneration for employees implemented within the annual review of
remuneration in the previous year. The increase takes effect from 1 January each year in respect of the
preceding employee-level salary increase.
3
4
£0
£500
£1,000
£1,500
£2,000
£2,500
£3,000
£0
£800
£1,000
£1,200
£1,400
£1,600
£1,800
Median to upper quartile
1
Lower quartile to median
2
Secure Trust Bank current on-target (£1.5million)
Secure Trust Bank on-target with 200% of salary bonus and LTIP (£2.2million)
On-target remuneration
Market capitalisation
1
2
1
2
3
4
£600
£400
£200
3
CEO total on-target remuneration and market capitalisation v sector comparator
group
1
(£’000)
Note:
1. Peer group comprised of Arbuthnot Banking Group, OSB Group, Shawbrook, Vanquis Banking Group,
Paragon Banking Group, Close Brothers Group, International Personal Finance, Metro Bank and
Distribution Finance Capital.
Secure Trust Bank PLC Annual Report & Accounts 2025
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Corporate Governance
Financial Statements
Other Information
Directors’ Remuneration Report
continued
Annual bonus
The proposed maximum annual bonus opportunity for the year ending 31 December 2026 will
be equal to 100% of salary.
The bonus will be subject to stretching performance metrics based on a balanced scorecard.
The selected balance of performance metrics for 2026 will be substantially similar to the balance
of metrics for 2025 (65% financial; 35% non-financial) with precise weightings for individual
measures reflecting the Company’s in-year priorities.
The Committee considers that the targets for annual bonus metrics are commercially sensitive.
A description of the performance metrics, their weighting and the related targets will be disclosed
in the Annual Report on Remuneration for the year ending 31 December 2026 (or in respect of
targets, at such time when the targets are no longer considered commercially sensitive).
50% of any bonus earned will be deferred into shares under the DBP. Deferred shares will vest in
equal tranches after one, two and three years following deferral.
The Committee can consider corporate performance on ESG issues when setting Executive
Director remuneration and has considered whether the incentive structure for senior management
raises ESG risks by inadvertently motivating irresponsible behaviour.
LTIP and DBP
The Company proposes to grant LTIP awards to the Executive Directors in the form of nil-cost
share options at the level of up to 100% of salary for the CEO and CFO. T
he performance conditions
attached to the 2026 LTIP, will be measured over a three-year period commencing on 1 January
2026 and will be aligned to the 2025 grant as detailed on page 108, with 30% based on TSR, 30%
on EPS growth, 30% or RoAE and 10% risk management. The target ranges for the EPS and ROAE
metrics for 2026 LTIP awards are still being reviewed by the Committee and will be confirmed in
Annual Report on Remuneration for 2026.
The Company proposes to grant DBP awards to the Executive Directors in the form of nil-cost share
options in respect of 2025 annual bonus outcomes.
Statement of voting at AGM
The Directors’ Remuneration Policy was approved by shareholders at the AGM in 2023. The most
recent Directors’ Remuneration Report was approved at the AGM in 2025; the votes cast were as
detailed below.
Resolution
Proxy
votes for
% of proxy
votes cast
Proxy
votes against
% of proxy
votes cast
Votes
withheld
To approve the
Directors’
Remuneration Policy
(2023 AGM)
15,157,928
95.88
650,863
4.12
1,055
To receive and approve
the Directors’
Remuneration Report
(2025 AGM)
9,727,051
98.23
175,288
1.77
6,367
Approval
This report was approved by the Board on 11 March 2026 and signed on its behalf by:
Julie Hopes
Chair of the Remuneration Committee
Proposed Directors’ Remuneration Policy
This Directors’ Remuneration Policy will be submitted to the 2026 Annual General Meeting (‘AGM’)
for shareholder approval. If approved by shareholders, it will formally take effect from the date of
the 2026 AGM. The policy will apply for three years beginning with the date of its approval unless a
new policy is presented in the interim.
Policy development
In developing the Policy, the Remuneration Committee sought advice from its remuneration
consultants FIT Remuneration Consultants LLP (‘FIT’) and considered views of the Executive
Directors and leading shareholders (further information can be found page 127). The Committee
also considered benchmarking data, which is undertaken against a specialist sector group of smaller
banks and selected lenders further information can be found on page 114.
The Remuneration Committee are recommending increasing the policy maximums for the
long-term incentive plan (‘LTIP’) and bonus from 100% of salary to 200%. However, the increase in
the maximum limits are to provide headroom and will not be utilised without further engagement
with major shareholders. The Committee believe it is important to have the additional flexibility,
should it be required, in order to support delivery of the Group’s ambitious growth plans
and new strategy. In addition, it is critical the Group has the ability to attract and retain key
staff in a competitive market for talent and following the relaxation of the PRA rules on
variable remuneration, a number of banks have, or are expected to, increase their limits
on variable compensation.
The Remuneration Committee is also seeking approval for revised share plan rules, to replace the
current schemes, which are due to expire in 2027 and further information can be found on page 127
and our Notice of AGM. Whilst not part of the formal Policy, the revised rules will enable dividends
or dividend equivalents to be paid on share awards, which is in line with market practice.
Overview of the proposed Policy
The Directors’ Remuneration Policy, proposed for approval by shareholders at the 2026 AGM,
is broadly consistent with the prior Policy approved by our shareholders at the 2023 AGM, which
received 95.88% of votes cast in favour. The table below summarises the proposed 2026 Policy
and any material changes from the prior Policy are highlighted.
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Changes from prior
Remuneration Policy
Base salary
To provide a fixed
component, set such that
the overall package is
competitive, reflects the
scope of individual
responsibilities and
recognises sustained
individual performance in
the role. Further, to enable
the Group to recruit and
retain the services of
individuals of a
suitable calibre.
Base salaries are paid monthly in cash. Salaries are
reviewed annually, with consideration of a range of
factors including:
• role, individual performance and experience;
• contribution to Group performance and
achievement of strategic objectives;
• salary as competitive to benchmarking and
market forces; and
• pay and conditions of employees in the Group
as a whole.
Base salaries across the Group are reviewed each year
with any increases awarded (as a percentage of salary)
typically aligned to the range available to the wider
workforce. Deviations increasing from this range may
be awarded to take account of individual circumstances,
including:
• where an Executive Director has had an increase
in responsibility;
• where an Executive Director has been promoted or
has had a change in scope;
• an individual’s development or performance in role
(e.g. to align a newly appointed Executive Director’s
salary with the market over time); and
• where an Executive Director’s salary is no longer
market competitive (e.g. due to an increase in size
and complexity of the business).
Increases may be implemented over such time period as
the Committee deems appropriate.
There is no maximum salary defined.
For any new Executive appointed, salaries will be set at a
level appropriate to the role and the experience of the
Executive Director being appointed. Current Executive
Director salaries will not act as a reference point.
No formal performance conditions
apply to the base salary element of
remuneration, however, an
individual’s performance in role is
part of any consideration in
determining the appropriateness,
and quantum, of any increase to
base salary as part of the annual
review process.
No proposed changes.
Secure Trust Bank PLC Annual Report & Accounts 2025
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Corporate Governance
Financial Statements
Other Information
Proposed Directors’ Remuneration Policy
continued
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Changes from prior
Remuneration Policy
Benefits
To provide valued benefits
in line with market levels on
a cost-effective basis.
Executive Directors receive benefits in line
with market practice, and these include a car
allowance, medical insurance, life assurance,
and disability insurance.
Other benefits may be provided based on
individual circumstances. These may include,
for example, relocation and travel allowances.
Whilst the Committee has not set an absolute maximum
on the level of benefits Executive Directors may receive,
the value of benefits is set at a level that the Committee
considers to be appropriately positioned taking into
account relevant market levels based on the nature and
location of the role, individual circumstances and overall
cost to the business.
None.
No proposed changes.
Pension
To provide an appropriate
and competitive level of
retirement benefit (or cash
allowance equivalent).
Executive Directors are eligible to participate in
the Group defined contribution pension plan in
line with the rate for the Company’s employees.
In appropriate circumstances, such as where
contributions exceed the annual or lifetime
allowance, Executive Directors may be permitted
to take a cash supplement in lieu of contributions
to a pension plan.
For both incumbent and newly recruited Executive
Directors, employer pension contributions are limited
to 5% of base salary. The maximum cash supplement
in lieu of pension is 5% of base salary. These levels are
in line with the rate for the Company’s employees.
The maximum for Executive Directors may be
increased in line with any increase available to
the wider workforce.
None.
No proposed changes.
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Corporate Governance
Financial Statements
Other Information
Proposed Directors’ Remuneration Policy
continued
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Changes from prior
Remuneration Policy
Annual bonus
To incentivise achievement
of objectives set by the
Committee and designed
to improve performance
and realise the overall
Group strategy.
To drive and reward
individual performance.
To encourage retention
and alignment with
shareholders’ interests.
Outturns for each Executive Director’s annual
bonus are determined by the Committee
measuring performance after the year-end
against a blend of financial and non-financial
performance objectives set by the Committee
and measured over one year.
The Committee has discretion to amend the
pay-out should any formulaic output not reflect
the Committee’s assessment of overall business
performance, or as it otherwise
deems appropriate.
To further link the Executive Directors’ pay to the
interests of shareholders, Executive Directors are
required to defer 50% of any bonus earned into
shares under the Deferred Bonus Plan (‘DBP’).
Deferred share awards vest in equal tranches
after one, two and three years following deferral.
Deferred share awards will typically take the
form of a nil-cost share option but may be
structured as an alternative form of share award.
The Committee may decide to pay the whole of
the bonus earned in cash where the amount
to be deferred is less than £50,000 and would,
therefore, in the opinion of the Committee,
make operation of the DBP administratively
burdensome.
Clawback provisions will apply to annual bonus
awards and malus and clawback provisions will
apply to deferred share awards as detailed on
page 122.
Maximum annual bonus opportunity is 200% of base
salary for any financial year during the policy period.
However, the current annual operational limit in 2026
is 100% of base salary.
Targets are set annually at the
beginning of the performance year
and reflecting the Group’s strategy
and aligned with key financial,
strategic and/or individual targets.
The annual bonus will be
assessed against key financial
performance metrics of the
business and non-financial
strategic/personal objectives,
in such proportions as the
Committee considers appropriate.
Financial metrics
No more than 50% of the
maximum potential will be paid for
on-target performance and all of
the maximum potential will be paid
for outstanding performance.
Non-financial strategic
or individual metrics
Outcomes for the non-financial,
strategic or individual metrics will
apply on a scale between 0% and
100% based on the Committee’s
assessment of the extent to which
a non-financial performance
metric has been met.
Deferred share awards are
not subject to any additional
performance metrics.
In determining annual bonus
outturns, the Remuneration
Committee considers a wide
range of factors including Group
performance, risk events and
shareholder experience.
Flexibility is
requested under the
proposed policy to
increase the annual
bonus maximum
opportunity to 200%
of salary.
Should any
substantial
operational changes
to Executive
Director
remuneration be
proposed, further
engagement with
shareholders will
be conducted.
Subject to the
approval of the
revised share plan
rules, DBP deferred
awards will accrue
dividend equivalents
until vesting.
Secure Trust Bank PLC Annual Report & Accounts 2025
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Corporate Governance
Financial Statements
Other Information
Proposed Directors’ Remuneration Policy
continued
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Changes from prior
Remuneration Policy
Long-term incentive scheme (‘LTIP’)
To provide an effective
long-term incentive award
to motivate and incentivise
individuals and drive the
long-term sustainable
success of the Group,
further aligning interests
with shareholders.
To further assist in the
retention of the services
of key individuals.
Awards will be in the form of nil-cost share options,
conditional shares or other such form as has the
same economic effect. Awards will be granted with
vesting dependent on the achievement of
performance conditions set by the Committee,
normally over a three-year performance period.
Awards will usually be subject to a two-year
holding period following the end of the
performance period (with the exception that
sufficient shares may be sold to meet Income Tax,
National Insurance liabilities and any other
transaction costs).
Awards may be settled in cash (or granted
as a right to a cash amount) in exceptional
circumstances at the election of the Committee.
Malus and clawback provisions will apply to
awards as detailed on page 122.
The maximum annual award that can be made in respect
of any financial year in the policy period is an LTIP award
over shares with a value of 200% of base salary.
However, the current annual operational limit in 2026 is
to make LTIP awards over shares with a value of 100% of
base salary.
Performance metrics are selected
to drive performance in line with
Group strategy. Performance
metrics and their weightings,
where there is more than one
metric, are formulated and
approved annually.
Each performance condition that
awards are subject to will be tested
and elements will vest between
25% and 100% for performance
between ‘threshold’ performance
(the minimum level of performance
that results in any level of vesting)
and ‘maximum’ performance.
The Committee retains discretion
to override the formulaic outturn of
performance conditions for awards
if appropriate to do so.
Flexibility is
requested under
the proposed policy
to increase the
maximum annual
LTIP grant to 200%
of salary.
Should any
substantial
operational changes
to Executive Director
remuneration be
proposed, further
engagement with
shareholders will
be conducted.
Subject to the
approval of the
revised share plan
rules, LTIP awards
will accrue dividend
equivalents
until vesting.
All-employee share schemes
To promote a sense of
ownership in the Group and
create further alignment
with the interests
of shareholders.
Executive Directors are eligible to participate in
a HMRC tax-qualifying all-employee Sharesave
Scheme under the same terms as other
Group employees.
Participant limits are set by the UK tax authorities.
None.
No proposed
changes.
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Financial Statements
Other Information
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Changes from prior
Remuneration Policy
Minimum shareholding requirements and post-cessation requirements
To provide a continued focus
on long-term sustainable
value creation and to further
align Executives’ and
shareholders’ interests.
Executive Directors are required to build up a
shareholding in the Company equal to 200% of
base salary. Executive Directors are expected to
retain a proportion of the shares vesting under the
Company’s share plans until the guideline is met.
Any LTIP performance vested shares subject to a
holding period and any shares awarded in
connection with annual bonus deferral will be
credited for the purpose of the guidelines
(discounted for anticipated tax liabilities).
In addition, a post-cessation shareholding
requirement will apply to Executive Directors
who leave the Company. Leavers will have a
requirement to hold the share ownership
requirement or, if lower, the level of their
pre-cessation actual shareholding, excluding
shares purchased by Executive Directors in the
market, for two years from ceasing to work (the
earlier of commencing garden leave or termination
of service).
N/A
N/A
No proposed
changes.
Illustrations of application of Remuneration Policy
During consultation on the proposed 2026 Policy, we have been careful to confirm that, whilst flexibility is requested in the Policy, it is not operationally proposed to use this headroom at present.
Should substantial operational changes to the Directors’ remuneration be proposed, further engagement would be held with shareholders. As required by the Directors’ Remuneration Report (‘DRR’)
Regulations, the charts below show for the CEO and the CFO an indication of the level of remuneration that would be received by each Director in accordance with the Directors’ Remuneration Policy
in the first year to which the policy applies. This means applying the maximum annual bonus limit for 2026 (100% base salary) and the annual LTIP award level for 2026 (100% base salary). The following
charts show the split of remuneration between fixed pay, annual bonus (including amounts deferred under the DBP) and LTIP on the basis of minimum remuneration, remuneration receivable for
performance in line with the Company’s expectations, maximum remuneration (not allowing for any share price appreciation) and maximum remuneration (allowing for 50% share price appreciation
on the LTIP award).
Proposed Directors’ Remuneration Policy
continued
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Other Information
Proposed Directors’ Remuneration Policy
continued
0
£250
£500
£750
£1000
£1250
£1500
£1750
£2000
£2250
£2500
£2750
Minimum
£357
£773
£1,308
£2,201
£2,558
DRP Scenario – Chief Executive Officer
(£’000)
On target
Maximum
Maximum
plus
£714
£179
£714
£714
£714
£773
£356
£773
£773
£773
Total fixed
Bonus
Share options
Share price growth
0
£250
£500
£750
£1000
£1250
£1500
£1750
£2000
£2250
£2500
£2750
Minimum
£260
£569
£959
£1,609
£1,869
DRP Scenario – Chief Financial Officer
(£’000)
On target
Maximum
Maximum
plus
£520
£130
£520
£520
£520
£569
£260
£569
£569
£569
Total fixed
Bonus
Share options
Share price growth
In illustrating the above potential reward, the following assumptions have been made:
Scenario
Description
Assumptions
Minimum performance
Minimum remuneration receivable.
Fixed elements of remuneration only – salary as at 1 January
2025, benefits and pension.
No payments under incentive plans. No bonus earned.
On target performance
Remuneration receivable for achieving performance in line
with expectations.
Fixed elements of remuneration (as above).
50% of maximum annual bonus earned.
50% of maximum LTIP award vesting.
Maximum performance
Remuneration receivable for achieving performance in excess of
the maximum performance targets.
Fixed elements of remuneration (as above).
100% of maximum annual bonus earned.
100% of maximum LTIP award vesting.
Maximum performance including share price growth
Remuneration receivable at maximum performance,
plus 50% share price growth on the LTIP vesting value.
Fixed elements of remuneration (as above).
100% of maximum annual bonus earned, plus 50% share price
growth on deferred element of bonus.
100% of maximum LTIP award vesting, plus 50% share
price growth.
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Financial Statements
Other Information
Proposed Directors’ Remuneration Policy
continued
Application of malus and clawback
Malus:
The ability to reduce, cancel or impose further conditions on unvested awards, in the
circumstances set out below.
Clawback:
The ability to cancel an award that has vested but not yet been released (in relation to an
award, which is subject to a holding period) or exercised (in relation to share options), or require the
repayment of some, or all, of an award in the circumstances set out below.
Malus and clawback may apply in the following circumstances:
No changes are proposed to the malus and clawback provisions, and will continue to apply over the
below time periods, which are:
• if there is a material misstatement of financial results, which results in an adjustment of the
audited consolidated accounts of the Company;
• the assessment of any performance target or performance condition in respect of the award was
based on material error or materially inaccurate or misleading information;
• it is discovered that any information used to determine the size of an award was based on
material error or materially inaccurate or misleading information;
• in the reasonable opinion of the Board action or conduct of the participant amounts to fraud or
gross misconduct;
In the event a Company or regulatory investigation is commenced within the malus and clawback time periods, the Committee has the right to extend the time periods for malus and clawback up to a
period of 10 years, however, typically malus and clawback provisions will apply over the following time periods:
Element
Malus
Clawback
Annual bonus award
To such time as the payment is made.
Up to three years following payment.
Deferred bonus award
To such time as the award vests .
Tranche of award deferred for one year: Up to two years
following vesting.
Tranche of award deferred for two years: Up to one year
following vesting.
Tranche of award deferred for three years: No clawback
provisions apply.
LTIP award
To such time as the award vests.
Up to two years following vesting.
• the participant is subject to a regulatory censure in respect of a material failure in control;
• if the participant is dismissed for gross misconduct or receives a formal written warning for gross
misconduct as defined in the Company’s disciplinary policy;
• any Group entity suffers a material loss arising from the participant or others operating outside of
agreed risk policy parameters which, in the opinion of the Board, constitutes a material failure of
risk management;
• the level of the Award is not, in the opinion of the Board, sustainable when assessing the overall
financial viability of any Group entity;
• the Company has suffered corporate failure such as, although not limited to, the appointment of
an administrator or a liquidator or the Company entering into an agreement with its creditors;
• if there is a material failure of risk management and/or material failure of risk oversight or
supervision and/or regulatory non-compliance resulting in damage to the Company’s business
or reputation; or
• any other circumstances that the Board considers to have similar nature or effect to any of
the above.
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Other Information
Proposed Directors’ Remuneration Policy
continued
Choice of performance metrics and approach
Annual bonus
The choice and balance of financial and non-financial objectives (including key strategic and/or
personal objectives) for the measurement of performance for the annual bonus reflects the
Committee’s view that incentives should be stretching and formulated to drive the achievement of
the Group strategy. The Committee challenges and formulates the objectives each year, taking into
account Group priorities for the year ahead, and are selected to provide an appropriate balance
between incentivising Executive Directors to meet financial targets for the year and achieving
strategic and/or personal objectives. The Committee sets threshold, on plan and stretching
measures to encourage individual accountability in delivery of exceptional performance.
LTIP
In setting grant levels for Executive Directors under the LTIP, the Committee will take
into consideration Group and individual performance. Forward-looking performance is
measured against performance condition metrics that reflect the Group’s strategic ambitions.
Stretching performance conditions, formulated to drive the long-term success of the Group
andachievement of the Group strategy, are set by the Committee each year. When setting the
performance metrics, the Committee will consider a range of factors, which may include the Group’s
business plans and strategy and the economic environment. Performance metrics are selected that
are aligned with the performance of the Group, the interests of shareholders and consideration of
other stakeholders and/or factors at the discretion of the Committee.
Full vesting will only occur for what the Committee considers to be stretching performance.
Long-term performance metrics provide a robust and transparent basis on which to measure
the Group’s performance over the longer term and provide further alignment with the business
strategy. The Committee retains the ability to adjust or set different performance metrics or targets
if events occur (such as a change in strategy, a material acquisition and/or a divestment of a Group
business or a change in prevailing market conditions), which cause the Committee to determine that
the metrics are no longer appropriate and that amendment is required so that they achieve their
original purpose. At the Committee’s discretion, if deemed appropriate, awards and options may
be adjusted in accordance with the share plan rules in the event of a variation of share capital,
demerger, delisting, special dividend or other event which may affect the Company’s share price.
Share plan discretions retained by the Committee
The Committee operates the Group’s various incentive plans according to their respective rules and
(where applicable) in accordance with relevant legislation and HMRC guidance. In order to ensure
efficient administration of these plans, certain operational discretions are reserved to the
Committee, including, but not limited to:
• determining who may participate in the plans;
• determining the timing of grants of awards and/or payments under the plans;
• determining the quantum of any awards and/or payments (within the limits set out in the policy
table above;
• in exceptional circumstances, determining that a share-based award shall be settled (in full or in
part) in cash;
• determining the performance measures and targets applicable to an award;
• discretion to override formulaic outcomes;
• where a participant ceases to be employed by the Company, determining whether ‘good leaver’
status shall apply;
• determining the extent of vesting or payment of an award based on assessment of the
performance conditions and the overall performance of the Company, including discretion as
to the basis on which performance is to be measured if an award vests in advance of normal
timetable (on cessation of employment as a ‘good leaver’ or on the occurrence of
corporate events);
• whether, and to what extent, pro-rating shall apply in the event of cessation of employment as a
‘good leaver’ or on the occurrence of corporate events;
• discretion to vary shareholding and post-cessation holding requirements in
exceptional circumstances;
• whether malus and/or clawback shall be applied to any award and, if so, the extent to which they
shall apply; or
• making appropriate adjustments to awards on account of certain events, such as major changes in
the Company’s capital structure.
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Financial Statements
Other Information
Proposed Directors’ Remuneration Policy
continued
Elements of the Remuneration Policy for the Chair of the Board and the Non-Executive Directors
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Chair and Non-Executive Director fees
To enable the Group to recruit
and retain the appropriate
number and diversity of
Non-Executive Directors of a
suitable calibre and with
experience to provide balance,
oversight and challenge.
Fees for the Non-Executive Directors are considered annually.
A mechanical process was implemented in 2019 to increase the Board Chair’s and
Non-Executive Directors’ fee in line with employees’ average salary increases in the
prior year with a determination to be made if there is a reason to depart from
this approach.
Fees paid to the Chair are approved by the Remuneration Committee, fees paid to
Non-Executive Directors for their services are approved by the Board, without
Non-Executive involvement to ensure that no Director approves their own
remuneration. Fees may include a basic fee and additional fees for further
responsibilities (for example, Chairmanship or membership of Board Committees or
holding the office of Senior Independent Director). Fees are benchmarked against the
level of fees paid to Non-Executive Directors serving on the boards of similar-sized
UK-listed companies and those in the financial services sector, as well as the time
commitment and contribution expected for the role.
The Chair and Non-Executive Directors receive reimbursement of any reasonable
business-related expenses (including tax thereon if determined to be a taxable benefit)
incurred as part of performing their duties.
Fees will be reviewed periodically to determine
whether they remain appropriate and competitive.
Factors that may be considered include:
• any changes in roles;
• responsibilities; and/or
• time commitment of the
Non-Executive Directors.
Increases above those awarded for the rest of the
organisation may be made if considered appropriate.
None.
Benefits
To enable the Group to recruit
and retain the appropriate
number and diversity of
Non-Executive Directors of
a suitable calibre and with
experience to provide balance,
oversight and challenge.
Non-Executive Directors may be eligible to receive benefits such as private medical
insurance, the use of secretarial support, travel costs and other expenses that may
be appropriate.
Where benefits are provided to the Chair or
Non-Executive Directors, this will be at a level
considered appropriate, taking into account a range
of factors including individual circumstances and
cost to the business.
Where appropriate to do so, any tax that arises
on reimbursed expenses that are considered as
benefits may be paid by the Company.
None.
Share Plans and Pensions
Neither the Chair nor the Non-Executive Directors are eligible to participate in any of
the Company’s incentive or pension schemes.
N/A
None.
No new Chair or Non-Executive Director will be paid in excess of the Policy table above. No sign-on payments are offered to a new Chair or Non-Executive Director.
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Financial Statements
Other Information
Proposed Directors’ Remuneration Policy
continued
Recruitment remuneration
The Policy aims to facilitate the appointment of individuals of a suitable calibre. When appointing a
new Executive Director, the Committee seeks to ensure that arrangements are in the best interests
of the Group and not to pay more than is appropriate. The Committee will take into consideration a
number of relevant factors, which may include the calibre of the individual, the candidate’s existing
remuneration package, and the specific circumstances of the individual including the jurisdiction
from which the candidate was recruited. When hiring a new Executive Director, the Committee
will typically align the remuneration package with the outlined policy.
The Committee may include other elements of pay which it considers are appropriate, however,
this discretion is capped and is subject to the principles and the limits referred to below:
• Base salary will be set at a level appropriate to the role and the experience of the Executive
Director being appointed. This may include agreement on future increases up to a market rate,
in line with increased experience and/or responsibilities and subject to good performance,
where it is considered appropriate.
• Pension and benefits will be provided in line with the outlined policy.
• The Committee will not offer non-performance related incentive payments (for example a
‘guaranteed sign-on bonus’).
• Other elements may be included in the following circumstances:
– an interim appointment being made to fill an Executive Director role on a short-term basis;
– if exceptional circumstances require that the Chair or a Non-Executive Director takes on an
executive function on a short-term basis;
– if an Executive Director is recruited at a time in the year when it would be inappropriate to
provide a bonus or long-term incentive award for that year as there would not be sufficient
time to assess performance. Subject to the limit on variable remuneration set out below,
the quantum in respect of the months employed during the year may be transferred to the
subsequent year so that reward is provided on a fair and appropriate basis; and
– if the Executive Director will be required to relocate in order to take up the position, it is the
Company’s policy to allow reasonable relocation, travel and subsistence payments. Any such
payments will be at the discretion of the Committee.
• The Committee may also alter the performance metrics, performance period and vesting period
of the annual bonus, DBP or LTIP, if the Committee determines that the circumstances of the
recruitment merit such alteration. The rationale will be clearly explained in the following
Directors’ Remuneration Report.
• The maximum level of variable remuneration, which may be granted (excluding ‘buy out’ awards
as referred to as follows), will be within the maximum limits set out in the Policy table. For any
years of part service the bonus will be pro-rated, however, LTIPs may be granted at policy
maximum levels.
Any share awards referred to in this section will be granted as far as possible under the Company’s
existing share plans. If necessary, and subject to the limits referred to above, recruitment awards
may be granted outside of these plans as permitted under the Listing Rules, which allow for the
grant of awards to facilitate, in unusual circumstances, the recruitment of an Executive Director
(but subject always to the share plan and Policy limits).
The Committee may also make payments or awards in respect of hiring an employee to ‘buy out’
remuneration arrangements forfeited on leaving a previous employer. In doing so, the Committee
will take account of relevant factors including any performance conditions attached to the forfeited
arrangements and the time over which they would have vested. The Committee will generally seek
to structure buyout awards or payments on a like-for-like basis to the remuneration arrangements
forfeited. Any such payments or grant values of such awards are limited to the expected value of the
forfeited awards but are not subject to the limits of the Policy for variable remuneration. Any such
special buy-out awards will be liable to forfeiture or ‘malus’ and/or ‘clawback’ on early departure,
with these terms determined at the time of award. Where a position is filled internally, any ongoing
remuneration obligations or outstanding variable pay elements shall be allowed to continue
according to the original terms.
Fees payable to a newly appointed Chair or Non-Executive Director will be in line with the fee policy
in place at the time of appointment.
Service agreements and letters of appointment
Executive Directors’ service agreements are on a rolling basis and may be terminated on 12-months’
notice by the Company or the Executive Director. Service agreements for new Executive Directors
will generally be limited to 12-months’ notice by the Company.
All Non-Executive Directors’ letters of appointment are on a rolling basis and may be terminated on
six-months’ notice by the Company or the Non-Executive Director. All Non-Executive Directors are
subject to re-election at intervals of not more than three years, however, in line with good
governance practice, all stand for annual re-election.
Details of the Directors’ service agreements, letters of appointment and notice period are set out on
page 113.
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Other Information
Arrangement on cessation of employment
The principles on which the determination of payments for loss of office will be approached are set out below:
Aspect of
remuneration
Approach
Payment
in lieu of notice
The Company has discretion to make a payment in lieu of notice to Executive Directors and Non-Executive Directors. Such a payment would include base salary or fees for the
unexpired period of notice.
Annual bonus
This will be at the discretion of the Committee on an individual basis and the decision as to whether or not to award an annual bonus award in full or in part will be dependent on a
number of factors, including the circumstances of the individual’s departure and their contribution to the business during the annual bonus period in question. Any annual bonus award
amounts paid will be paid only to individuals considered to be a ‘good leaver’ and will be pro-rated for time in service during the annual bonus period and will, subject to performance,
normally be paid at the usual time (although the Committee retains discretion to pay the annual bonus award earlier in appropriate circumstances).
Any annual bonus earned for the year of departure and, if relevant, for the prior year may be paid wholly in cash at the discretion of the Committee.
DBP
The extent to which any unvested award will vest will be determined in accordance with the rules of the DBP.
Unvested awards will normally lapse on cessation of employment. However, if a participant leaves due to death, ill-health, injury, disability, retirement
1
, their employer or business unit
ceasing to be a Group entity or any other reason at the discretion of the Committee, the award will vest at the normal vesting date(s) other than in the case of death where vesting shall
ordinarily be accelerated or in the other cases only exceptionally at the discretion of the Committee. Other than in the case of death and unless the Committee determines otherwise,
the extent of vesting will be reduced to take account of the period of time elapsed from the date of grant to the date of cessation relative to the deferral period. The Committee retains
discretion to attach additional conditions to good leavers’ awards.
Awards in the form of nil-cost or nominal-cost share options may then be exercised during such period as the Committee determines.
Awards in the form of nil-cost or nominal-cost share options, which have vested and been released but remain unexercised at the date of cessation, may be exercised if a participant
leaves for any reason (other than summary dismissal). Awards may then be exercised for such period as the Committee determines.
Awards granted to participants that are former employees at the time of the grant of the awards will vest on normal timetable unless the Board determines otherwise.
LTIP
The extent to which any unvested award will vest will be determined in accordance with the rules of the LTIP.
Unvested awards will normally lapse on cessation of employment. However, if a participant leaves due to death, ill-health, injury, disability, retirement
1
, their employer or business unit
ceasing to be a Group entity or any other reason at the discretion of the Committee, the award will vest at the normal vesting date other than in the case of death where vesting shall
ordinarily be accelerated or in the other cases only exceptionally at the discretion of the Committee. In either case, the extent of vesting will be determined by the Committee taking
into account the extent to which the performance condition is satisfied and, unless the Committee determines otherwise, the period of time elapsed from the date of grant to the date
of cessation relative to the performance period. Awards in the form of nil-cost or nominal-cost share options may then be exercised during such period as the Committee determines.
The Committee retains discretion to attach additional conditions to good leavers’ awards.
If a participant leaves for any reason (other than summary dismissal) after an award has vested but before it has been released (i.e. during a ‘holding period’), their award will ordinarily
continue until the normal release date when it will be released. The Committee retains the discretion to release awards when the participant leaves. The Committee will normally align
continuing holding periods after termination with the two-year period after termination for share ownership guidelines.
Change of control
The extent to which unvested awards under the DBP and LTIP will vest will be determined in accordance with the rules of the relevant plan.
Awards under the DBP may vest in full in the event of a takeover, merger or other relevant corporate event unless the Committee determines the award will be subject to roll-over.
Awards under the LTIP may vest early on a takeover, merger or other relevant corporate event unless the Committee determines the award will be subject to roll-over. The Committee
will determine the level of vesting taking into account the extent to which the performance condition is satisfied and, unless the Committee determines otherwise, the period of time
elapsed from the date of grant to the date of the relevant corporate event relative to the performance period.
Mitigation
Termination payments may be reduced, including to zero, where the Executive Director commences alternative employment during the notice period.
Other payments
Payments may be made either in the event of a loss of office or a change of control under the Sharesave plan, which is governed by its rules and the legislation relating to such
tax-qualifying plans. There is no discretionary treatment for leavers or on a change of control under these plans.
In appropriate circumstances, payments may also be made in respect of accrued holiday, outplacement and legal fees.
Note: 1. With the agreement of the Committee.
Proposed Directors’ Remuneration Policy
continued
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Other Information
Proposed Directors’ Remuneration Policy
continued
Where a buy-out award is made then the leaver provisions would be determined at the time of the
award. The Committee reserves the right to make additional exit payments where such payments
are made in good faith in the discharge of an existing legal obligation (or by way of damages for
breach of such an obligation) or by way of settlement or compromise of any claim arising in
connection with the termination of a Director’s office or employment. Contributions may be
made to legal fees or for outplacement support.
Where the Committee retains discretion it will be used to provide flexibility in certain situations,
taking into account the particular circumstances of the Executive Director’s departure and
performance. There is no entitlement to any compensation in the event of a Non-Executive
Director’s fixed-term agreements not being renewed or the agreement terminating earlier
with the exception of a payment in lieu of notice as detailed in the table on page 126.
Existing remuneration arrangements
The Committee retains the discretion to make any remuneration payment or payment for loss
of office outside the Policy in this report:
• where the terms of the payment were agreed before the Policy came into effect; and/or
• where the terms of the payment were agreed at a time when the relevant individual was not
a Director of the Company, and in the opinion of the Committee, the payment was not in
consideration of the individual becoming a Director of the Company.
For these purposes, ‘payment’ includes the satisfaction of awards of variable remuneration,
and in relation to an award involving shares the terms of the payment are agreed at the time
the award is granted.
Consideration of wider employee remuneration and employee views
The Committee considers the general basic salary increase, remuneration arrangements and
employment conditions for the broader employee population when determining remuneration
policy for the Executive Directors. Remuneration arrangements are determined throughout the
Group based on the same principle that reward should be achieved for delivery of the business
strategy and should be sufficient to attract and retain high-calibre talent. The designated NED for
workforce engagement, who also Chairs the employee forum, is a member of the Committee and
ensures the employee voice is heard at the Committee meetings. Employees have the opportunity
to make comments on any aspect of the Group’s activities through the Employee forum and any
employee opinion survey.
Pay levels for the employee population are considered by the Committee via benchmarking data
provided for consideration. Consideration of the appropriate annual level of salary increase for
the wider population informs the Committee’s decision around appropriate increases for the
Executive Directors.
Further information on the remuneration of our Executive Directors and the wider workforce is set
out on page 112.
Consideration of shareholder views
The Chair of the Committee is available to shareholders at the AGM for feedback on remuneration
and any views received via this, or other methods of engagement, are taken into account.
As highlighted previously, we have consulted with shareholders representing 43% of our
shareholder population prior to publication of the proposed Policy and have been pleased with the
constructive engagement and positive feedback received. Shareholders were broadly supportive
of our proposals and no changes have been made to the draft policy as a result of this engagement.
Feedback received indicated a desire for transparency on benchmarking and we have provided our
benchmarking analysis on page 114.
In our engagement with shareholders, we have been clear that, whilst flexibility has been requested
to increase headroom under the LTIP and bonus elements of the DRP, further engagement will take
place with shareholders prior to making substantive operational changes to Executive
Director remuneration.
Share plan approvals
Approval is being sought at the 2026 AGM to adopt or renew rules for the Group’s share schemes,
namely the LTIP, DBP and SAYE, a full summary of the plan rules can be found within the Notice of
AGM. The scheme rules are broadly consistent with the existing scheme rules, however, the
following key changes are proposed.
• Awards under the Company’s DBP and LTIP will be entitled to receive dividend or dividend
equivalents, which is in line with market practice and will ensure our equity incentive plans
are competitive with peers.
• In accordance with changes to the Investment Association’s Principles of Remuneration
(the ‘Principles’) it is proposed to:
– remove the 5% dilution sub-limit for executive share plans. All plan rules will continue to have
an overall 10% dilution limit, in any 10-year rolling period, across all share plans, ensuring the
appropriate protections remain in place for shareholders. Removing the 5% limit for executive
schemes will provide the Committee with greater flexibility in managing the Company’s
dilution levels; and
– propose an open-ended life for the Company’s all employee SAYE plan. Previously, the
Principles required share plan rules to be renewed every 10 years, however, this has been
removed for all employee plans. The Committee is strongly supportive of promoting share
ownership across all levels of the organisation and the benefits this brings. By enabling the
plan to continue in perpetuity it removes the additional administrative burden of seeking
shareholder approval for new rules, when the plan expires.
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Corporate Governance
Financial Statements
Other Information
The Directors submit their report, the related Strategic Report and Corporate Governance Report, and the audited Financial Statements of Secure Trust Bank PLC and
its subsidiaries (the ‘Group’) for the year ended 31 December 2025.
Business performance
Principal activities
The Company’s principal activity is to provide banking services, including deposit taking and secured and unsecured lending. Our business model is based on helping
customers fulfil their ambitions and is explained in the Strategic Report. The Group operates in the United Kingdom and the Company is incorporated and domiciled
in England and Wales with company number 00541132.
Development
and performance
Commentary on the development and performance in the year ended 31 December 2025, and likely future developments in the Group’s business, is included in the
Strategic Report on pages 1 to 67.
Financial risk
Descriptions of the Group’s financial risk management objectives and policies, and its exposure to risks arising from its use of financial instruments, are set out in Note 5 to
the Financial Statements on pages 157 to 159.
Directors’ remuneration
Information concerning Directors’ contractual arrangements and entitlements under share-based remuneration arrangements is given in the Remuneration report on
pages 97 to 115.
Environmental performance
The Group’s environmental performance data, including the Scope 1, 2 and 3 emissions for 2025 and the Group’s Task Force on Climate-related Financial Disclosures
(‘TCFD’) report can be found on pages 54 to 65.
Employees in the business
The Group has processes in place for communicating with its employees. Employee communications include information about the performance of the Group, on major
matters affecting their work, employment or workplace and to encourage employees to get involved in social or community events. We have a formal Employee Council
to help facilitate engagement and listen to the views of our employees. Further information on how the Group communicates with its employees is set out on page 43.
The Group is an inclusive and equal opportunities employer and opposes all forms of discrimination. Applications from people with disabilities will be considered fairly,
and if existing employees become disabled, every effort is made to retain them within the workforce wherever reasonable and practicable. The Group also endeavours
to provide equal opportunities in the training, promotion and general career development of disabled employees.
Group policies seek to create a workplace that has an open atmosphere of trust, honesty and respect. Harassment or discrimination of any kind is not tolerated.
This principle applies to all aspects of employment from recruitment and promotion, through to termination and all other terms and conditions of employment.
Stakeholder interests
How we considered stakeholder interests in key decisions can be found on page 79, and our s.172 statement and our engagement practices can be found on
pages 42 to 44.
Important events affecting
the Company since
the end of the year
There have been no significant events between 31 December 2025 and the date of approval of these Financial Statements, which would require a change to, or additional
disclosure in, the Financial Statements.
The sale of the Consumer Vehicle Finance business completed on 25 February 2026. The Group will undertake servicing of the loan portfolio on behalf of the purchaser
post completion until a target migration date of 30 May 2026.
Political donations
The Group made no political donations and incurred no political expenditure during the year (2024: £nil).
Directors’ report
Secure Trust Bank PLC Annual Report & Accounts 2025
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Corporate Governance
Financial Statements
Other Information
Directors’ report
continued
Listing Rules and Disclosure Guidance and Transparency
Rules disclosures
DTR 4.1.5R, DTR 4.1.8R and DTR 4.1.11R
Information, which is the required content of the Management Report, can be found in the Strategic Report and in this Directors’ report.
LR 6.6.1 R
Information
Location
Interest capitalised
Not applicable
Shareholder waiver of dividends
Note 12 to the Financial Statements
Shareholder waiver of future dividends
Note 12 to the Financial Statements
Agreements with controlling shareholders
Not applicable
Provision of services by a controlling shareholder
Not applicable
Details of long-term incentive schemes
Not applicable
Waiver of emoluments by a Director
Not applicable
Waiver of future emoluments by a Director
Not applicable
Significant contracts
Not applicable
Non pre-emptive issues of equity for cash
Note 34 to the Financial Statements and page 130
Non pre-emptive issues of equity for cash in relation to major subsidiary
Not applicable
Participation by parent of a placing by a listed subsidiary
Not applicable
Publication of unaudited financial information
Page 133
Compliance statement – DTR 7.2
This statement can be found in our Governance section on page 68 and is deemed to form part of this Directors’ report.
Internal control and risk management
systems – DTR 7.2.5
A description of the Company’s financial reporting, internal control and risk management processes can be found on pages 30 to 39 and 92.
Structure of capital and voting rights –
DTR 7.2.6
As at 31 December 2025, there were 19,097,256 fully paid ordinary shares of 40 pence, amounting to £7,638,902.40. As at 11 March 2026, there were
19,104,955 shares in issue amounting to £7,641,982.
Each share in issue is listed on the Official List maintained by the FCA in its capacity as the UK Listing Authority. The Company has one class of ordinary
shares, which rank equally in all respects and there are no special rights to dividends or in relation to control of the Company. All shares carry the right to
attend, speak and vote at general meetings of the Company and to participate in dividends and other distributions according to their respective rights and
interests in the profits of the Company and a return of capital on a winding up of the Company. Full details regarding the exercise of voting rights in respect
of the resolutions to be considered at the Annual General Meeting (‘AGM’) to be held on 14 May 2026 are set out in the Notice of Annual General Meeting.
To be valid, the appointment of a proxy to vote at a general meeting must be received not less than 48 hours before the time appointed for holding the
meeting. Full details on how to submit the proxy can be found in the AGM Notice.
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Other Information
Shares and shareholders
Powers to issue shares
The Directors were granted authority at the 2025 AGM to allot shares in the Company and to grant rights to subscribe for, or convert, any securities into shares in the
Company up to an aggregate nominal amount of £2,542,854 in any circumstances. This amount represented approximately one-third of the Company’s issued share capital
prior to that meeting. The Directors were also authorised to allot shares and to grant rights up to an aggregate nominal amount of £5,085,708 in connection with a fully
pre-emptive offer (but such amount to be reduced by any allotments made under the first limb of the authority). This amount represented approximately two-thirds of the
Company’s issued share capital prior to the meeting.
At the same time, the Directors were also granted authority to allot shares in the Company and to grant rights to subscribe for, or convert, any securities into shares up to an
aggregate nominal amount of £2,542,854 in relation to any issue of Additional Tier 1 Securities. This amount represented approximately one-third of the Company’s issued
share capital prior to that meeting.
The Directors were also empowered at the 2025 AGM to allot shares for cash on a non-pre-emptive basis, both in connection with a rights issue or similar pre-emptive issue
and, otherwise than in connection with any such issue, up to a maximum aggregate nominal amount of £762,856 of the Company’s issued share capital (representing
approximately 10% of the Company’s issued share capital prior to the meeting).
The Directors were further empowered to allot shares for cash on a non-pre-emptive basis representing approximately 2% of issued ordinary share capital, to be used only
for the purposes of a follow-on offer as prescribed by the most recent version of the Pre-Emption Group’s Statement of Principles. As permitted by those Principles, the
Directors were also empowered to allot shares for cash on a non-pre-emptive basis up to the same amount for use only in connection with an acquisition or specified capital
investment. The Directors were also empowered to allot shares for cash on a non-pre-emptive basis specifically in relation to the issue of Additional Tier 1 Securities.
These share capital authorities and powers are due to lapse from the conclusion of the 2026 AGM, and the Board intends to seek approval to renew these authorities and
powers at the 2026 AGM.
Share issuances
An additional 25,848 ordinary shares of 40 pence each were issued during 2025 (2024: 53,613) subsequent to requests to exercise under the Group’s employee share
schemes and as authorised by shareholders at the 2025 Annual General Meeting. Since 1 January 2026, and until the date of the report, 7,699 further ordinary shares
of 40 pence each were issued in the Company.
Powers to buy back shares
The Directors were also authorised at the 2025 AGM to repurchase shares in the capital of the Company up to a maximum aggregate number of 1,907,140 shares.
This represented approximately 10% of the Company’s issued share capital prior to the meeting.
No shares have been repurchased under this authority during the year ended 31 December 2025, nor since this date up to the 11 March 2026.
The authority to repurchase shares is due to lapse from the conclusion of the 2025 AGM, and the Board intends to seek approval to renew this authority at the 2026 AGM.
Restrictions on
transfer of shares
Shareholders may transfer all, or any, of their certificated or uncertificated shares in the Company. All such rights are subject to certain exceptions and restrictions provided
in the Company’s Articles and in any applicable legislation. These include where rights are suspended for non-disclosure of an interest in shares, where share transfers do
not comply with specific requirements, and where any amounts on shares owing by a shareholder to the Company remain unpaid.
The rights and obligations of shareholders, and restrictions on transfer, are set out in full in the Articles. The Company is not aware of any agreements between shareholders
that may result in restrictions on the transfer of securities and/or voting rights.
CREST
The Company’s ordinary shares are in CREST, the settlement system for stocks and shares traded on the London Stock Exchange.
Shares held in Employee
Benefit Trusts
Ocorian Limited (the ‘EBT Trustee’), as trustee of the Secure Trust Bank PLC Employee Benefit Trust (the ‘EBT’), holds ordinary shares in trust for the benefit of the Group’s
employees. The purchase of shares by the EBT is funded by way of a loan from the Company. Where the EBT Trustee has allocated shares held in the trust in respect of
specific awards granted under the Company’s share plans, the holders of such awards may recommend to the EBT Trustee how it should exercise voting rights relating to
such shares. To the extent that a participant does not make such recommendations, no vote is registered. In addition, the EBT Trustee does not vote on any unallocated
shares held in the trust. As at 11 March 2026, the EBT Trustee held 2.0% of the Company’s issued share capital. Full details of the EBT’s holdings are outlined in Note 35.1
to the Financial Statements.
Directors’ report
continued
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Other Information
Directors’ report
continued
Shares and shareholders
Annual General Meeting
The AGM will take place on 14 May 2026. The Notice of the AGM will be circulated to all shareholders at least 20 working days before the meeting and the details of the
resolutions to be proposed will be set out in that Notice.
This document will be available on the Company’s website at
www.securetrustbank.com/agm
.
Dividends and
dividend policy
The Board recommends the payment of a final dividend of 23.7 pence per share, which represents total dividends for the year of 35.5 pence per share
(2024: 33.8 pence per share). The final dividend, if approved by shareholders at the AGM, will be paid on 21 May 2026 to shareholders on the register at
the close of business on 24 April 2026.
The Company operates a progressive dividend policy, which means dividends will not reduce from the previous year and was effective from the 2024 AGM. Under the
dividend policy, the Directors will have regard to current and projected capital, liquidity, earnings and market expectations in determining the amount of the dividend.
On occasion, the Company may declare and pay a special dividend resulting from special circumstances, however, no such special dividend is currently envisaged.
Substantial share interests
As at 31 December 2025, the Company had been notified of the following voting interests in the ordinary share capital of the Company in accordance with DTR 5 of the
FCA’s Disclosure Guidance and Transparency Rules. It should be noted that these holdings may have changed since notified to the Company. Percentages are shown as
notified, calculated with reference to the Company’s disclosed share capital as at the date of the movement triggering the notification.
Substantial shareholders
No. of shares
%
Wellington Management
1,808,374
9.48
Mr Steven Cohen
1,510,412
7.94
Artemis Investment Management
1,046,979
5.49
Premier Miton Investors
974,958
5.11
Between 1 January 2026 to 11 March 2026, the following notifications have been received by the Company:
• Premier Miton Investors reduced their holding to 917,747 (4.80%).
•
Ennismore Fund Management Limited increased their holding to 613,175 (3.21%).
• Premier Miton Investors increased their holding to 962,747 (5.04%).
• Premier Miton Investors reduced their holding to 947,887 (4.96%).
Articles of Association
Changes to the Company’s Articles of Association must be approved by shareholders by way of a special resolution and must comply with the Companies Act 2006 and
other regulatory requirements, as applicable.
Directors
Board of Directors
The Directors of the Company who served during the year, and up to the date of signing the Financial Statements were:
•
Ann Berresford (until 30 December 2025)
• Julie Hopes
• Paul Myers
• Jim Brown
• Rachel Lawrence
• Finlay Williamson
• Steve Colsell (from 12 June 2025)
• David McCreadie (until 8 September 2025)
• Ian Corfield (from 8 September 2025)
• Victoria Mitchell
Directors’ interests
The Directors’ interests in the Company’s shares are set out in the Directors’ Remuneration report on page 109. No Director had a material interest in any significant
contract (other than a service contract or contract for services) with the Company at any time during the year. The Directors are advised of their statutory duty to avoid
conflicts of interest with the interests of the Company. All actual and potential conflicts are brought to the attention of the Board. The operation of the Company’s policy
on conflicts of interest is described in the Governance section on page 85.
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Other Information
Directors
Appointment and
replacement of Directors
The Company’s Articles of Association empower the Board to appoint as a Director any person who is willing to act as such. Such person shall hold office only until the next
AGM, but shall then be eligible for reappointment by the shareholders. The Articles also provide that the Company may fill any vacancies on the Board.
The Articles provide that the Company may, by ordinary resolution, of which special notice is given, remove any Director from office and elect another person in their place.
The Articles also set out the specific circumstances in which a Director shall vacate office.
The Articles require that, at each AGM, one-third of the Directors (or, if their number is not a multiple of three, the number nearest to but not exceeding one-third) shall
retire from office by rotation. Notwithstanding the provisions of the Articles, it is the Company’s practice that all Directors retire and stand for reappointment in accordance
with the recommendations of the UK Corporate Governance Code.
Powers of the Directors
The Directors’ powers are conferred on them by UK legislation and the Company’s Articles of Association and include the ability to issue or buy back shares (as detailed in
the Shares and Shareholder section on page 131).
Change of control
With reference to Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (paragraph 13(2)(k)), the Company does not
have agreements with any Director or employee that would provide compensation for loss of office or employment resulting from a change of control following a takeover
bid, except that provisions of the Company’s share schemes may cause options and awards granted under such schemes to vest in those circumstances.
There are no significant agreements to which the Company is party that take effect, alter or terminate upon a change of control following a takeover bid for the Company.
Directors’ indemnities
The Company’s Articles of Association provide that, subject to the provisions of the Companies Act 2006, any Director or Officer of the Company, or any associated
company, shall be identified by the Company against any liability. This indemnity, which applies to all Directors, has been in force throughout the year up to, and including,
the date of signing this report. The Group has also maintained Directors’ and Officers’ liability insurance throughout 2025.
Directors’ service
agreements
Each Executive Director, at the time of this report, has a written service agreement, which may be terminated by either party on not less than 12-months’ notice.
Non-Executive Directors’
letters of appointment
The letters of appointment of the Non-Executive Directors are issued for an initial period of three years, which may be renewed for further terms as appropriate.
All appointments are subject to a review by the Nomination Committee upon the third anniversary and on extension a further review is undertaken at the sixth anniversary
at which the Board’s succession plans and the need to refresh the Board’s skills and experiences are carefully considered. The role and responsibilities of each Director are
clearly set out and include the duties of a Director as provided in the Companies Act 2006. It is made clear that these duties do not include any management function but an
indication that the Director is expected to support and challenge management and help in the development of the Group’s strategy. Six-months’ notice is required to be
served by either party to terminate the appointment. The Non-Executive Directors’ letters of appointment are available for inspection at the Company’s registered office
during normal business hours and at the AGM (for 15 minutes prior to, and during, the Meeting).
Related party transactions
Note 44 to the Financial Statements , page 194.
Auditors and Audit
Independent Auditors and
audit information
Deloitte LLP was reappointed as Auditor at the Annual General Meeting held in 2025. As detailed in the Audit Committee report on page 91, the Board is recommending
the reappointment of Deloitte LLP as Auditor at the 2026 Annual General Meeting.
Each Director in office at the date of this Directors’ report confirms that so far as the Director is aware, there is no relevant audit information of which the Company’s
Auditor is unaware and each Director has taken all reasonable steps that they ought to have taken as a Director to make themselves aware of any relevant audit information
and to establish that the Company’s Auditor is aware of that information.
This confirmation is given, and should be interpreted, in accordance with the provisions of the Companies Act 2006.
Directors’ report
continued
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Other Information
Directors’ report
continued
Statements
Directors’ responsibility
statements
The statement of Directors’ responsibility for preparing the Annual Report and Accounts is set out on page 134 and is deemed to form part of the Directors’ report.
Within this, the Directors have included a statement that the Annual Report and Accounts presents a fair, balanced and understandable assessment of the Group’s position
and prospects. To help the Board discharge its responsibilities in this area, the Board consulted the Audit Committee, and following the Committee’s advice, the Board
considered and concluded that:
• the business model and strategy were clearly described;
• the assessment of performance was balanced;
• KPIs were used consistently;
• the language used was concise, with good linkages to different parts of the document; and
• an appropriate forward-looking orientation had been adopted.
Internal control and
risk management
The Directors confirm that they have carried out a robust assessment of the principal and emerging risks facing the Group, including those that would threaten its business
model, future performance, solvency or liquidity. The Board considers that the information it receives enables it to review the effectiveness of the Group’s internal controls
in accordance with the FRC’s Guidance on Risk Management, Internal Control and Related Financial and Business Reporting. Areas where financial control can be improved
are identified and appropriate actions agreed as part of our internal control systems. Senior management, the Board and the Risk Committee regularly monitor progress
towards completion of these actions. The Board considers that none of the identified areas for improvement constitute a significant failing or weakness.
Going concern
The Strategic Report discusses the Group’s business activities, together with the factors likely to affect its future development, performance and position.
In addition, it sets out the Group’s financial position, cash flows, liquidity position and borrowing facilities. The financial risk management note to the Financial Statements
sets out the Group’s objectives, policies and processes for managing capital and its financial risk management objectives, together with details of financial instruments and
exposure to credit and liquidity risk.
The Group has access to the financial resources required to run the business efficiently and has a strong gross cash position. The Group’s forecasts and projections,
including rigorous stress testing, show that the Group will be able to operate within its available resources for at least 12 months from the date of this report.
This has included a detailed focus on the wider macroeconomic and geopolitical environment, legal and regulatory risks and the potential for multiple risks to occur
simultaneously. As a consequence, the Directors consider it appropriate to prepare the annual Financial Statements on a going concern basis of accounting. For further
information, please see page 40.
Statement of viability
In accordance with Provision 31 of the Code, the Directors have assessed the prospects of the Group over a longer period than the 12 months as required by the going
concern provision. Details of the assessment can be found on pages 40 and 41.
Publication of unaudited
financial information
On 9 October 2025, the Company published a trading statement, which contained the following profit forecast:
“Whilst the Board now expects the Group’s underlying profit before tax for FY25 to fall below market expectations by up to £9 million, due to the performance of Vehicle
Finance, it remains confident of c.30% year-on-year growth in underlying profit before tax.”
This provided a forecast for adjusted total profit before tax of over £51.1 million. The audited adjusted total profit before tax for 2025 was £51.6 million.
The Directors’ Report was approved by the Board of Directors on 11 March 2026 and is signed on its behalf by:
Lisa Daniels
Group Company Secretary
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Financial Statements
Other Information
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:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
• provide additional disclosures when compliance with the specific requirements of the financial
reporting framework are insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the entity’s financial position and financial
performance; and
• make an assessment of the Company’s ability to continue as a going concern.
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 pages 72 to 74 of this Annual Report, confirm that to the best of their knowledge:
• the Financial Statements, prepared in accordance with the relevant financial reporting
framework, give a true and fair view of the assets, liabilities, financial position and profit
or loss of the Company and the undertakings included in the consolidation taken as a whole;
• the Management Report includes a fair review of the development and performance of the
business and the position of the Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and uncertainties that they
face; and
• the Annual Report and Financial Statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to assess the
Company’s position and performance, business model and strategy.
This responsibility statement was approved by the Board of Directors on 11 March 2026
and is signed on its behalf by:
Ian Corfield
Chief Executive Officer
Directors’ responsibility statement
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Other Information
Independent Auditor’s report to the members of Secure Trust Bank PLC
Report on the audit of the Financial Statements
1. Opinion
In our opinion:
• the Financial Statements of Secure Trust Bank PLC (the ‘Parent Company’) and its subsidiaries (the ‘Group’) give a true and fair view of the state of the Group’s and of the Parent Company’s affairs
as at 31 December 2025 and of the Group’s profit for the year then ended;
• the Group Financial Statements have been properly prepared in accordance with United Kingdom-adopted international accounting standards and IFRS Accounting Standards as issued by the
International Accounting Standards Board (‘IASB’);
• the Parent Company Financial Statements have been properly prepared in accordance with United Kingdom-adopted international accounting standards and as applied in accordance with the
provisions of the Companies Act 2006; and
• the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the Financial Statements which comprise:
• the Consolidated statement of comprehensive income;
• the Consolidated and Company statement of financial position;
• the Consolidated and Company statement of changes in equity;
• the Consolidated and Company statements of cash flows; and
• the related Notes 1 to 47 (excluding Note 42).
The financial reporting framework that has been applied in the preparation of the Group Financial Statements is applicable law and United Kingdom-adopted international accounting standards and
IFRS Accounting Standards as issued by the IASB. The financial reporting framework that has been applied in the preparation of the Parent Company Financial Statements is applicable law and United
Kingdom-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities under those standards are further described in the auditor’s
responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, including the Financial
Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit
services provided to the Group and Parent Company for the year are disclosed in Note 6 to the Financial Statements. We confirm that we have not provided any non-audit services prohibited by the
FRC’s Ethical Standard to the Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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Other Information
Independent Auditor’s report to the members of Secure Trust Bank PLC
continued
3.
Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• impairment of loans and advances to customers; and
• regulatory and litigation matters
Within this report, key audit matters are identified as follows:
Similar level of risk
Materiality
The materiality that we used for the Group Financial Statements was £2.8 million, which was determined on the basis of 0.75% of net assets.
Scoping
We have audited the entire financial information of the Parent Company. For the remaining entities, we have performed specified audit procedures on specific account
balances and class of transactions. Our audit work to respond to the risks of material misstatement was performed directly by the Group audit engagement team.
Significant changes
in our approach
There has been no significant change in our audit approach in the current year.
4.
Conclusions relating to going concern
In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the Financial Statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going concern basis of accounting included:
• obtaining an understanding of relevant controls around the going concern assessment including Board approval;
• with the involvement of prudential regulation specialists, we read the most recent Internal Capital Adequacy Assessment Process (‘ICAAP’) and Internal Liquidity Adequacy Assessment Process
(‘ILAAP’) documents, assessed the capital and liquidity projections, assessed the results of the capital and liquidity stress testing, evaluating key assumptions and methods used in the capital and liquidity
stress testing models, and tested the mechanical accuracy of the forecasts;
• inspecting correspondence with regulators to assess the capital and liquidity requirements imposed by the Group’s regulators during the year;
• obtaining the capital and liquidity forecasts and assessing key assumptions and their projected impact on capital and liquidity ratios, particularly with respect to loan book growth and potential credit
losses, whilst also considering the impact of economic volatility and specific industry risks;
• evaluating the impact of the regulatory matters outlined in section 5.2 on the Group’s capital and liquidity positions over the planning horizon as part of our stress testing;
• assessing the historical accuracy of forecasts; and
• assessing the appropriateness of the disclosures made in the Financial Statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s and
Parent Company’s ability to continue as a going concern for a period of at least 12 months from when the Financial Statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the Financial
Statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
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Other Information
Independent Auditor’s report to the members of Secure Trust Bank PLC
continued
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5.1. Impairment of loans and advances to customers
Key audit matter
description
The Group held allowances for impairment of loans and advances to customers of £89.5 million (2024: £111.8 million) against loans and advances to customers of
£3,776.1 million (2024: £3,720.3 million).
For financial assets measured at amortised cost, IFRS 9 ‘Financial Instruments’ requires the carrying value to be assessed for impairment using unbiased forward-looking
information. The measurement of expected credit losses (‘ECL’) is complex and involves judgements and estimates relating to probability of default (‘PD’), exposure at
default (‘EAD’), loss given default (‘LGD’), collateral valuations, significant increases in credit risk (‘SICR’) and macroeconomic scenario modelling. Where model or other
limitations exist, overlays are applied to the model output. These assumptions are prepared using historical behaviour and the Director’s judgement, in particular with
respect to the incorporation of forward-looking information and identifying significant increases in credit risk.
We identified three specific areas in relation to the ECL that require significant judgement or relate to assumptions to which the overall ECL provision is
particularly sensitive:
• the accuracy of the LGD on the Vehicle Finance portfolio given the newly implemented model during the period;
• the appropriateness of the PD rates applied to the Vehicle Finance and Retail Finance portfolio; and
•
the appropriateness of the approach and assumptions used in calculating the Real Estate Finance Stage 3 ECL allowance for the largest and most complex exposures.
Given the material effect of the significant judgements taken in deriving the above, we also considered that there is a potential for fraud through possible manipulation of
this balance.
Impairment of loans and advances to customers, including associated accounting policies is included in Note 17 of the Financial Statements. The corresponding area in the
Audit Committee report is on page 89.
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Other Information
Independent Auditor’s report to the members of Secure Trust Bank PLC
continued
How the scope of our
audit responded to the
key audit matter
Our audit procedures included obtaining an understanding of the relevant controls over the impairment provision with particular focus on controls over significant
assumptions and judgements used in the calculation of ECL.
To challenge the accuracy of the LGD on the Vehicle Finance portfolio, with the involvement of credit risk specialists, we:
• evaluated changes to the LGD model methodology, performed an assessment of the underlying code and assessed the appropriateness and accuracy of the
underlying assumptions against IFRS 9 requirements and current collection practices; and
• assessed the model’s ongoing performance and implementation to evaluate where it aligns with the approved model methodology, including assessment of
management’s back-testing of the model’s predictions against actual observed losses, analysed the stability of key model parameters over time, and evaluated
internal model validation reports.
To assess the appropriateness of the PD rates applied to the Vehicle Finance and Retail Finance portfolios, with the involvement of credit risk specialists, we:
• evaluated the model methodology, assessed the appropriateness and accuracy of the assumptions used in computing the PD rates;
• assessed whether the SICR quantitative thresholds remain appropriate; and
• assessed the ongoing performance of the model and implementation of the model, to evaluate the consistency with its design and approved methodology, including
assessment of management’s back-testing of the model’s predictions against actual defaults, analysed the stability of key model parameters and outputs, and evaluated
internal model validation reports and monitoring dashboards.
To challenge the appropriateness of the approach and assumptions used in calculating the Real Estate Finance Stage 3 ECL allowance for the largest and most complex
Stage 3 exposures, we:
• inquired with management and others within the Group to understand the latest status of the exposure and the planned workout strategy;
• inspected minutes of the Credit Risk Committee and other risk-related minutes to corroborate the inquiries performed;
• assessed the appropriateness of the assumptions used in the discounted cash flow computation and whether they are reasonable considering the latest economic
environment and the appropriateness of the relevant cashflows used specific to the latest development;
• assessed the reasonableness of the discounted cash flow computations, specifically the scenarios and their assigned weightings. Our assessment involved corroborating
these inputs with other audit evidence obtained during the course of our audit; and
• working with our real estate valuation specialists to undertake an independent assessment of the value of the collateral used in the cash flow computations.
As part of our wider assessment of impairment of loans and advances to customers we:
• assessed the accuracy and completeness of source data and report logic used to extract source data from the underlying lending systems for input into the
impairment models;
• with support from our real estate valuation specialists, assessed a sample of collateral valuations used in the LGD calculation for the Real Estate Finance portfolio;
• reconciled the impairment models to the general ledger and tested a sample of loans to assess whether the data used in the provision calculation was complete
and accurate;
• with support from our economic specialists we have independently assessed the economic forecasts by benchmarking to the alternate forecasts and scenarios weightings
used by management in their ECL models;
• assessed the quantitative and qualitative factors used in the SICR assessment by reference to standard validation metrics including the proportion of transfers to Stage 2
driven solely by being 30 days past due, the volatility of loans in Stage 2 and the proportion of loans that spend little or no time in Stage 2 before moving to Stage 3;
• evaluated the Group’s SICR policy including the curing criteria and assessed whether it complies with IFRS 9;
• tested the completeness and accuracy of data used in applying the quantitative and qualitative criteria in the SICR assessment on whether loans are assigned to the
correct stage; and
• as a stand back test, considered potential contradictory evidence, assessed changes in the overall coverage ratios and the completeness of key judgements and ECJs
adopted by the Directors’ through comparison to industry peers.
Key observations
Based on the evidence obtained, we concluded that the judgements and assumptions underpinning the allowances for impairment of loans and advances to customers
are determined and applied appropriately, and therefore that the recognised provision is reasonable.
5.1. Impairment of loans and advances to customers
continued
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5.2. Regulatory and litigation matters
Key audit matter
description
The Group is exposed to regulatory and litigation matters in relation to historical motor commission arrangements. As reported in Note 31, the Group’s provision for these
matters is £21.5 million at 31 December 2025 (2024: £6.4 million).
Significant judgement is required by the Group in determining whether, taking account the requirements of IAS 37 ‘Provisions, Contingent Liabilities and Contingent
Assets’, the amount recorded is representative of the Group’s best estimate to settle the probable obligation based on the information available to the Group, where
there is significant uncertainty around the final outcome given that the Financial Conduct Authority’s (‘FCA’) redress scheme is not yet finalised.
Details of the provision and accounting estimate is included in Note 31. The corresponding area in the Audit Committee report is on page 89.
How the scope of our
audit responded to the
key audit matter
With the involvement of regulatory specialists we have performed the following procedures:
• obtained an understanding of the relevant controls around determining an appropriate provision;
• evaluated the assessment of the provision, associated probabilities, and potential outcomes against the proposed redress scheme in accordance with IAS
37 requirements;
• tested the mathematical accuracy of the provision including the completeness and accuracy of data used in the provision;
• assessed the methodology and assumptions applied to determine the provision;
• inspected correspondence with the Group’s regulators to challenge the completeness of the provisions;
• evaluated whether the disclosures made in the Financial Statements appropriately reflect the facts and key sources of estimation uncertainty; and
• performed the stand back assessment on the appropriateness of the provision recognised with reference to the conclusions reached across the industry.
Key observations
Based on the evidence obtained, we concluded that the judgements and assumptions applied are reasonable, and that the provision related to regulatory and litigation
matters and the related disclosures are appropriate.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the Financial Statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
Group Financial Statements
Parent Company Financial Statements
Materiality
£2.8 million (2024: £2.7 million)
£2.8 million (2024: £2.7 million)
Basis for determining
materiality
0.75% of net assets (2024: 0.75%
of net assets)
0.75% of net assets (2024: 0.75%
of net assets)
Rationale for the
benchmark applied
Net assets have been used as the basis for determining materiality as it
is considered a key metric for users of the Financial Statements given the
capital requirements which arise from being a regulated bank. As most of
theGroup’s operations are carried out by the Parent Company, the same
materiality basis was used for both.
Component performance
materiality range
£1.0 million to
£1.9 million
Audit Committee
reporting threshold
£0.1 million
Group materiality
£2.8 million
Net assets
£374.3 million
Net assets
Group materiality
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6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the
Financial Statements as a whole.
Group Financial Statements
Parent Company Financial Statements
Performance materiality
70% (2024: 70%) of Group materiality
70% (2024: 70%) of Parent Company materiality. Where account balances are audited
for the purposes of the consolidated Financial Statements, a lower component
performance materiality was used.
Basis and rationale for
determining performance
materiality
In determining performance materiality, we considered a number of factors, including:
• our overall risk assessment, including our assessment of the Group’s overall control environment and whether we were able to rely on controls;
• our understanding of the business; and
• the number of corrected and uncorrected misstatements identified in the prior year.
6.3. Error reporting threshold
We agreed with the Audit Committee we would report to the Committee all audit differences in excess of £0.1 million (2024: £0.1 million), as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the Financial Statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group–wide controls, and assessing the risks of material misstatement at the Group level.
The nature of the Group is such that we have identified components by legal entity. Our Group audit was mainly focused on audit of the Parent Company, which represents 92% of the Group’s revenue;
72% of the Group’s profit before tax, and 98% of the Group’s net assets. We haveaudited the entire financial information of the Parent Company, for which we applied a component performance
materiality equal to £1.9 million. For the remaining entity, we have performed specified audit procedures of the specific account balances and classes of transactions using component performance
materiality of £1.9 million.
Audit testing to respond to the risks of material misstatement was performed directly by the Group audit engagement team. We performed further audit procedures at an aggregated Group level
to evaluate consolidation entries recognised and to re-assess our evaluation that there were no identified risks of material misstatement in any of the entities.
7.2. Our consideration of the control environment
We identified relevant IT systems for the Group in respect of the financial reporting system, lending systems for Vehicle Finance, Commercial Finance, Retail Finance, and the deposits system.
With involvement of our IT specialists, we performed testing of the general IT controls associated with these systems and relied upon IT controls in respect of these systems.
In the current year, we tested relevant automated and manual controls for the lending and deposits business cycles and were able to adopt a controls reliance approach. We obtained an understanding
of the relevant controls related to the financial reporting process, impairment of loans and advances with customers and regulatory and litigation matters.
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7.3. Our consideration of climate-related risks
We have obtained an understanding of the process for considering the impact of climate-related risks and controls and assessed whether the risks identified are complete and consistent with our
understanding of the entity as part of our own risk assessment procedures. These risks and Task Force on Climate-Related Financial Disclosures (‘TCFD’) are contained within pages 54 to 65 of
the Annual Report and Accounts.
In conjunction with our climate risk specialists, we have held discussions with the Group to understand the process for identifying affected operations, including the governance and controls over
this process, and the subsequent effect on the financial reporting for the Group and the long-term strategy to respond to climate change risks as they evolve.
Our audit work has involved reviewing management’s assessment of the physical and transition risks identified and considered in the Group’s climate risk assessment.
As set out in Note 17 to the Financial Statements, the Directors’ do not consider that climate change risk is currently a key source of estimation uncertainty, nor that it presents a material impact
to the judgements made in the Financial Statements.
We performed our own risk assessment of the potential impact of climate change on the Group’s account balances and classes of transactions and did not identify any additional risks of material
misstatement. We also read the Annual Report and Accounts to consider whether the climate related disclosures are materially consistent with the Financial Statements and our knowledge
obtained in the audit and also evaluated the appropriateness of disclosures included in the Financial Statements in Note 17.
8. Other information
The other information comprises the information included in the Annual Report, other than the Financial Statements and our auditor’s report thereon. The Directors are responsible for the other
information contained within the Annual Report.
Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the Financial Statements themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view,
and for such internal control as the Directors determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing as applicable, matters related
to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative
but to do so.
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10. Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these Financial Statements.
A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our
auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration policies, key drivers for Directors’ remuneration, bonus levels and
performance targets;
• the Group’s own assessment of the risk that irregularities may occur either as a result of fraud or error;
• results of our enquiries of management, Internal Audit, the Directors and the Audit Committee about their own identification and assessment of the risks of irregularities, including those that are specific
to the Group’s sector;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
• the matters discussed among the audit engagement team and relevant internal specialists, including tax, real estate valuation, financial instruments, economic advisory, climate risk, regulatory risk,
share-based payments, data analytics, IT, prudential regulatory and credit risk specialists regarding how and where fraud might occur in the Financial Statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following area:
impairment of loans and advances to customers. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination
of material amounts and disclosures in the Financial Statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the Financial Statements but compliance with which may be fundamental to the Group’s ability
tooperate or to avoid a material penalty. These included the regulation set by the FCA and Prudential Regulation Authority (‘PRA’) relating to regulatory capital and liquidity requirements.
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11.2. Audit response to risks identified
As a result of performing the above, we identified impairment of loans and advances to customers as a key audit matter related to the potential risk of fraud. The key audit matters section of our report
explains the matter in more detail and also describes the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the Financial Statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on
the Financial Statements;
• enquiring of management, the Directors, the Audit Committee and in-house legal counsel concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with HMRC, FCA and PRA as well as holding discussions with the PRA;
and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making
accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists and remained alert to any indications of fraud
or non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the Financial Statements are prepared is consistent with the Financial Statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the course of the audit, we have not identified any material misstatements
in the Strategic Report or the Directors’ Report.
13. Opinion on other matter prescribed by the Capital Requirements (Country-by-Country Reporting) Regulations 2013
In our opinion the information given in Note 46 to the Financial Statements for the financial year ended 31 December 2025 has been properly prepared, in all material respects, in accordance with
the Capital Requirements (Country-by-Country Reporting) Regulations 2013.
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14. Corporate Governance Statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Group’s compliance
with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the Financial
Statements and our knowledge obtained during the audit:
• the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on pages 40 and 41;
• the Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set out on pages 40 and 41;
•
the Directors’ statement on fair, balanced and understandable set out on pages 134;
•
the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 30 to 39;
• the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out on page 92; and
• the section describing the work of the Audit Committee set out on pages 86 to 9.
15. Matters on which we are required to report by exception
15.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
• the Parent Company Financial Statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration have not been made or the part of the Directors’ Remuneration Report to be
audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
Independent Auditor’s report to the members of Secure Trust Bank PLC
continued
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16. Other matters which we are required to address
16.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the Board of Directors on 16 May 2018 to audit the Financial Statements for the year ending 31 December 2018 and
subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is eight years, covering the years ending 31 December 2018
to 31 December 2025.
16.2. Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISAs (UK).
17. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the FCA Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these Financial Statements will form part of the Electronic Format Annual Financial Report filed on
the National Storage Mechanism of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This Auditor’s Report provides no assurance over whether the Electronic Format Annual Financial Report
has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
Kieren Cooper (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
11 March 2026
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Consolidated statement of comprehensive income
For the year ended 31 December 2025
2025
2024
Note
Continuing
£million
Discontinued
£million
Total
Group
£million
Continuing
£million
Discontinued
£million
Total
Group
£million
Income statement
Interest income and similar income
4.1
Interest expense and similar charges
4.1
(150.7 )
(22.7 )
(173.4 )
(159.5 )
(21.6 )
(181.1 )
Net interest income
4.1
Fee and commission income
4.2
Fee and commission expense
4.2
(0.2 )
(0.2 )
(0.1 )
(0.1 )
(0.2 )
Net fee and commission income
4.2
Operating income
Net impairment charge on loans and advances to customers
17
(31.4 )
(26.6 )
(58.0 )
(23.2 )
(38.7 )
(61.9 )
Other gains/(losses)
(0.4 )
(0.3 )
Fair value gains on financial instruments
5
Operating expenses
6
(74.7 )
(29.5 )
(104.2 )
(72.2 )
(31.6 )
(103.8 )
Profit/(loss) before income tax before exceptional items
(7.7 )
(21.8 )
Exceptional items
8
(24.1 )
(24.1 )
(1.5 )
(8.4 )
(9.9 )
Profit/(loss) before income tax
(31.8 )
(30.2 )
Income tax (expense)/credit
9
(14.7 )
(9.9 )
(16.0 )
(9.5 )
Profit/(loss) for the year
(27.0 )
(23.7 )
Items that may be reclassified to the income statement
Cash flow hedge reserve movements
(1.4 )
(1.4 )
(0.8 )
(0.8 )
Reclassification to the income statement
Taxation
(0.2 )
(0.2 )
Other comprehensive income for the year, net of income tax
Total comprehensive income/(expense) for the year
(27.0 )
(23.7 )
Profit/(loss) attributable to equity holders of the Company
(27.0 )
(23.7 )
Total comprehensive income/(expense) attributable to equity holders of the Company
(27.0 )
(23.7 )
Earnings per share for profit attributable to the equity
holders of the Company during the year (pence per share)
Basic earnings per ordinary share
11.1
(144.5 )
(124.3 )
Diluted earnings per ordinary share
11.2
(136.6 )
(122.1 )
The Notes on pages 151 to 194 are an integral part of these consolidated financial statements.
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Consolidated and Company statement of financial position
As at 31 December 2025
Group
Company
Note
2025
£million
2024
£million
2025
£million
2024
£million
ASSETS
Cash and Bank of England reserve account
528.1
445.0
Loans and advances to banks
13
36.1
23.6
Debt securities
14
1.0
–
Loans and advances to customers
15,16
3,295.8
3,608.5
Fair value adjustment for portfolio
hedged risk
18
(6.8 )
7.3
(6.8)
Derivative financial instruments
18
0.2
14.3
Assets held for sale
19,15,16
390.8
–
Investment property
20
0.9
0.9
Property, plant and equipment
21
5.9
6.0
Right-of-use assets
22
4.2
1.4
Intangible assets
23
3.2
2.9
Investment in Group undertakings
24
6.3
6.1
Current tax assets
2.6
1.0
Deferred tax assets
25
3.3
3.3
Other assets
26
33.4
13.0
Total assets
4,319.1
4,119.2
LIABILITIES AND EQUITY
Liabilities
Due to banks
27
205.9
365.8
Deposits from customers
28
3,509.6
3,244.9
Fair value adjustment for portfolio
hedged risk
18
(3.4 )
4.7
(3.4)
Derivative financial instruments
18
0.1
10.0
Lease liabilities
29
4.2
1.6
Other liabilities
30
110.3
41.1
Provisions for liabilities and charges
31
25.5
11.3
Subordinated liabilities
32
93.5
93.3
Total liabilities
3,953.8
3,764.6
Group
Company
Note
2025
£million
2024
£million
2025
£million
2024
£million
Equity attributable to owners of the Parent
Share capital
34
7.6
7.6
Share premium
84.2
84.0
Other reserves
35
(1.9 )
(2.2 )
(1.9)
(2.2)
Retained earnings
275.4
265.2
Total equity
365.3
354.6
Total liabilities and equity
4,319.1
4,119.2
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.
Board of Directors on 11 March 2026 and were signed on its behalf by:
Jim Brown
Ian Corfield
Chair
The Notes on pages 151 to 194 are an integral part of these consolidated financial statements.
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Consolidated and Company statement of changes in equity
Group
Company
Equity attributable to equity holders of the parent
Equity attributable to equity holders of the parent
Other reserves
Other reserves
Share
capital
£million
Share
premium
£million
Cash flow
hedge
reserve
£million
Own
shares
£million
Retained
earnings
£million
Total
£million
Share
capital
£million
Share
premium
£million
Cash flow
hedge
reserve
£million
Own
shares
£million
Retained
earnings
£million
Total
£million
Balance at 1 January 2025
(2.2 )
7.6
84.0
–
(2.2)
265.2
354.6
Profit for 2025
–
–
–
–
14.6
14.6
Other comprehensive income, net of income tax
–
–
–
–
–
–
Total comprehensive income for the year
–
–
–
–
14.6
14.6
Purchase of own shares
(0.2 )
(0.2 )
–
–
–
(0.2)
–
(0.2)
Sale of own shares
–
–
–
0.5
–
0.5
Loss on sale of own shares
(0.5 )
(0.5 )
–
–
–
–
(0.5)
(0.5)
Issue of shares
–
0.2
–
–
–
0.2
Dividends
(6.4 )
(6.4 )
–
–
–
–
(6.4)
(6.4)
Share-based payments
–
–
–
–
2.5
2.5
Balance at 31 December 2025
(1.9 )
7.6
84.2
–
(1.9)
275.4
365.3
Balance at 1 January 2024
(0.3 )
(1.4 )
7.6
83.8
(0.3)
(1.4)
248.5
338.2
Profit for 2024
–
–
–
–
20.1
20.1
Other comprehensive income, net of income tax
–
–
0.3
–
–
0.3
Total comprehensive income for the year
–
–
0.3
–
20.1
20.4
Purchase of own shares
(1.4 )
(1.4 )
–
–
–
(1.4)
–
(1.4)
Sale of own shares
–
–
–
0.6
–
0.6
Loss on sale of own shares
(0.5 )
(0.5 )
–
–
–
–
(0.5)
(0.5)
Issue of shares
–
0.2
–
–
–
0.2
Dividends
(5.2 )
(5.2 )
–
–
–
–
(5.2)
(5.2)
Share-based payments
–
–
–
–
2.3
2.3
Balance at 31 December 2024
(2.2 )
7.6
84.0
–
(2.2)
265.2
354.6
The Notes on pages 151 to 194 are an integral part of these consolidated financial statements.
Secure Trust Bank PLC Annual Report & Accounts 2025
148
Strategic Report
Corporate Governance
Financial Statements
Other Information
Consolidated statement of cash flows
For the year ended 31 December 2025
Note
2025
£million
2024
£million
Cash flows from operating activities
Profit for the year
Adjustments for:
Income tax expense
9
Depreciation of property, plant and equipment
21
Depreciation of right-of-use assets
22
Amortisation of intangible assets
23
Impairment charge on loans and advances to customers
17
Share-based compensation
36
Provisions for liabilities and charges - charge to income
statement
31
Other non-cash items included in profit before tax
(0.6 )
Cash flows from operating profits before changes in operating
assets and liabilities
Changes in operating assets and liabilities:
loans and advances to customers
(159.0 )
(354.8 )
loans and advances to banks and balances at central banks
(5.1 )
other assets
deposits from customers
provisions for liabilities and charges
(7.6 )
(4.7 )
other liabilities
(5.5 )
Income tax paid
(12.0 )
(8.8 )
Net cash inflow from operating activities
Note
2025
£million
2024
£million
Cash flows from investing activities
Purchase of investment property
20
(1.1 )
Purchase of debt securities
14
(1.0 )
Purchase of property, plant and equipment and intangible
assets
21,23
(1.6 )
(1.0 )
Sale of property, plant and equipment
21
Net cash outflow from investing activities
(1.8 )
(1.0 )
Cash flows from financing activities
(Repayment)/drawdown of amounts due to banks
(1.7 )
Drawdown of sale and repurchase agreements
Repayment of sale and repurchase agreements
(175.0 )
Repayment of Term Funding Scheme with additional incentives
for SMEs
(230.0 )
(160.0 )
Purchase of own shares
(0.2 )
(1.4 )
Issue of shares
Dividends paid
12
(6.4 )
(5.2 )
Repayment of lease liabilities
29
(1.3 )
(1.4 )
Net cash outflow from financing activities
(164.4 )
(42.0 )
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
37
Interest received was £227.0 million (2024: £246.1 million) and interest paid was £65.2 million
(2024: £70.6 million).
The Notes on pages 151 to 194 are an integral part of these consolidated financial statements.
Secure Trust Bank PLC Annual Report & Accounts 2025
149
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Corporate Governance
Financial Statements
Other Information
Company statement of cash flows
For the year ended 31 December 2025
Note
2025
£million
2024
£million
Cash flows from operating activities
Profit for the year
14.6
20.1
Adjustments for:
Income tax expense
9
5.3
6.2
Depreciation of property, plant and equipment
21
0.5
0.6
Depreciation of right-of-use assets
22
1.0
0.8
Amortisation of intangible assets
23
0.9
1.1
Impairment charge on loans and advances to customers
58.0
62.0
Share-based compensation
36
1.8
2.1
Dividends received from subsidiaries
(10.8)
(9.5)
Provisions for liabilities and charges - charge to the income
statement
31
21.7
10.1
Other non-cash items included in profit before tax
0.1
(1.2)
Cash flows from operating profits before changes in operating
assets and liabilities
93.1
92.3
Changes in operating assets and liabilities:
loans and advances to customers
(136.0)
(354.9)
loans and advances to banks and balances at central banks
(5.1)
5.0
other assets
(9.7)
11.3
deposits from customers
264.7
373.1
provisions for liabilities and charges
(7.6)
(4.6)
other liabilities
64.4
(3.9)
Income tax paid
(6.4)
(6.7)
Net cash inflow from operating activities
257.4
111.6
Note
2025
£million
2024
£million
Cash flows from investing activities
Purchase of debt securities
14
(1.0)
–
Purchase of property, plant and equipment and intangible
assets
21,23
(1.6)
(0.8)
Net cash outflow from investing activities
(2.6)
(0.8)
Cash flows from financing activities
(Repayment)/drawdown of amounts due to banks
(1.7)
0.8
Drawdown of sale and repurchase agreements
250.0
125.0
Repayment of sale and repurchase agreements
(175.0)
–
Repayment of Term Funding Scheme with additional
incentives for SMEs
(230.0)
(160.0)
Purchase of own shares
(0.2)
(1.4)
Issue of shares
0.2
0.2
Dividends paid
12
(6.4)
(5.2)
Repayment of lease liabilities
29
(1.2)
(1.2)
Net cash outflow from financing activities
(164.3)
(41.8)
Net increase in cash and cash equivalents
90.5
69.0
Cash and cash equivalents at 1 January
468.6
399.6
Cash and cash equivalents at 31 December
37
559.1
468.6
The Notes on pages 151 to 194 are an integral part of these consolidated financial statements.
Secure Trust Bank PLC Annual Report & Accounts 2025
150
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Financial Statements
Other Information
Strategic Report
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Financial Statements
Other Information
Secure Trust Bank PLC Annual Report & Accounts 2025
151
Notes to the consolidated financial statements
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
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
ofthe 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
been prepared in accordance with UK-adopted International Accounting Standards in conformity
with the requirements of the Companies Act 2006 and UK-adopted International Financial
Reporting Standards. The consolidated financial statements also comply with International
Financial Reporting Standards (‘IFRSs’) as issued by the International Accounting Standards Board
(‘IASB’), including interpretations issued by the IFRS Interpretations Committee. They have been
prepared under the historical cost convention, as modified by the valuation of derivative financial
instruments. The consolidated financial statements are presented in pounds Sterling, which is the
(Amendments to IFRS 9 and IFRS 7)’ to address matters identified during the post-implementation
review of the classification and measurement requirements of IFRS 9 ‘Financial Instruments’.
The amendments are effective for reporting periods beginning on or after 1 January 2026.
The IASB amended to the requirements related to:
• settling financial liabilities using an electronic payment system; and
• assessing contractual cash flow characteristics of financial assets, including those environmental,
social and governance (‘ESG’)-linked features.
As stated on page 152 the Group has early adopted the requirements in respect of financial assets
New accounting pronouncements issued by the IASB with an effective date of 1 January 2027
include IFRS 18 ‘Presentation and Disclosure in Financial Statements’ which replaces IAS 1
‘Presentation of Financial Statements’. IFRS 18 introduces additional disclosure obligations in
relation to the structure of the income statement, management-defined performance measures,
and the aggregation and disaggregation of financial information. IFRS 18 will have no impact on the
Group’s net profit as it impacts neither recognition nor measurement.
The new standard will impact the presentation of the Group’s results as it requires that operating,
investing and financing activities are presented separately. There will also be a change in the
Group’s cash flow statement as IFRS 18 requires that the first line of the cash flow statement is
operating profit.
The preparation of consolidated financial statements in conformity with IFRS requires the use
of certain critical accounting estimates. It also requires management to exercise its judgement
in the process of applying the Group’s accounting policies. The areas involving a higher degree
of judgement or complexity or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in Note 2.
Group’s ability to continue as a going concern. The Directors confirm they are satisfied that the
Company and the Group have adequate resources to continue in business for the foreseeable
future. For this reason, they continue to adopt the ‘going concern’ basis for preparing accounts,
The consolidated financial statements were authorised for issue by the Board of Directors on
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.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
152
continued
1. Accounting policies
continued
1.3. Consolidation
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
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 asset is held within a business model whose objective is to hold the asset to collect its
contractual cash flows; and
• the contractual terms of the financial asset give rise to cash flows on specified dates that
are Solely Payments of Principal and Interest (‘SPPI’).
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 asset is held within a business model whose objective is achieved by both collecting its
contractual cash flows and selling the financial asset; and
• the contractual terms of the financial asset give rise to cash flows on specified dates that
represent SPPI on the outstanding principal amount.
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:
• contingent events that would change the amount and timing of cash flows;
•
prepayments and extension terms;
•
terms that limit the Group’s claim to cash flows from specific assets (e.g. non-recourse asset
arrangements); and
•
features that modify consideration of the time value of money (e.g. periodical reset of
interest rate).
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:
•
the stated policies and objectives for the portfolio and the operation of those policies in practice.
In particular, whether management’s strategy focuses on managing the portfolio in order to
collect contractual cash flows or whether it is managed in order to trade to realise fair
value changes;
• how the performance of the portfolio is evaluated and reports to management;
•
the risks that affect the performance of the business model (and the financial assets held within
that business model) and how those risks are managed; and
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
153
continued
1. Accounting policies
continued
1.4. Financial assets and financial liabilities accounting policy
• the frequency, volume and timing of sales in prior periods, the reasons for such sales and
itsexpectations about future sales activity. However, information about sales activity is not
considered in isolation, but as part of an overall assessment of how the Group’s stated objective
for managing the financial assets is achieved and how cash flows are realised.
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.
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
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
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
Financial assets and financial liabilities are not offset in the consolidated financial statements unless
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
2.1. Judgements
No critical judgements have been identified.
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:
•
Note 17.1. Allowances for impairment of loans and advances to customers;
The Group is organised into four operating segments, which consist of the different products
available, as disclosed below.
Consumer Finance
•
Retail Finance: a market-leading online e-commerce service to retailers, providing unsecured
lending products to prime UK customers to facilitate the purchase of a wide range of consumer
products, including furniture, jewellery, dental, leisure items and football season tickets.
•
Vehicle Finance: hire purchase lending for used cars to prime and near-prime customers and
Personal Contract Purchase lending into the consumer prime credit market, both secured against
the vehicle financed. In addition, a Stocking Funding product was also offered, whereby funds are
advanced and secured against dealer forecourt used car stock, sourced from auctions, part
exchanges or trade sources. In December 2025, this segment was classified as discontinued.
For further information please see Note 10.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
154
continued
3. Operating segments
Business Finance
•
Real Estate Finance: non-regulated first charge secured lending to specialist real estate markets, lending to professional landlords to enable them to improve and grow their portfolio and provide
development facilities to property developers and SME housebuilders to help build new homes for sale or letting.
•
Commercial Finance: asset-based lending solutions to SMEs and some larger corporates who need bespoke working capital solutions for their business. Lending is predominantly against receivables,
releasing funds of up to 90% of qualifying invoices under invoice discounting facilities.
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.
Total |
Discontinued |
||||||
Retail |
Real Estate |
Commercial |
Continuing |
Vehicle |
Total |
||
Finance |
Finance |
Finance |
Other |
operations |
Finance |
Group |
|
31 December 2025 |
£million |
£million |
£million |
£million |
£million |
£million |
£million |
Interest income and similar income |
157.2 |
92.2 |
27.6 |
24.8 |
301.8 |
70.2 |
372.0 |
Interest expense and similar charges |
(59.7) |
(58.0) |
(15.5) |
(17.5) |
(150.7) |
(22.7) |
(173.4) |
Net interest income |
97.5 |
34.2 |
12.1 |
7.3 |
151.1 |
47.5 |
198.6 |
Fee and commission income |
3.7 |
0.3 |
10.1 |
– |
14.1 |
1.0 |
15.1 |
Fee and commission expense |
– |
– |
– |
– |
– |
(0.2) |
(0.2) |
Net fee and commission income |
3.7 |
0.3 |
10.1 |
– |
14.1 |
0.8 |
14.9 |
Operating income |
101.2 |
34.5 |
22.2 |
7.3 |
165.2 |
48.3 |
213.5 |
Net impairment charge on loans and advances to customers |
(19.2) |
(8.8) |
(3.4) |
– |
(31.4) |
(26.6) |
(58.0) |
Other gains/(losses) |
– |
0.2 |
– |
(0.1) |
0.1 |
0.1 |
0.2 |
Fair value gains on financial instruments |
– |
– |
– |
0.1 |
0.1 |
– |
0.1 |
Operating expenses |
(24.3) |
(10.4) |
(7.8) |
(32.2) |
(74.7) |
(29.5) |
(104.2) |
Profit/(loss) before income tax before exceptional items |
57.7 |
15.5 |
11.0 |
(24.9) |
59.3 |
(7.7) |
51.6 |
Exceptional items |
– |
– |
– |
– |
– |
(24.1) |
(24.1) |
Profit/(loss) before income tax |
57.7 |
15.5 |
11.0 |
(24.9) |
59.3 |
(31.8) |
27.5 |
Loans and advances to customers |
1,466.5 |
1,466.9 |
362.4 |
– |
3,295.8 |
390.8 |
3,686.6 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
155
continued
3. Operating segments
Exceptional items have been reallocated out to the respective operating segments for prior year to aid comparability.
Total | Discontinued | ||||||
Retail | Real Estate | Commercial | Continuing | Vehicle | Total | ||
Finance | Finance | Finance | Other | operations | Finance | Group | |
31 December 2024 | £million | £million | £million | £million | £million | £million | £million |
Interest income and similar income | 140.7 | 87.1 | 29.8 | 39.2 | 296.8 | 69.2 | 366.0 |
Interest expense and similar charges | (53.9) | (54.5) | (17.6) | (33.5) | (159.5) | (21.6) | (181.1) |
Net interest income | 86.8 | 32.6 | 12.2 | 5.7 | 137.3 | 47.6 | 184.9 |
Fee and commission income | 3.2 | 0.4 | 14.6 | 0.1 | 18.3 | 0.9 | 19.2 |
Fee and commission expense | – | – | (0.1) | – | (0.1) | (0.1) | (0.2) |
Net fee and commission income | 3.2 | 0.4 | 14.5 | 0.1 | 18.2 | 0.8 | 19.0 |
Operating income | 90.0 | 33.0 | 26.7 | 5.8 | 155.5 | 48.4 | 203.9 |
Net impairment charge on loans and advances to customers | (13.3) | (4.0) | (5.9) | – | (23.2) | (38.7) | (61.9) |
Other (losses)/gains | – | – | – | (0.4) | (0.4) | 0.1 | (0.3) |
Fair value gains on financial instruments | – | 0.3 | – | 0.9 | 1.2 | – | 1.2 |
Operating expenses | (26.1) | (10.0) | (8.1) | (28.0) | (72.2) | (31.6) | (103.8) |
Profit/(loss) before income tax before exceptional items | 50.6 | 19.3 | 12.7 | (21.7) | 60.9 | (21.8) | 39.1 |
Exceptional items | – | – | – | (1.5) | (1.5) | (8.4) | (9.9) |
Profit/(loss) before income tax | 50.6 | 19.3 | 12.7 | (23.2) | 59.4 | (30.2) | 29.2 |
Loans and advances to customers | 1,357.8 | 1,341.4 | 351.0 | – | 3,050.2 | 558.3 | 3,608.5 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
156
otherwise stated.
2025 |
2024 |
|
£million |
£million |
|
Loans and advances to customers |
347.2 |
326.7 |
Cash and Bank of England reserve account |
19.6 |
22.5 |
366.8 |
349.2 |
|
Income on financial instruments hedging assets |
5.2 |
16.8 |
Interest income and similar income |
372.0 |
366.0 |
Of which: |
||
Continuing |
301.8 |
296.8 |
Discontinued (Note 10) |
70.2 |
69.2 |
Deposits from customers |
(146.7) |
(136.0) |
Due to banks |
(12.1) |
(18.5) |
Subordinated liabilities |
(11.9) |
(11.9) |
Other |
(0.1) |
(0.1) |
(170.8) |
(166.5) |
|
Expense on financial instruments hedging liabilities |
(2.6) |
(14.6) |
Interest expense and similar charges |
(173.4) |
(181.1) |
Of which: |
||
Continuing |
(150.7) |
(159.5) |
Discontinued (Note 10) |
(22.7) |
(21.6) |
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:
• the gross carrying amount of the financial asset; or
• the amortised cost of the financial liability.
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
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
157
continued
4. Operating income
2025 |
2024 |
|
£million |
£million |
|
Fee and disbursement income |
14.0 |
18.1 |
Commission income |
1.1 |
1.1 |
Fee and commission income |
15.1 |
19.2 |
Of which: |
||
Continuing |
14.1 |
18.3 |
Discontinued (Note 10) |
1.0 |
0.9 |
Other expenses |
(0.2) |
(0.2) |
Fee and commission expense |
(0.2) |
(0.2) |
Of which: |
||
Continuing |
– |
(0.1) |
Discontinued (Note 10) |
(0.2) |
(0.1) |
Fees and commission income is all recognised under IFRS 15 Revenue from contracts to customers
and consists principally of the following:
•
Commercial Finance – discounting, service and arrangement fees.
•
Retail Finance – principally comprises of account management fees received from customers and
referral fees received from third parties.
•
Vehicle Finance – primarily relates to vehicle collection and damage charges made to customers
and loan administration fees charged to dealers in respect of the Stock Funding product.
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
2025 |
2024 |
|
£million |
£million |
|
Fair value movement during the year - Interest rate derivatives |
(6.4) |
1.6 |
Fair value movement during the year - Hedged items |
6.4 |
(1.5) |
Hedge ineffectiveness recognised in the income statement |
– |
0.1 |
Inception and amortisation adjustment¹ |
(0.5) |
0.6 |
Losses recognised on hedges not in hedge relationships |
0.6 |
0.5 |
0.1 |
1.2 |
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 page 35 of the Group’s Strategic Report.
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.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
158
continued
5. Fair value gains on financial instruments
5.1. Fair value gain recognised in other comprehensive income
2025 |
2024 |
|
£million |
£million |
|
Cash flow hedges |
||
Fair value movement during the year - Interest rate derivatives |
(1.4) |
(0.8) |
Interest reclassified to the income statement during the year |
1.4 |
1.3 |
Fair value gain recognised in other comprehensive income |
– |
0.5 |
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:
•
differences between the expected and actual volume of prepayments, as the Group hedges
to the expected repayment date taking into account expected prepayments based on past
experience; or
• differences in the timing of cash flows for the hedged item and the hedging instrument.
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.
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
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:
•
hedges of the fair value of recognised assets or liabilities or firm commitments (fair value
hedges); and
• hedges of highly probable future cash flows attributable to a recognised asset or liability
(cash flow hedges).
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.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
159
continued
5. Fair value gains on financial instruments
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
2025 | 2024 | |
£million | £million | |
Employee costs, including those of Directors: | ||
Wages and salaries | 51.0 | 52.5 |
Social security costs | 7.8 | 5.7 |
Pension costs | 2.0 | 2.0 |
Share-based payment transactions | 2.1 | 2.3 |
Depreciation of property, plant and equipment (Note 21) | 0.8 | 1.0 |
Depreciation of lease right-of-use assets (Note 22) | 1.1 | 1.0 |
Amortisation of intangible assets (Note 23) | 1.2 | 1.4 |
Operating lease rentals | 0.8 | 0.8 |
Other administrative expenses | 37.4 | 37.1 |
Total operating expenses | 104.2 | 103.8 |
Of which: | ||
Continuing | 74.7 | 72.2 |
Discontinued | 29.5 | 31.6 |
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
2025 | 2024 | |
£million | £million | |
Fees payable to the Company’s Auditor for the audit of the Company’s | ||
annual accounts | 1.4 | 1.3 |
Fees payable to the Company’s Auditor for other services: | ||
Other assurance services | 0.2 | 0.1 |
1.6 | 1.4 |
Other assurance services related to the interim independent review report and profit certifications
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
160
2025 |
2024 |
|
Number |
Number |
|
Directors |
2 |
2 |
Other senior management |
26 |
23 |
Other employees |
832 |
890 |
860 |
915 |
2025 |
2024 |
|
£million |
£million |
|
Motor Finance commissions |
||
Redress |
11.3 |
5.2 |
Cost |
5.1 |
1.7 |
16.4 |
6.9 |
|
BiFD Vehicle Finance collections review |
||
Redress |
– |
0.2 |
Cost |
2.1 |
1.3 |
2.1 |
1.5 |
|
Exit from Vehicle Finance |
5.0 |
– |
Sale of Consumer Vehicle Finance |
0.6 |
– |
Organisational redesign |
– |
1.5 |
Total exceptional items |
24.1 |
9.9 |
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 are expenses that do not relate to the Group’s core activities, which are
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
161
2025 | 2024 | |
£million | £million | |
Current taxation | ||
Corporation tax charge – current year | 9.6 | 8.4 |
Corporation tax charge – adjustments in respect of prior years | 0.1 | 0.3 |
9.7 | 8.7 | |
Deferred taxation | ||
Deferred tax charge – current year | 0.4 | 1.2 |
Deferred tax credit – adjustments in respect of prior years | (0.2) | (0.4) |
0.2 | 0.8 | |
Income tax expense | 9.9 | 9.5 |
Of which: | ||
Continuing | 14.7 | 16.0 |
Discontinued (Note 10) | (4.8) | (6.5) |
Tax reconciliation | ||
Profit before tax | 27.5 | 29.2 |
Tax at 25.0% (2024: 25.0%) | 6.9 | 7.3 |
Permanent differences on exceptional items | 3.0 | 1.5 |
Other permanent differences | 0.2 | 0.1 |
Rate change on deferred tax assets | – | 0.5 |
Other adjustments including prior year adjustments | (0.2) | 0.1 |
Income tax expense for the year | 9.9 | 9.5 |
The tax has been calculated at the current statutory rate, which is 25.0% for the year ended
31 December 2025 (2024: 25.0%).
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.
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 on
page 146 and Note 3 Operating segments presents the information required to be disclosed under
IFRS 5 including:
(i)
the post-tax profit or loss of discontinued operations;
(ii)
the revenue, expenses and pre-tax profit or loss of discontinued operations; and
(iii) the related income tax expense.
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
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:
2025 | 2024 | |
Profit attributable to equity holders of the parent (£million) | 17.6 | 19.7 |
Weighted average number of ordinary shares (number) | 18,678,740 | 19,057,161 |
Earnings per share (pence) | 94.2 | 103.4 |
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:
2025 | 2024 | |
Weighted average number of ordinary shares | 18,678,740 | 19,057,161 |
Number of dilutive shares in issue at the period-end | 1,089,891 | 363,751 |
Fully diluted weighted average number of ordinary shares | 19,768,631 | 19,420,912 |
Dilutive shares being based on: | ||
Number of options outstanding at the period-end | 1,688,791 | 1,395,045 |
Weighted average exercise price (pence) | 162 | 215 |
Average share price during the period (pence) | 804 | 525 |
Diluted earnings per share (pence) | 89.0 | 101.4 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
162
2025 | 2024 | ||
Paid | £million | £million | |
2025 interim dividend – | Sep−25 | 2.2 | – |
2024 final dividend – | May−25 | 4.2 | – |
2024 interim dividend – | Sep−24 | – | 2.1 |
2023 final dividend – | May−24 | – | 3.1 |
The Directors recommend the payment of a final dividend of 23.7 pence per share
(2024: 22.5 pence per share). The final dividend, if approved by members at the Annual
General Meeting, will be paid on 21 May 2026, with an associated record date of 24 April 2026.
The Employee Benefit Trust (‘EBT’) has waived its right to receive future dividends on shares held in
the trust. Dividends waived on shares held in the EBT in 2025 were £0.1 million (2024: £0.1 million).
Final dividends on ordinary shares are recognised in equity in the period in which they are
approved by shareholders. Interim dividends on ordinary shares are recognised in equity in
Moody’s long-term ratings are as follows:
Group | Group | Company | Company | |
2025 | 2024 | 2025 | 2024 | |
£million | £million | £million | £million | |
Aaa - Aa3 | 5.1 | – | 5.1 | – |
A1 | 31.7 | 24.0 | 31.0 | 23.6 |
36.8 | 24.0 | 36.1 | 23.6 |
None of the loans and advances to banks are either past due or impaired.
Loans and advances to banks includes £5.1 million (2024: £nil), which the Group and Company does
not have access to, and are therefore excluded from cash and cash equivalents. See Note 37.1 for a
Group and Company
Debt securities consisted solely of sterling UK Government securities (‘gilts’). The Group holds gilts
from time to time for liquidity risk management purposes. The Group’s intention is to hold the asset
to collect its contractual cash flows of principal and interest and, therefore, they are stated in the
statement of financial position at amortised cost. During 2025, the Group transacted £1.0 million
Group and Company
Loans and | |||
advances to | Assets held | ||
customers | for sale | Total | |
31 December 2025 | £million | £million | £million |
Gross loans and advances | 3,341.3 | 434.8 | 3,776.1 |
Less: allowances for impairment of loans and | |||
advances (Note 17) | (45.5) | (44.0) | (89.5) |
3,295.8 | 390.8 | 3,686.6 |
Loans and | |||
advances to | Assets held | ||
customers | for sale | Total | |
31 December 2024 | £million | £million | £million |
Gross loans and advances | 3,720.3 | – | 3,720.3 |
Less: allowances for impairment of loans and | |||
advances (Note 17) | (111.8) | – | (111.8) |
3,608.5 | – | 3,608.5 |
The fair value of loans and advances to customers is shown in Note 43. Loans and advances to
customers includes finance lease receivables of £411.5 million (2024: £548.4 million). See Note 16
for further details.
Retail Finance assets of £1,023.8 million (2024: £1,088.2 million) were pre-positioned for use under
sale and repurchase agreements (2024: Sale and repurchase agreements and Term Funding Scheme
with additional incentives for SMEs) and are available for use as collateral.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
163
continued
15. Loans and advances to customers
estate, which had a loan-to-value of 57% at 31 December 2025 (2024: 56%).
Under its credit policy, the Real Estate Finance business lends to a maximum loan-to-value of:
•
70% for investment loans;
• 60% for residential development loans
1
;
• 65% for certain residential higher leveraged development loans
1
, which is subject to an overall
cap on such lending agreed by management according to risk appetite; and
• 65% for commercial development loans
1
.
Note:
1. based on gross development value.
All property valuations at loan inception, and the majority of development stage valuations, are
performed by independent Chartered Surveyors, who perform their work in accordance with the
Royal Institution of Chartered Surveyors Valuation – Professional Standards.
Of cash collateral, £0.3 million has been received as at 31 December 2025 in respect of certain loans
Group and Company
Loans and advances to customers include finance lease receivables as follows:
2025 |
2024 |
|
£million |
£million |
|
Gross investment in finance lease receivables: |
||
Not more than one year |
191.4 |
228.1 |
Later than one year and no later than five years |
358.6 |
535.4 |
550.0 |
763.5 |
|
Unearned future finance income on finance leases |
(138.5) |
(215.1) |
Net investment in finance leases |
411.5 |
548.4 |
The net investment in finance leases may be analysed as follows: |
||
Not more than one year |
123.6 |
135.3 |
Later than one year and no later than five years |
287.9 |
413.1 |
411.5 |
548.4 |
Finance lease receivables include Vehicle Finance loans to consumers.
The present value of the lease payments on assets leased to customers under agreements
that transfer substantially all the risks and rewards of ownership, with or without ultimate
legal title, are recognised as a receivable. The difference between the gross receivable and
the present value of the receivable is recognised as unearned finance income. Lease income
is recognised over the term of the lease using the net investment method, which reflects a
Group and Company
Not credit-impaired |
Credit- |
|||||
impaired |
Gross |
|||||
Stage 1: |
Stage 2: |
Stage 3: |
loans and |
|||
Subject to |
Subject to |
Subject to |
advances |
|||
12-month |
lifetime |
lifetime |
Total |
to |
Provision |
|
ECL |
ECL |
ECL |
provision |
customers |
coverage |
|
31 December 2025 |
£million |
£million |
£million |
£million |
£million |
% |
Consumer Finance: |
||||||
Retail Finance |
13.5 |
8.0 |
11.6 |
33.1 |
1,499.6 |
2.2 |
Business Finance: |
||||||
Real Estate Finance |
0.4 |
– |
8.0 |
8.4 |
1,475.3 |
0.6 |
Commercial Finance |
0.6 |
3.2 |
0.2 |
4.0 |
366.4 |
1.1 |
14.5 |
11.2 |
19.8 |
45.5 |
3,341.3 |
1.4 |
|
Assets held for sale: Vehicle Finance: |
||||||
Voluntary termination provision |
3.8 |
1.5 |
– |
5.3 |
||
Other impairment |
6.9 |
8.6 |
23.2 |
38.7 |
||
10.7 |
10.1 |
23.2 |
44.0 |
434.8 |
10.1 |
|
25.2 |
21.3 |
43.0 |
89.5 |
3,776.1 |
2.4 |
|
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
164
continued
17. Allowances for impairment of loans and advances
Not credit-impaired | Credit- | |||||
impaired | Gross | |||||
Stage 1: | Stage 2: | Stage 3: | loans and | |||
Subject to | Subject to | Subject to | advances | |||
12-month | lifetime | lifetime | Total | to | Provision | |
ECL | ECL | ECL | provision | customers | coverage | |
31 December 2024 | £million | £million | £million | £million | £million | % |
Consumer Finance: | ||||||
Retail Finance | 13.5 | 6.5 | 10.1 | 30.1 | 1,387.9 | 2.2 |
Business Finance: | ||||||
Real Estate Finance | 0.4 | 0.3 | 11.8 | 12.5 | 1,353.9 | 0.9 |
Commercial Finance | 0.5 | 0.2 | 0.1 | 0.8 | 351.8 | 0.2 |
14.4 | 7.0 | 22.0 | 43.4 | 3,093.6 | 1.4 | |
Vehicle Finance: | ||||||
Voluntary termination provision | 5.4 | 1.5 | – | 6.9 | ||
Other impairment | 9.8 | 7.4 | 44.3 | 61.5 | ||
15.2 | 8.9 | 44.3 | 68.4 | 626.7 | 10.9 | |
29.6 | 15.9 | 66.3 | 111.8 | 3,720.3 | 3.0 | |
The impairment charge disclosed in the income statement can be analysed as follows:
2025 | 2024 | |
£million | £million | |
Expected credit losses: impairment charge | 58.3 | 61.9 |
Charge in respect of off balance sheet loan commitments | 0.1 | 0.1 |
Loans written off directly to the income statement | 0.8 | 0.7 |
Unwind of discount | (1.2) | (0.8) |
58.0 | 61.9 | |
Of which: | ||
Continuing | 31.4 | 23.2 |
Discontinued (Note 10) | 26.6 | 38.7 |
Total provisions include expert credit judgements as follows:
2025 | 2024 | |
£million | £million | |
Specific overlays/(underlays) held against credit-impaired secured | ||
assets held within the Business Finance portfolio | 1.9 | (0.7) |
Management judgement in respect of: | ||
Vehicle Finance LGD | – | (4.5) |
Other | (0.3) | (0.5) |
Expert credit judgements over the IFRS 9 model results | 1.6 | (5.7) |
The specific overlays/(underlays) for Business Finance have been estimated on an individual basis
by assessing the recoverability and condition of the secured asset, along with any other recoveries
that may be made.
Vehicle Finance LGD underlay has been released in 2025 reflecting recoveries and model changes.
Reconciliations of the opening to closing allowance for impairment of loans and advances are
presented below:
Not credit-impaired | Credit- | |||
Stage 1: | impaired | |||
Subject to | Stage 2: | Stage 3: | ||
12-month | Subject to | Subject to | ||
ECL | lifetime ECL | lifetime ECL | Total | |
£million | £million | £million | £million | |
At 1 January 2025 | 29.6 | 15.9 | 66.3 | 111.8 |
(Decrease)/increase due to change in | ||||
credit risk | ||||
Transfer to stage 2 | (13.7) | 40.0 | (2.4) | 23.9 |
Transfer to stage 3 | (0.2) | (24.2) | 48.9 | 24.5 |
Transfer to stage 1 | 6.8 | (16.5) | – | (9.7) |
Passage of time | (11.0) | 3.6 | 5.2 | (2.2) |
New loans originated | 15.6 | – | – | 15.6 |
Matured and derecognised loans | (2.6) | (1.6) | (3.0) | (7.2) |
Changes to credit risk parameters | 2.2 | 4.0 | 2.1 | 8.3 |
Other adjustments | 5.0 | 0.1 | – | 5.1 |
Charge to income statement | 2.1 | 5.4 | 50.8 | 58.3 |
Allowance utilised in respect of write-offs | (6.5) | – | (74.1) | (80.6) |
31 December 2025 | 25.2 | 21.3 | 43.0 | 89.5 |
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Corporate Governance
Financial Statements
Other Information
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Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
165
continued
17. Allowances for impairment of loans and advances
Not credit-impaired | Credit- | |||
Stage 1: | impaired | |||
Subject to | Stage 2: | Stage 3: | ||
12-month | Subject to | Subject to | ||
ECL | lifetime ECL | lifetime ECL | Total | |
£million | £million | £million | £million | |
At 1 January 2024 | 29.5 | 18.2 | 40.4 | 88.1 |
(Decrease)/increase due to change in | ||||
credit risk | ||||
Transfer to stage 2 | (11.7) | 38.6 | (1.4) | 25.5 |
Transfer to stage 3 | (0.2) | (24.1) | 48.8 | 24.5 |
Transfer to stage 1 | 7.8 | (20.8) | – | (13.0) |
Passage of time | (6.3) | 4.6 | 14.8 | 13.1 |
New loans originated | 16.2 | – | – | 16.2 |
Matured and derecognised loans | (2.1) | (1.6) | (0.5) | (4.2) |
Changes to credit risk parameters | (2.3) | (0.5) | (2.9) | (5.7) |
Other adjustments | 4.0 | 1.5 | – | 5.5 |
Charge/(credit) to income statement | 5.4 | (2.3) | 58.8 | 61.9 |
Allowance utilised in respect of write-offs | (5.3) | – | (32.9) | (38.2) |
31 December 2024 | 29.6 | 15.9 | 66.3 | 111.8 |
These tables have been prepared based on monthly movements in the ECL.
Passage of time represents the impact of accounts maturing through their contractual life, the
associated reduction in PDs and the unwind of the discount applied in calculating the ECL.
Changes to credit risk parameters represent movements that have occurred due to the Group
updating model inputs. This would include the impact of, for example, updating the macroeconomic
scenarios applied to the models.
Other adjustments represents the movement in the Vehicle Finance voluntary
termination provision.
Stage 1 write-offs arise on Vehicle Finance accounts where borrowers have exercised their right to
voluntarily terminate their agreements.
Reconciliations of the opening to closing gross loans and advances are presented below:
Credit- | ||||
Not credit-impaired | impaired | |||
Stage 1: | Stage 2: | Stage 3: | ||
Subject to 12 | Subject to | Subject to | ||
month ECL | lifetime ECL | lifetime ECL | Total | |
£million | £million | £million | £million | |
At 1 January 2025 | 3,204.6 | 329.0 | 186.7 | 3,720.3 |
Transfer to stage 2 | (668.7) | 651.7 | (3.2) | (20.2) |
Transfer to stage 3 | (9.0) | (136.7) | 143.4 | (2.3) |
Transfer to stage 1 | 391.2 | (407.9) | – | (16.7) |
Passage of time | (1,407.7) | (18.7) | (73.3) | (1,499.7) |
New loans originated | 2,526.2 | – | – | 2,526.2 |
Matured and derecognised loans | (689.4) | (149.9) | (92.2) | (931.5) |
31 December 2025 | 3,347.2 | 267.5 | 161.4 | 3,776.1 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
166
continued
17. Allowances for impairment of loans and advances
A breakdown of the gross receivable by internal credit risk rating is shown below:
| 2025 | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| £million | £million | £million | £million | |
Business Finance: | ||||
Strong | 84.9 | – | – | 84.9 |
Good | 1,166.6 | 46.4 | 1.2 | 1,214.2 |
Satisfactory | 348.2 | 51.3 | 25.0 | 424.5 |
Weak | – | 31.0 | 87.1 | 118.1 |
1,599.7 | 128.7 | 113.3 | 1,841.7 | |
| 2024 | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| £million | £million | £million | £million | |
Business Finance: | ||||
Strong | 29.6 | – | – | 29.6 |
Good | 1,051.5 | 54.2 | 1.4 | 1,107.1 |
Satisfactory | 298.6 | 141.5 | 25.8 | 465.9 |
Weak | – | 20.1 | 83.0 | 103.1 |
1,379.7 | 215.8 | 110.2 | 1,705.7 | |
| 2025 | ||||
Stage 1 | Stage 2 | Stage 3 | Total | |
£million | £million | £million | £million | |
Consumer Finance: | ||||
Good | 1,008.7 | 1.2 | – | 1,010.0 |
Satisfactory | 632.5 | 51.8 | – | 684.3 |
Weak | 106.3 | 85.8 | 48.1 | 240.2 |
1,747.5 | 138.8 | 48.1 | 1,934.4 | |
| 2024 | ||||
Stage 1 | Stage 2 | Stage 3 | Total | |
£million | £million | £million | £million | |
Consumer Finance: | ||||
Good | 921.6 | 4.9 | – | 926.5 |
Satisfactory | 768.1 | 32.4 | – | 800.5 |
Weak | 135.2 | 75.9 | 76.5 | 287.6 |
1,824.9 | 113.2 | 76.5 | 2,014.6 | |
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Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
167
continued
17. Allowances for impairment of loans and advances
The Group recognises loss allowances for Expected Credit Losses (‘ECL’) on all financial assets
carried at amortised cost, including lease receivables and loan commitments. Credit loss
allowances on Stage 1 assets are measured as an amount equal to 12-month ECL and credit loss
allowances on Stage 2, and Stage 3 assets are measured as an amount equal to lifetime ECL.
Stage 1 assets
Stage 1 assets comprise of the following.
•
Financial assets determined to have low credit risk at the reporting date.
•
Financial assets that have not experienced a significant increase in credit risk since their
initial recognition.
•
Financial assets that have experienced a significant increase in credit risk since their
initial recognition, but have subsequently met the Group’s cure policy, as set out on the
following page.
A low credit risk asset is considered to have low credit risk when its credit risk rating is equivalent
to the widely understood definition of ‘investment grade’ assets. This is not applicable to loans
and advances to customers, but the Group has assessed all its debt securities, which represents
gilts, to be low credit risk.
Stage 2 assets
Loans and advances to customers that have experienced a significant increase in credit risk since
their initial recognition and have not subsequently met the Group’s cure policy are classified as
Stage 2 assets.
The Group’s definitions of a significant increase in credit risk and default are set out on the
following page.
For Consumer Finance, the credit risk of a financial asset is considered to have experienced a
significant increase in credit risk since initial recognition where there has been a significant
increase in the remaining lifetime probability of default of the asset. The Group may also use its
expert credit judgement, and where possible, relevant historical and current performance data,
including bureau data, to determine that an exposure has undergone a significant increase in
credit risk.
For Business Finance, the credit risk of a financial asset is considered to have experienced a
significant increase in credit risk where certain early warning indicators apply. These indicators
may include notification of county court judgements or, specifically for the Real Estate Finance
portfolio, cost over-runs and timing delays experienced by borrowers.
As a backstop, the Group considers that a significant increase in credit risk occurs no later than
when an asset is more than 30 days past due for all portfolios.
Stage 3 assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost
are credit-impaired or defaulted (Stage 3). A financial asset is considered to be credit-impaired
when an event or events that have a detrimental impact on estimated future cash flows have
occurred, or have other specific unlikeliness to pay indicators. Evidence that a financial asset is
credit-impaired includes the following observable data.
•
Initiation of bankruptcy proceedings.
• Notification of bereavement.
•
Identification of loan meeting debt sale criteria.
•
Initiation of repossession proceedings.
•
Customer on an Individual Voluntary Arrangement or Debt Management Plan.
• A material covenant breach that has remained unremedied for more than 90 days.
In addition, a loan that is 90 days or more past due is considered credit-impaired for all portfolios.
The credit risk of financial assets that become credit-impaired will be monitored in line with the
curing policy.
For Commercial Finance facilities that do not have a fixed-term or repayment structure,
evidence that a financial asset is credit-impaired includes:
• the client ceasing to trade; or
•
unpaid debtor balances that are dated at least six months past their normal recourse period.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
168
continued
17. Allowances for impairment of loans and advances
Cure policy
The credit risk of a financial asset may improve such that it is no longer considered to have
experienced a significant increase in credit risk if it meets the Group’s cure policy. The Group’s
cure policy from stage 2 to stage 1 for all portfolios requires sufficient payments to be made
to bring an account back within less than 30 days past due and such payments need to be
maintained for six consecutive months in Vehicle Finance and three months in Retail Finance.
In addition, an account can cure from stage 2 to stage 1 if the significant increase in credit risk
since their initial recognition is not triggered anymore due to improvement in their credit quality
(e.g. loan credit bureau score).
The Group’s cure policy from stage 3 to 2 for all portfolios requires sufficient payments to be
made to bring an account back within less than 30 days past due. For Vehicle Finance and Retail
Finance, such non-defaulted status need to be maintained for three consecutive months.
For Real Estate Finance such payments need to be maintained for 12 consecutive months.
Calculation of expected credit loss (‘ECL’)
ECL are probability weighted estimates of credit losses that are measured as the present value
of all cash shortfalls. Specifically, this is the difference between the contractual cash flows due
and the cash flows expected to be received, discounted at the original effective interest rate.
For undrawn loan commitments, ECL is measured as the difference between the contractual
cash flows due if the commitment is drawn and the cash flows expected to be received.
Lifetime ECL is the ECL that results from all possible default events over the expected life of a
financial asset.
12-month ECL is the portion of lifetime ECL that results from default events on a financial asset
that are possible within 12 months after the reporting date.
ECL are calculated by multiplying three main components: the Probability of Default (‘PD’),
Exposure At Default (‘EAD’) and Loss Given Default (‘LGD’) discounted at the original effective
interest rate of an asset. These variables are derived from internally developed statistical models
and historical data, adjusted to reflect forward-looking information and are discussed in turn
further below. Management adjustments are made to modelled output to account for situations,
where known, or expected risk factors that have not been reflected in the modelled outcome.
Probability of Default (‘PD’) and credit risk grades
Credit risk grades are a primary input into the determination of the PD for exposures. The Group
allocates each exposure to a credit risk grade at origination and at each reporting period to
predict the risk of default. Credit risk grades are determined using qualitative and quantitative
factors that are indicative of the risk of default e.g. arrears status and loan credit bureau score.
These factors vary for each loan portfolio. Exposures are subject to ongoing monitoring, which
may result in an exposure being moved to a different credit risk grade. In monitoring exposures
information, such as payment records and forecast changes in economic conditions are
considered for Consumer Finance. Additionally, for Business Finance portfolios information
obtained during periodic client reviews, for example, audited financial statements, management
accounts, budgets and projections are considered, with particular focus on key ratios, compliance
with covenants and changes in senior management teams.
Emergence curves modelling is used in the production of forward-looking lifetime PDs.
This method defines the way that debt emerges for differing quality accounts and their time on
the books creating a clean relationship to best demonstrate the movement in default rates as
macroeconomic variables are changed. These models are extrapolated to provide PD estimates
for the future, based on forecasted economic scenarios.
Exposure at Default (‘EAD’)
EAD represents the expected exposure in the event of a default. EAD is derived from the current
exposure and potential changes to the current amount allowed under the terms of the contract,
including amortisation overpayments and early terminations. The EAD of a financial asset is its
gross carrying amount. For loan commitments, the EAD includes the amount drawn, as well as
potential future amounts that may be drawn under the terms of the contract, estimated based
on historical observations and forward-looking forecasts.
For Commercial Finance facilities that have no specific term, an assumption is made that
accounts close 36 months after the reporting date for the purposes of measuring lifetime ECL.
This assumption is based on industry experience of average client life. These facilities do not have
a fixed-term or repayment structure, but are revolving and increase or decrease to reflect the
value of the collateral i.e. receivables or inventory. The Group can cancel the facilities with
immediate effect, although this contractual right is not enforced in the normal day-to-day
management of the facility. Typically, demand would only be made on the failure of a client
business or in the event of a material event of default, such as a fraud. In the normal course of
events, the Group’s exposure is recovered through receipt of remittances from the client’s
debtors rather than from the client itself.
The ECL for such facilities is estimated taking into account the credit risk management actions
that the Group expects to take to mitigate against losses. These include a reduction in advance
rate and facility limits or application of reserves against a facility to improve the likelihood of full
recovery of exposure from the debtors.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
169
continued
17. Allowances for impairment of loans and advances
Alternative recovery routes mitigating ECL would include refinancing by another funding
provider, taking security over other asset classes or secured personal guarantees from the
client’s principals.
Loss Given Default (‘LGD’)
LGD is the magnitude of the likely loss in the event of default. This takes into account recoveries
either through curing or, where applicable, through the auction sale of repossessed collateral and
debt sale of the residual shortfall amount. For loans secured by real estate property, loan-to-value
ratios are key parameters in determining LGD. LGDs are calculated on a discounted cash flow basis
using the financial instrument’s origination effective interest rate as the discount factor.
Incorporation of forward-looking data
The Group incorporates forward-looking information into both its assessment of whether the
credit risk of a financial asset has increased significantly since initial recognition and its
measurement of ECL. This is achieved by developing a number of potential economic scenarios
and modelling ECLs for each scenario. To ensure material non-linear relationships between
economic factors and credit losses are reflected in the calculation of ECL, a severe stress
scenario is used as one of these scenarios. The outputs from each scenario are combined using
the estimated likelihood of each scenario occurring to derive a probability weighted expected
credit loss. The four scenarios adopted and probability weighting applied are set out on
page 170.
The Group considers that the key drivers of credit risk and credit losses included in the
macroeconomic scenarios are annual unemployment rate growth, annual house price index
growth, consumer price index (‘CPI’), Bank of England Base Rate, and debt service ratio.
Base case assumptions applied for each of these variables have been sourced from external
consensus or Bank of England forecasts. Further details of the assumptions applied to other
scenarios are presented on page 170.
Expert credit judgements
The impairment charge comprises modelled ECLs and expert credit judgements. Where the ECL
modelled output does not reflect the level of credit risk, judgement is used to calculate expert
credit judgements, which are overlaid onto the output from the models.
Presentation of loss allowance
Loss allowances for ECLs and expert credit judgements are presented in the statement of
financial position as follows with the loss recognised in the income statement:
•
Financial assets measured at amortised cost: as a deduction from the gross carrying amount of
the assets.
•
Other loan commitments: generally, as a provision.
For the Real Estate Finance and Commercial Finance portfolios, where a loan facility is agreed
that includes both drawn and undrawn elements and the Group cannot identify the ECL on
the loan commitment separately, a combined loss allowance for both drawn and undrawn
components of the loan is presented as a deduction from the gross carrying amount of the
drawn component, with any excess of the loss allowance over the gross drawn amount presented
as a provision.
When a loan is uncollectible, it is written off against the related ECL allowance. Such loans are
written off after all necessary procedures have been completed and the amount of the loss has
been determined.
Vehicle Finance voluntary termination provision
In addition to recognising allowances for ECLs, the Group holds a provision for Voluntary
Terminations (‘VT’) for all Vehicle Finance financial assets. VT is a legal right provided to
customers who take out hire purchase agreements. The provision is calculated by multiplying
the probability of VT of an asset by the expected shortfall on VT discounted back at the original
effective interest rate of the asset. VT allowances are not held against loans in default (Stage
3 loans).
The VT provision is presented in the statement of financial position as a deduction from the gross
carrying amount of Vehicle Finance assets with the loss recognised in the income statement.
Write-off
Loans and advances to customers are written off partially or in full when the Group has
exhausted all viable recovery options. The majority of write-offs arise from Debt Relief Orders,
insolvencies, Individual Voluntary Arrangements, deceased customers where there is no estate
and vulnerable customers in certain circumstances. Amounts subsequently recovered on assets
previously written off are recognised in the impairment charge in the income statement.
Intercompany receivables
The parent company’s expected credit loss on amounts due from related companies is calculated
by applying probability of default and loss given default to the amount outstanding at the
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
170
continued
17. Allowances for impairment of loans and advances
Estimations that could have a material impact on the Group’s financial results and are, therefore,
considered to be key sources of estimation uncertainty all relate to the impairment charge on
loans and advances to customers and are, therefore, set out below. The potential impact of the
current macroeconomic environment has been considered in determining reasonably possible
changes in key sources of estimation uncertainty that may occur in the next 12 months.
The determination of both the PD and LGD require estimation, which is discussed further below.
17.1.1. Incorporation of forward-looking data
The Group incorporates forward-looking information into both its assessment of whether the
credit risk of a financial asset has increased significantly since initial recognition and its
measurement of expected credit loss by developing a number of potential economic scenarios
and modelling expected credit losses for each scenario. Further detail on this process is provided
on page 169. The macroeconomic scenarios used were provided by external economic advisers.
The scenarios and weightings applied are summarised below:
December 2025 | UK unemployment rate – Annual Average | ||||
2026 | 2027 | 2028 | 5-Yr Average | ||
Scenario | Weightings | % | % | % | % |
Upside | 20% | 4.6 | 3.9 | 3.6 | 3.9 |
Base | 50% | 5.0 | 4.8 | 4.5 | 4.6 |
Downside | 25% | 5.8 | 6.5 | 6.9 | 6.5 |
Severe | 5% | 6.1 | 7.2 | 7.7 | 7.1 |
UK HPI – movement from December 2025 | |||||
2026 | 2027 | 2028 | 5-Yr Average | ||
Scenario | Weightings | % | % | % | % |
Upside | 20% | 4.5 | 10.3 | 17.9 | 5.4 |
Base | 50% | 2.4 | 5.8 | 10.8 | 4.1 |
Downside | 25% | (5.9) | (7.5) | (7.6) | 0.6 |
Severe | 5% | (11.6) | (17.0) | (21.7) | (2.3) |
UK CPI – movement from December 2025 | |||||
2026 | 2027 | 2028 | 5-Yr Average | ||
Scenario | Weightings | % | % | % | % |
Upside | 20% | 3.5 | 6.9 | 9.8 | 2.8 |
Base | 50% | 2.7 | 5.3 | 7.6 | 2.3 |
Downside | 25% | 1.6 | 2.9 | 4.7 | 1.7 |
Severe | 5% | 0.6 | 1.1 | 2.5 | 1.2 |
| UK Base Rate – Annual Average | |||||
2026 | 2027 | 2028 | 5-Yr Average | ||
Scenario | Weightings | % | % | % | % |
Upside | 20% | 4.8 | 4.4 | 3.7 | 3.8 |
Base | 50% | 3.3 | 3.0 | 2.8 | 2.8 |
Downside | 25% | 2.4 | 1.8 | 1.8 | 1.9 |
Severe | 5% | 1.4 | 0.8 | 0.8 | 0.9 |
UK debt service ratio – Annual Average | |||||
2026 | 2027 | 2028 | 5-Yr Average | ||
Scenario | Weightings | % | % | % | % |
Upside | 20% | 5.1 | 5.0 | 4.3 | 4.5 |
Base | 50% | 4.4 | 4.3 | 4.1 | 4.1 |
Downside | 25% | 4.1 | 4.1 | 4.0 | 3.9 |
Severe | 5% | 3.6 | 3.2 | 3.4 | 3.3 |
December 2024 | UK unemployment rate – Annual Average | ||||
2025 | 2026 | 2027 | 5-Yr Average | ||
Scenario | Weightings | % | % | % | % |
Upside | 20% | 4.0 | 3.6 | 3.6 | 3.7 |
Base | 50% | 4.4 | 4.3 | 4.2 | 4.2 |
Downside | 25% | 5.1 | 6.0 | 6.7 | 6.2 |
Severe | 5% | 5.5 | 6.7 | 7.4 | 6.8 |
UK HPI – movement from December 2024 | |||||
2025 | 2026 | 2027 | 5-Yr Average | ||
Scenario | Weightings | % | % | % | % |
Upside | 20% | 3.7 | 7.8 | 13.4 | 4.2 |
Base | 50% | 1.7 | 3.4 | 6.2 | 2.9 |
Downside | 25% | (6.6) | (9.6) | (11.7) | (0.5) |
Severe | 5% | (12.3) | (18.9) | (24.7) | (3.4) |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
171
continued
17. Allowances for impairment of loans and advances
continued
17.1.1. Incorporation of forward-looking data
December 2024 (continued)
UK CPI – movement from December 2024 |
|||||
2025 |
2026 |
2027 |
5-Yr Average |
||
Scenario |
Weightings |
% |
% |
% |
% |
Upside |
20% |
3.8 |
7.3 |
10.1 |
2.8 |
Base |
50% |
3.0 |
5.4 |
7.6 |
2.3 |
Downside |
25% |
1.9 |
2.9 |
4.6 |
1.7 |
Severe |
5% |
1.0 |
1.1 |
2.6 |
1.2 |
| UK Bank Rate – Annual Average |
|||||
2025 |
2026 |
2027 |
5-Yr Average |
||
Scenario |
Weightings |
% |
% |
% |
% |
Upside |
20% |
5.4 |
4.4 |
3.4 |
3.8 |
Base |
50% |
3.8 |
3.1 |
2.6 |
2.9 |
Downside |
25% |
3.0 |
1.8 |
1.8 |
2.0 |
Severe |
5% |
2.0 |
0.8 |
0.8 |
1.0 |
UK debt service ratio – Annual Average |
|||||
2025 |
2026 |
2027 |
5-Yr Average |
||
Scenario |
Weightings |
% |
% |
% |
% |
Upside |
20% |
5.6 |
5.3 |
4.8 |
4.9 |
Base |
50% |
4.9 |
4.6 |
4.5 |
4.5 |
Downside |
25% |
4.6 |
4.3 |
4.5 |
4.3 |
Severe |
5% |
4.6 |
3.6 |
3.8 |
3.8 |
The sensitivity of the ECL allowance to reasonably possible changes in scenario weighting (an
increase in downside case weighting from the upside case and an increase in severe stress case
weighting from the base case) has been assessed by the Group and computed as not material.
The Group recognised a total impairment charge of £58.0 million (2024: £61.9 million).
Were each of the scenarios to be applied at 100%, rather than using the weightings set out above,
the increase/(decrease) in ECL provisions would be as follows:
| 2025 |
||||
Vehicle |
Retail |
Business |
Total |
|
Finance |
Finance |
Finance |
Group |
|
Scenario |
£million |
£million |
£million |
£million |
Upside |
(0.7) |
(0.3) |
(1.3) |
(2.3) |
Base |
(0.4) |
(0.3) |
(0.7) |
(1.4) |
Downside |
1.6 |
0.7 |
1.8 |
4.1 |
Severe |
2.1 |
0.7 |
4.1 |
6.9 |
| 2024 |
||||
Vehicle |
Retail |
Business |
Total |
|
Finance |
Finance |
Finance |
Group |
|
Scenario |
£million |
£million |
£million |
£million |
Upside |
(0.6) |
(0.3) |
(1.3) |
(2.2) |
Base |
(0.2) |
(0.1) |
(0.8) |
(1.1) |
Downside |
0.6 |
0.4 |
1.8 |
2.8 |
Severe |
1.2 |
0.8 |
4.1 |
6.1 |
17.1.2. ECL modelled output: Estimation of PDs
Sensitivity to reasonably possible changes in PD could potentially result in material changes in
the ECL allowance for Vehicle Finance and Retail Finance.
A 15% change in the PD for Vehicle Finance would immediately impact the ECL allowance by
£3.7 million (2024: a 15% change impacted the ECL allowance by £4.0 million).
A 15% change in the PD for Retail Finance would immediately impact the ECL allowance by
£4.1 million (2024: a 15% change impacted the ECL allowance by £3.4 million).
The above sensitivities reflect the levels of defaults observed during the year.
Due to the relatively low levels of provisions on the Business Finance books, sensitivity to
reasonably possible changes in PD are not considered material.
17.1.3. ECL modelled output: Vehicle Finance recovery rates
With the exception of the Vehicle Finance portfolio, the sensitivity of the ECL allowance to
reasonably possible changes in the LGD is not considered material. The Vehicle Finance portfolio
is particularly sensitive to changes in LGD due to the range of outcomes that could crystallise,
depending on whether the Group is able to recover the vehicle as security. For the Vehicle
Finance portfolio, a 20% (2024: 20%) change in the recovery rate assumption in the LGD is
considered reasonably possible due to delays in the vehicle collection process. A 20%
(2024: 20%) reduction in the vehicle recovery rate assumption element of the LGD for Vehicle
Finance would increase the ECL by £1.2 million (2024: £1.7 million). There has been no change in
the vehicle recovery rate assumption in the ECL model in either the current or prior year.
17.1.4. Climate-risk impact
The Group considers the impact of climate-related risks on the financial statements on an annual
basis, in particular, climate change negatively impacting the value of the Group’s Real Estate
Finance business’ security due to the increased risk of flooding associated with climate change.
While the effects of climate change represent a source of uncertainty (in respect of potential
transitional risks, such as those that may arise from changes in future government policy), the
impact of all of the climate change risks is considered to be low. Accordingly, the Group does
not consider there to be a material impact on its judgements and estimates from the physical,
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
172
Group and Company
Interest rate derivatives are held for risk mitigation purposes. The table below provides an analysis of the notional amount and fair value of derivatives by hedge accounting relationship. The amount of
ineffectiveness recognised for each hedge type is shown in Note 5. Notional amount is the amount on which payment flows are derived and does not represent amounts at risk.
Notional |
Assets |
Liabilities |
Notional |
Assets |
Liabilities |
|
2025 |
2025 |
2025 |
2024 |
2024 |
2024 |
|
£million |
£million |
£million |
£million |
£million |
£million |
|
Interest rate derivatives designated in fair value hedges |
||||||
In less than one year |
953.1 |
3.4 |
(1.7) |
965.5 |
3.1 |
(2.5) |
More than one year but less than three years |
1,179.7 |
3.4 |
(7.8) |
941.4 |
10.1 |
(3.9) |
More than three years but less than five years |
374.2 |
1.5 |
(1.2) |
432.9 |
1.1 |
(3.3) |
2,507.0 |
8.3 |
(10.7) |
2,339.8 |
14.3 |
(9.7) |
|
Interest rate derivatives designated in cash flow hedges |
||||||
In less than one year |
– |
– |
– |
9.4 |
– |
(0.1) |
More than one year but less than three years |
2.4 |
0.1 |
– |
2.4 |
– |
– |
More than three years but less than five years |
8.7 |
– |
– |
– |
– |
– |
11.1 |
0.1 |
– |
11.8 |
– |
(0.1) |
|
Interest rate derivatives - not hedged¹ |
||||||
In less than one year |
– |
– |
– |
15.0 |
– |
– |
More than one year but less than three years |
95.0 |
– |
– |
42.5 |
– |
– |
More than three years but less than five years |
8.0 |
– |
– |
– |
– |
– |
103.0 |
– |
– |
57.5 |
– |
– |
|
Foreign exchange derivatives |
||||||
In less than one year |
17.0 |
0.1 |
– |
25.7 |
– |
(0.2) |
17.0 |
0.1 |
– |
25.7 |
– |
(0.2) |
|
Offset |
– |
(8.3) |
10.6 |
– |
– |
– |
2,638.1 |
0.2 |
(0.1) |
2,434.8 |
14.3 |
(10.0) |
Note:
1. Derivatives not in hedge relationships at the end of the reporting period will either enter a hedge relationship in the following month, or be in the final month of maturity.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
173
continued
18. Derivative financial instruments
In order to manage interest rate risk arising from fixed-rate financial instruments, the Group
monitors its interest rate mismatch regularly throughout each month, seeking to ‘match’ assets and
liabilities in the first instance and hedging residual risk using interest rate derivatives to maintain
adherence to risk appetites. Some residual risk remains due to timing differences. The exposure
from the portfolio frequently changes due to the origination of new instruments, contractual
repayments and early prepayments made in each period. As a result, the Group adopts a dynamic
hedging strategy (sometimes referred to as ‘macro’ or ‘portfolio’ hedge) to hedge its exposure profile
by closing and entering into new interest rate derivative agreements. The Group establishes the
hedging ratio by matching the derivatives with the principal of the portfolio being hedged.
The following table sets out details of the hedged exposures covered by the Group’s
hedging strategies:
Accumulated |
Accumulated |
|||
amount |
amount |
|||
of fair value |
of fair value |
|||
Carry |
adjustments |
Carry amount |
adjustments |
|
amount of |
in the hedged |
of |
in the hedged |
|
hedged item |
items |
hedged item |
items |
|
asset/ |
asset/ |
asset/ |
(liability)/ |
|
(liability) |
(liability) |
(liability) |
asset |
|
2025 |
2025 |
2024 |
2024 |
|
£million |
£million |
£million |
£million |
|
ASSETS |
||||
Interest rate fair value hedges |
||||
Loans and advances to customers |
||||
Fixed rate Real Estate Finance loans |
558.8 |
3.2 |
519.6 |
(5.2) |
Fixed rate Consumer Finance loans |
680.4 |
4.1 |
723.4 |
(1.6) |
1,239.2 |
7.3 |
1,243.0 |
(6.8) |
|
Interest rate cash flow hedges |
||||
Cash and Bank of England reserve account |
||||
Bank of England reserve |
11.1 |
N/A |
11.8 |
N/A |
1,250.3 |
7.3 |
1,254.8 |
(6.8) |
|
LIABILITIES |
||||
Interest rate fair value hedges |
||||
Deposits from customers |
||||
Fixed rate customer deposits |
(1,177.1) |
(3.7) |
(1,006.5) |
3.1 |
Subordinated liabilities |
||||
Fixed rate Tier 2 regulatory capital |
(90.0) |
(1.0) |
(90.0) |
0.3 |
(1,267.1) |
(4.7) |
(1,096.5) |
3.4 |
The following table shows:
• amounts which have been offset, where there is an enforceable master netting arrangement or
similar agreement in place, an unconditional right to offset exists and there is an intention to
settle net (‘amounts offset’); and
• amounts which have not been offset, where there is an enforceable master netting arrangement
or similar agreement in place, but the offset criteria are otherwise not satisfied (‘master netting
arrangements’) and/or where financial collateral has been paid or received (‘financial collateral’).
Financial collateral consists of cash settled, typically daily or weekly, to mitigate the credit risk on
the fair value of derivatives.
Net |
||||||
amount |
||||||
reported |
Master |
Net |
||||
Gross |
on |
netting |
amounts |
|||
amount |
Amounts |
balance |
arrange- |
Financial |
after |
|
recognised |
offset |
sheet |
ments |
collateral |
offsetting |
|
31 December 2025 |
£million |
£million |
£million |
£million |
£million |
£million |
Derivative financial assets |
||||||
Interest rate derivatives |
8.5 |
(8.3) |
0.2 |
(0.1) |
(0.1) |
– |
8.5 |
(8.3) |
0.2 |
(0.1) |
(0.1) |
– |
|
Derivative financial liabilities |
||||||
Interest rate derivatives |
(10.7) |
10.6 |
(0.1) |
0.1 |
– |
– |
(10.7) |
10.6 |
(0.1) |
0.1 |
– |
– |
Amounts offset for derivative financial assets of £8.3 million include variation margin netted
of £2.3 million at 31 December 2025.
Gross |
||||
amount |
||||
reported |
Master |
Net |
||
on |
netting |
amounts |
||
balance |
arrange- |
Financial |
after |
|
sheet |
ments |
collateral |
offsetting |
|
31 December 2024 |
£million |
£million |
£million |
£million |
Derivative financial assets |
||||
Interest rate derivatives |
14.3 |
(9.8) |
(4.1) |
0.4 |
14.3 |
(9.8) |
(4.1) |
0.4 |
|
Derivative financial liabilities |
||||
Interest rate derivatives |
(9.8) |
9.8 |
– |
– |
Foreign exchange derivatives |
(0.2) |
– |
– |
(0.2) |
(10.0) |
9.8 |
– |
(0.2) |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
174
Under IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, assets and liabilities
are required to be reclassified as ‘Held for Sale’ on the face of the statement of financial position if
they are expected to be sold within 12 months of the balance sheet date.
As at 31 December 2025, the Group’s Consumer Vehicle Finance business met the criteria to be
classified as Held for Sale. Accordingly, the business’s loans and advances to customers was
reclassified in the Consolidated and Company statement of financial position at its carrying amount
Group | Company | |
£million | £million | |
At 1 January 2024 and 31 December 2024 | – | 0.9 |
Additions | 24.1 | – |
At 31 December 2025 | 24.1 | 0.9 |
The Group’s investment property comprises 100 Violet Road, London E3 3QH, which was
purchased in December 2025. The fair value of the property is £22.5 million.
The Company’s investment property comprises 25 and 26 Neptune Court, Vanguard Way,
Cardiff CF24 5PJ, which is occupied by one of the Company’s subsidiaries.
The Company’s investment property was stated at fair value as at 31 December 2025, based
on external valuations performed by professionally qualified valuers Knight Frank LLP in
December 2024.
These valuations were undertaken in accordance with the current editions of RICS Valuation –
Global Standards, which incorporate the International Valuations Standards, and the RICS UK
National Supplement. The valuations were carried out using the comparative and investment
methods, and were arrived at by reference to market evidence of the transaction prices paid for
similar properties, together with evidence of demand within the vicinity of the subject properties.
In estimating the fair value of the properties, the valuers consider the highest and best use of the
properties. Knight Frank LLP were paid a fixed fee for the valuations. Knight Frank LLP also
undertakes some professional work in respect of the Group’s Real Estate Finance business, although
this is limited in relation to the activities of the Group as a whole. The Directors assessed the value
of the investment property at the year-end, and concluded the valuation remains appropriate.
Investment property, which is property held to earn rentals and for capital appreciation, is
measured initially at cost, including transaction costs. Subsequent to initial recognition, for
the Group, investment property is measured at cost. Depreciation is calculated using the
straight-line method to allocate their cost to their residual values over their estimated useful
lives, which are subject to regular review (see property, plant and equipment accounting
policy for estimated useful lives). This represents a change in accounting policy for the Group,
noting the Group held no investment properties in the prior year. For the Company
investment property is measured at fair value. External valuations are performed on a
triennial basis. Gains or losses arising from changes in the fair value of investment property
are included in the income statement in the period in which they arise.
An investment property is derecognised upon disposal or when the investment property is
permanently withdrawn from use and no future economic benefits are expected from the
disposal. Any gain or loss arising on derecognition of the property (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in the
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
175
| Group | Company | |||||
Freehold | Computer | Freehold | Computer | |||
land and | and other | land and | and other | |||
buildings | equipment | Total | buildings | equipment | Total | |
£million | £million | £million | £million | £million | £million | |
Cost or valuation | ||||||
At 1 January 2024 | 10.1 | 7.7 | 17.8 | 3.8 | 7.1 | 10.9 |
Additions | – | 0.5 | 0.5 | – | 0.3 | 0.3 |
Impairment | (0.4) | – | (0.4) | – | – | – |
At 31 December 2024 | 9.7 | 8.2 | 17.9 | 3.8 | 7.4 | 11.2 |
Additions | – | 0.3 | 0.3 | 0.2 | 0.2 | 0.4 |
Disposals | (4.2) | (0.3) | (4.5) | – | (0.2) | (0.2) |
At 31 December 2025 | 5.5 | 8.2 | 13.7 | 4.0 | 7.4 | 11.4 |
Accumulated depreciation | ||||||
At 1 January 2024 | (2.5) | (4.5) | (7.0) | (0.2) | (4.4) | (4.6) |
Depreciation charge | (0.2) | (0.8) | (1.0) | (0.1) | (0.5) | (0.6) |
At 31 December 2024 | (2.7) | (5.3) | (8.0) | (0.3) | (4.9) | (5.2) |
Depreciation charge | (0.1) | (0.7) | (0.8) | (0.1) | (0.4) | (0.5) |
Disposals | 2.2 | 0.3 | 2.5 | – | 0.2 | 0.2 |
At 31 December 2025 | (0.6) | (5.7) | (6.3) | (0.4) | (5.1) | (5.5) |
Net book amount | ||||||
At 31 December 2024 | 7.0 | 2.9 | 9.9 | 3.5 | 2.5 | 6.0 |
At 31 December 2025 | 4.9 | 2.5 | 7.4 | 3.6 | 2.3 | 5.9 |
The Group’s freehold properties, which are occupied by the Group, comprise:
• the Registered Office of the Company;
•
25 and 26 Neptune Court, Vanguard Way, Cardiff CF24 5PJ; and
• One Arleston Way, Solihull B90 4LH, which was sold during 2025.
The Company’s freehold property comprises the Registered Office of the Company.
The carrying value of freehold land, which is included in the total carrying value of freehold land and
buildings, and which is not depreciated at 31 December 2025 was £1.2 million (2024: £1.5 million)
for the Group and £1.0 million (2024: £0.8 million) for the Company.
and any accumulated impairment losses. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Pre-installed computer software licences are
capitalised as part of the computer hardware it is installed on. Depreciation is calculated using
the straight-line method to allocate their cost to their residual values over their estimated
useful lives, which are subject to regular review:
Land | not depreciated |
Freehold buildings | 50 years |
Leasehold improvements | shorter of life of lease or seven years |
Computer equipment | three to five years |
Other equipment | five to ten years |
The above useful economic lives have not changed since the prior year.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts.
These are included in the income statement.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
176
| Group |
Company |
|||||
Leased |
Leased |
|||||
Leasehold |
motor |
Leasehold |
motor |
|||
property |
vehicles |
Total |
property |
vehicles |
Total |
|
£million |
£million |
£million |
£million |
£million |
£million |
|
Cost |
||||||
At 1 January 2024 |
3.9 |
0.8 |
4.7 |
3.9 |
0.3 |
4.2 |
Additions |
– |
0.8 |
0.8 |
– |
0.6 |
0.6 |
At 31 December 2024 |
3.9 |
1.6 |
5.5 |
3.9 |
0.9 |
4.8 |
Additions |
3.4 |
0.5 |
3.9 |
3.5 |
0.3 |
3.8 |
Disposals |
– |
(0.5) |
(0.5) |
– |
(0.1) |
(0.1) |
At 31 December 2025 |
7.3 |
1.6 |
8.9 |
7.4 |
1.1 |
8.5 |
Accumulated depreciation |
||||||
At 1 January 2024 |
(2.5) |
(0.4) |
(2.9) |
(2.5) |
(0.1) |
(2.6) |
Depreciation charge |
(0.5) |
(0.5) |
(1.0) |
(0.5) |
(0.3) |
(0.8) |
At 31 December 2024 |
(3.0) |
(0.9) |
(3.9) |
(3.0) |
(0.4) |
(3.4) |
Depreciation charge |
(0.6) |
(0.5) |
(1.1) |
(0.6) |
(0.4) |
(1.0) |
Disposals |
– |
0.5 |
0.5 |
– |
0.1 |
0.1 |
At 31 December 2025 |
(3.6) |
(0.9) |
(4.5) |
(3.6) |
(0.7) |
(4.3) |
Net book amount |
||||||
At 31 December 2024 |
0.9 |
0.7 |
1.6 |
0.9 |
0.5 |
1.4 |
At 31 December 2025 |
3.7 |
0.7 |
4.4 |
3.8 |
0.4 |
4.2 |
The Group assesses whether a contract is, or contains, a lease at inception of the contract.
The Group recognises a right-of-use asset and a corresponding lease liability with respect to
all lease arrangements in which it is the lessee, except for short-term leases (defined as leases
with a lease term of 12 months or less) and leases of low-value assets. For these leases, the
Group recognises the lease payments as an operating expense on a straight-line basis over the
term of the lease unless another systematic basis is more representative of the time pattern in
which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the future lease payments,
discounted by using the rate implicit in the lease. If this rate cannot be readily determined,
the Group uses its incremental borrowing rate. It is subsequently measured by increasing
the carrying amount to reflect interest on the lease liability (using the effective interest rate
method) and by reducing the carrying amount to reflect the lease payments made, and is
presented as a separate line in the consolidated statement of financial position.
The right-of-use assets comprise the initial measurement of the corresponding lease liability,
lease payments made at, or before, the commencement day, less any lease incentives received
and any initial direct costs. They are subsequently measured at cost less accumulated
depreciation and impairment charges and are depreciated over the shorter of the lease term
and useful life of the underlying asset. The depreciation starts at the commencement date
of the lease. The right-of-use assets are presented as a separate line in the consolidated
statement of financial position. The Group applies IAS 36 to determine whether a right-of-use
asset is impaired and accounts for any identified impairment loss as described in the ‘Property,
plant and equipment’ policy.
Rentals made under operating leases for less than 12 months in duration, and operating leases
on low-value items, are recognised in the income statement on a straight-line basis over the
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
177
Other |
||||
Computer |
intangible |
|||
Goodwill |
software |
assets |
Total |
|
£million |
£million |
£million |
£million |
|
Cost or valuation |
||||
At 1 January 2024 |
1.0 |
17.7 |
2.2 |
20.9 |
Additions |
– |
0.5 |
– |
0.5 |
Disposals |
– |
(0.1) |
– |
(0.1) |
At 31 December 2024 |
1.0 |
18.1 |
2.2 |
21.3 |
Additions |
– |
1.3 |
– |
1.3 |
At 31 December 2025 |
1.0 |
19.4 |
2.2 |
22.6 |
Accumulated depreciation |
||||
At 1 January 2024 |
– |
(12.8) |
(2.2) |
(15.0) |
Amortisation charge |
– |
(1.4) |
– |
(1.4) |
Disposals |
– |
0.1 |
– |
0.1 |
At 31 December 2024 |
– |
(14.1) |
(2.2) |
(16.3) |
Amortisation charge |
– |
(1.2) |
– |
(1.2) |
At 31 December 2025 |
– |
(15.3) |
(2.2) |
(17.5) |
Net book amount |
||||
At 31 December 2024 |
1.0 |
4.0 |
– |
5.0 |
At 31 December 2025 |
1.0 |
4.1 |
– |
5.1 |
Goodwill above relates to the V12 cash-generating unit, which is part of the Retail Finance
operating segment.
The recoverable amount of these cash-generating units are determined on a value-in-use
calculation, which uses cash flow projections based on financial forecasts covering a three-year
period, and a discount rate of 8% (2024: 8%). Cash flow projections during the forecast period
are based on the expected rate of new business. A zero growth-based scenario is also considered.
The Directors believe that any reasonably possible change in the key assumptions on which
recoverable amount is based would not cause the aggregate carrying amount to exceed the
aggregate recoverable amount of the cash-generating unit. Hence no impairment has
been recognised.
Other intangible assets were recognised as part of the V12 Finance Group acquisition,
which are now fully amortised.
Company
Computer |
|||
Goodwill |
software |
Total |
|
£million |
£million |
£million |
|
Cost or valuation |
|||
At 1 January 2024 |
0.3 |
12.6 |
12.9 |
Additions |
– |
0.5 |
0.5 |
At 31 December 2024 |
0.3 |
13.1 |
13.4 |
Additions |
– |
1.2 |
1.2 |
At 31 December 2025 |
0.3 |
14.3 |
14.6 |
Accumulated depreciation |
|||
At 1 January 2024 |
– |
(9.4) |
(9.4) |
Amortisation charge |
– |
(1.1) |
(1.1) |
At 31 December 2024 |
– |
(10.5) |
(10.5) |
Amortisation charge |
– |
(0.9) |
(0.9) |
At 31 December 2025 |
– |
(11.4) |
(11.4) |
Net book amount |
|||
At 31 December 2024 |
0.3 |
2.6 |
2.9 |
At 31 December 2025 |
0.3 |
2.9 |
3.2 |
Goodwill above relates to the Retail Finance operating segment. The recoverable amount is
determined on the same basis as for the Group.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
178
continued
23. Intangible assets
Goodwill represents the excess of the cost of the acquisition over the fair value of the Group’s
share of the net identifiable assets acquired at the date of acquisition. Goodwill is held at cost
less accumulated impairment charge and is deemed to have an infinite life.
The Group reviews the goodwill for impairment at least annually or when events or changes
in economic circumstances indicate that impairment may have taken place. An impairment
charge is recognised in the income statement if the carrying amount exceeds the
Acquired computer software licences are capitalised on the basis of the costs incurred to
acquire and bring to use the specific software.
Costs associated with developing or maintaining computer software programmes are
recognised as an expense as incurred unless the technical feasibility of the development has
been demonstrated, and it is probable that the expenditure will enable the asset to generate
future economic benefits in excess of its originally assessed standard of performance, in which
case they are capitalised.
These costs are amortised on a straight-line basis over their expected useful lives, which are
between three to 10 years.
(c) Other intangible assets
The acquisition of subsidiaries has been accounted for in accordance with IFRS 3 ‘Business
Combinations’, which requires the recognition of the identifiable assets acquired and liabilities
assumed at their acquisition date fair values. As part of this process, it was necessary to
recognise certain intangible assets that are separately identifiable and are not included on the
acquiree’s balance sheet, which are amortised over their expected useful lives, as set
out above.
Company
2025 |
2024 |
|
Cost and net book value |
£million |
£million |
At 1 January |
6.1 |
5.9 |
Equity contributions to subsidiaries in respect of share options |
0.2 |
0.2 |
At 31 December |
6.3 |
6.1 |
Shares in subsidiary undertakings of Secure Trust Bank PLC are stated at cost less any provision for
impairment. All subsidiary undertakings are unlisted and none are banking institutions. The share
capital of the subsidiary undertakings comprises solely of ordinary shares and all are 100% owned
by the Company. The subsidiary undertakings were all incorporated in the UK and wholly owned via
ordinary shares. All subsidiary undertakings are included in the consolidated financial statements
and have an accounting reference date of 31 December.
Company |
||
number |
Principal activity |
|
Owned directly |
||
AppToPay Ltd |
11204449 |
Non-trading |
Debt Managers (Services) Limited |
08092808 |
Non-trading |
Secure Homes Services Limited |
01404439 |
Property rental |
STB Leasing Limited |
01648384 |
Non-trading |
V12 Finance Group Limited |
07498951 |
Holding company |
Owned indirectly via an intermediate holding company |
||
V12 Personal Finance Limited |
05418233 |
Dormant |
Sourcing and servicing |
||
V12 Retail Finance Limited |
04585692 |
of unsecured loans |
The registered office of the Company, and all subsidiary undertakings, is Yorke House,
Arleston Way, Solihull B90 4LH.
AppToPay Ltd, Debt Managers (Services) Limited, Secure Homes Services Limited, STB Leasing
Limited, V12 Finance Group Limited and V12 Personal Finance Limited are exempt from the
requirements of the Companies Act 2006 relating to the audit of individual accounts by virtue
of s479A, and the Company has given guarantees accordingly under s479C in respect of the year
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
179
Group |
Group |
Company |
Company |
|
2025 |
2024 |
2025 |
2024 |
|
£million |
£million |
£million |
£million |
|
Deferred tax assets: |
||||
Other short-term timing differences |
3.6 |
3.3 |
3.3 |
3.3 |
At 31 December |
3.6 |
3.3 |
3.3 |
3.3 |
Deferred tax assets: |
||||
At 1 January |
3.3 |
4.3 |
3.3 |
4.3 |
Income statement |
(0.2) |
(0.8) |
(0.5) |
(0.8) |
Cash flow hedge reserve |
– |
(0.2) |
– |
(0.2) |
Retained earnings - Share-based payments |
0.5 |
– |
0.5 |
– |
At 31 December |
3.6 |
3.3 |
3.3 |
3.3 |
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset
current tax assets and liabilities, and they relate to taxes levied by the same tax authority
on the same taxable entity, or on different tax entities, when they intend to settle current
tax liabilities and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.
Deferred tax assets are recognised where it is probable that future taxable profits will be
available, against which the temporary differences can be utilised. The short-term timing
differences relate primarily to deferred tax on IFRS 9 transitional arrangements and on the
movement in share options during the year. Deferred tax has not been recognised on capital
losses arising from the disposal of property during the year (£2.0 million) or in respect of
deductible temporary differences arising on investment properties held by the Company
Group |
Group |
Company |
Company |
|
2025 |
2024 |
2025 |
2024 |
|
£million |
£million |
£million |
£million |
|
Gross amounts due from related companies |
– |
– |
27.2 |
4.2 |
Less: allowances for impairment of amounts |
||||
due from related companies |
– |
– |
(1.9) |
(1.9) |
Amounts due from related companies |
– |
– |
25.3 |
2.3 |
Other receivables |
1.7 |
2.0 |
1.4 |
1.7 |
Cloud software development prepayment |
0.6 |
3.6 |
0.6 |
3.6 |
Other prepayments and accrued income |
6.5 |
6.1 |
6.1 |
5.4 |
8.8 |
11.7 |
33.4 |
13.0 |
Cloud software development costs, principally relating to the Group’s Motor Transformation
Programme, do not meet the intangible asset recognition criteria and are, therefore, classified
as a prepayment, which is expensed to the income statement over the useful economic life of
Group and Company
2025 |
2024 |
|
£million |
£million |
|
Amounts due under the Bank of England’s liquidity support operations |
||
Term Funding Scheme with additional incentives for SMEs (‘TFSME’) |
– |
230.0 |
Sale and repurchase agreements |
200.0 |
125.0 |
Amounts due to other credit institutions |
4.7 |
6.9 |
TFSME accrued interest |
– |
3.2 |
Sale and repurchase agreements accrued interest |
1.2 |
0.7 |
205.9 |
365.8 |
Amounts due under sale and repurchase agreements are due for repayment during 2026.
Secure Trust Bank maintains access to the Bank of England’s Sterling Monetary Framework,
including a reserves account.
Group and Company
2025 |
2024 |
|
£million |
£million |
|
Access accounts |
770.2 |
805.2 |
Fixed term bonds |
1,518.9 |
1,510.0 |
Notice accounts |
39.3 |
72.4 |
ISAs |
1,181.2 |
857.3 |
3,509.6 |
3,244.9 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
180
Group | Group | Company | Company | |
2025 | 2024 | 2025 | 2024 | |
£million | £million | £million | £million | |
At 1 January | 1.8 | 2.3 | 1.6 | 2.1 |
New leases | 3.9 | 0.8 | 3.8 | 0.6 |
Lease termination | (0.1) | – | (0.1) | – |
Payments | (1.3) | (1.4) | (1.2) | (1.2) |
Interest expense | 0.1 | 0.1 | 0.1 | 0.1 |
At 31 December | 4.4 | 1.8 | 4.2 | 1.6 |
Lease liabilities – Gross | ||||
No later than one year | 1.1 | 1.1 | 0.9 | 1.0 |
Later than one year and no later than | ||||
five years | 2.2 | 0.8 | 2.2 | 0.7 |
More than five years | 1.8 | – | 1.8 | – |
5.1 | 1.9 | 4.9 | 1.7 | |
Less: Future finance expense | (0.7) | (0.1) | (0.7) | (0.1) |
Lease liabilities – Net | 4.4 | 1.8 | 4.2 | 1.6 |
Lease liabilities – Gross | ||||
No later than one year | 0.9 | 1.1 | 0.8 | 0.9 |
Later than one year and no later than | ||||
five years | 1.9 | 0.7 | 1.8 | 0.7 |
More than five years | 1.6 | – | 1.6 | – |
4.4 | 1.8 | 4.2 | 1.6 |
Group | Group | Company | Company | |
2025 | 2024 | 2025 | 2024 | |
£million | £million | £million | £million | |
Other payables | 87.0 | 23.1 | 85.1 | 21.1 |
Amounts due to related companies | – | – | 15.7 | 12.5 |
Accruals and deferred income | 11.0 | 9.4 | 9.5 | 7.5 |
98.0 | 32.5 | 110.3 | 41.1 |
Group
| Group | |||
ECL allowance | |||
on loan | |||
commitments | Other | Total | |
£million | £million | £million | |
Balance at 1 January 2024 | 0.8 | 5.2 | 6.0 |
Charge to income statement | 0.1 | 9.8 | 9.9 |
Utilised | – | (4.6) | (4.6) |
Balance at 31 December 2024 | 0.9 | 10.4 | 11.3 |
Charge to income statement | 0.1 | 21.7 | 21.8 |
Utilised | – | (7.6) | (7.6) |
Balance at 31 December 2025 | 1.0 | 24.5 | 25.5 |
Company
| Company | |||
ECL allowance | |||
on loan | |||
commitments | Other | Total | |
£million | £million | £million | |
Balance at 1 January 2024 | 0.8 | 4.8 | 5.6 |
Charge to income statement | 0.1 | 10.1 | 10.2 |
Utilised | – | (4.5) | (4.5) |
Balance at 31 December 2024 | 0.9 | 10.4 | 11.3 |
Charge to income statement | 0.1 | 21.7 | 21.8 |
Utilised | – | (7.6) | (7.6) |
Balance at 31 December 2025 | 1.0 | 24.5 | 25.5 |
ECL allowance on loan commitments
In accordance with the requirements of IFRS 9, the Group holds an ECL allowance against loans it
has committed to lend, but have not yet been drawn. For the Real Estate Finance and Commercial
Finance portfolios, where a loan facility is agreed that includes both drawn and undrawn elements
and the Group cannot identify the ECL on the loan commitment separately, a combined loss
allowance for both drawn and undrawn components of the loan is presented as a deduction from
the gross carrying amount of the drawn component, with any excess of the loss allowance over
the gross drawn amount presented as a provision. At 31 December 2025 and 31 December 2024,
no provision was held for losses in excess of drawn amounts.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
181
continued
31. Provisions for liabilities and charges
Other
Other includes:
• costs and redress relating to the BiFD Vehicle Finance collections review (see Note 8 for further
details) and historical motor commissions (see below for further details);
• provision for redundancy;
• provision for fraud, which relates to cases where the Group has reasonable evidence of suspected
fraud, but further investigation is required before the cases can be dealt with appropriately;
• s75 Consumer Credit Act 1974 provision.
The Directors expect these provisions to be fully utilised within the next one to two years.
A provision is recognised where there is a present obligation as a result of a past event,
In January 2024, the FCA launched a review of the historical use of discretionary commission
arrangements (‘DCAs’) in the motor finance industry. The Vehicle Finance business sometimes
operated these arrangements until June 2017, but stopped doing so well ahead of the FCA
banning their use in January 2021.
In October 2024, the Court of Appeal gave judgment in the cases of Hopcraft, Wrench and
Johnson, which had wider implications for the legality of both fixed and DCA historical motor
commissions. These were then appealed to the Supreme Court where, in August 2025, the
Hopcraft and Wrench cases were overturned, however the Johnson case was upheld on the
facts of that case.
At 31 December 2024, we undertook scenario analysis using different assumptions,
which were probability weighted to estimate a potential exposure. In October 2025,
the FCA issued a consultation paper providing further detail on its proposed redress
approach, including significantly broadening the scope of the overall redress scheme, how
unfairness would be assessed, the scheme’s period and proposed redress methodology.
Based on the FCA proposals in their current form, the potential impact is towards the extreme
end of the range of previously expected outcomes. As a result, the Group recognised a further
provision of £16.4 million. This comprises further potential goodwill/redress payments of
£11.3 million (2024: £5.2 million), and £5.1 million (2024: £1.2 million) of associated costs.
As at 31 December 2025, the Group held a provision of £21.5 million (2024: £6.4 million).
If the FCA scheme was implemented entirely in its current form, the Group would expect
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
182
Group and Company
2025 |
2024 |
|
£million |
£million |
|
Notes at par value |
90.0 |
90.0 |
Unamortised issue costs |
(0.5) |
(0.7) |
Accrued interest |
4.0 |
4.0 |
93.5 |
93.3 |
The Fixed Rate Reset Callable Subordinated Notes due August 2033 are listed on the International
Securities Market of the London Stock Exchange. This issuance is in line with the Group’s funding
strategy and supports the Group’s stated medium-term growth ambitions.
• The notes are redeemable for cash at their principal amount on fixed dates.
• The Company has a call option to redeem the notes early in the event of a ‘tax event’ or a ‘capital
disqualification event’, which is at the full discretion of the Company.
• Interest payments are paid at six-monthly intervals and are mandatory.
• The notes give the holders’ rights to the principal amount on the notes, plus any unpaid interest,
on liquidation. Any such claims are subordinated to senior creditors, but rank pari passu with
holders of other subordinated obligations and in priority to holders of share capital.
The above features provide the issuer with a contractual obligation to deliver cash or another
financial asset to the holders, and, therefore, the notes are classified as financial liabilities.
Transaction costs that are directly attributable to the issue of the notes and are deducted from the
financial liability and expensed to the income statement on an effective interest rate basis over the
expected life of the notes.
The notes are treated as Tier 2 regulatory capital, which is used to support the continuing growth of
the business taking into account increases in regulatory capital buffers. The issue of the notes is part
of an ongoing programme to diversify and expand the capital base of the Group.
The Group paid interest of £11.7 million on subordinated liabilities during the period
(2024: £11.7 million), which is included in net cash inflow from operating activities in the
consolidated and company statement of cash flows.
31.1.1. Laws and regulations
As a financial services business, the Group must comply with numerous laws and regulations
that significantly affect the way it does business. Whilst the Group believes there are no material
unidentified areas of failure to comply with these laws and regulations, there can be no guarantee
At 31 December 2025, the Group and Company had no capital commitments (2024: £nil).
33.3. Credit commitments
Group and Company
Commitments to extend credit to customers were as follows:
2025 |
2024 |
|
£million |
£million |
|
Consumer Finance |
||
Retail Finance |
115.8 |
112.2 |
Vehicle Finance |
– |
1.2 |
Business Finance |
||
Real Estate Finance |
40.4 |
39.5 |
Commercial Finance |
241.6 |
110.3 |
397.8 |
263.2 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
183
Number |
£million |
|
At 1 January 2024 |
19,017,795 |
7.6 |
Issued during 2024 |
53,613 |
– |
At 31 December 2024 |
19,071,408 |
7.6 |
Issued during 2025 |
25,848 |
– |
At 31 December 2025 |
19,097,256 |
7.6 |
Share capital comprises ordinary shares with a par value of 40 pence each.
Equity instruments issued by the Company are recorded at the proceeds received, net of
direct issuance costs. Any amounts received over nominal value are recorded in the share
premium account, net of direct issuance costs. Costs associated with the listing of shares
Group |
Group |
Company |
Company |
|
2025 |
2024 |
2025 |
2024 |
|
£million |
£million |
£million |
£million |
|
Own shares |
(1.9) |
(2.2) |
(1.9) |
(2.2) |
(1.9) |
(2.2) |
(1.9) |
(2.2) |
35.1. Own shares
Nominal |
Nominal |
|||
value |
value |
|||
2025 |
2025 |
2024 |
2024 |
|
Employee Benefit Trust (‘EBT’) |
Number |
£million |
Number |
£million |
At 1 January |
434,809 |
0.2 |
216,472 |
0.1 |
Shares acquired |
47,475 |
– |
312,718 |
0.1 |
Shares disposed |
(100,801) |
– |
(94,381) |
– |
At 31 December |
381,483 |
0.2 |
434,809 |
0.2 |
Market value (£million) |
4.7 |
1.6 |
||
Accounting value (£million) |
1.9 |
2.2 |
||
Percentage of called up share capital |
2.0% |
2.3% |
These shares are held in trust for the benefit of employees, who will be exercising their options
under the Group’s share options schemes. The trustee’s expenses are included in the operating
expenses of the Group. The maximum number of shares held by the EBT during the year was
480,382 (2024: 434,809), which had a nominal value of £192,000 (2024: £174,000).
Shares were disposed of during the year for consideration of £40,000 (2024: £37,000).
The EBT qualifies for ‘look-through’ accounting, under which the EBT is treated as, in
substance, an extension of the sponsoring entity, which is Secure Trust Bank PLC. Own shares
represent the shares of the parent Company, Secure Trust Bank PLC, that are held by the EBT.
At 31 December 2025 and 31 December 2024, the Group had four share-based payment schemes
in operation:
• 2017 Long-Term Incentive Plan;
• 2017 Sharesave Plan;
• 2017 Deferred Bonus Plan; and
• ‘Phantom’ Share Option Scheme.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
184
continued
36. Share-based payments
A summary of the movements in share options during the year is set out below:
Weighted | ||||||||||
average | Weighted | Weighted | ||||||||
remaining | average | average | ||||||||
Forfeited, | contractual life | exercise price | exercise price | |||||||
Outstanding | lapsed and | Outstanding | Vested and | of options | of options | of options | ||||
at | Granted | cancelled | Exercised | at | exercisable at | outstanding at | outstanding at | outstanding at | ||
1 January | during | during | during | 31 December | 31 December | 31 December | 31 December | 31 December | ||
2025 | the year | the year | the year | 2025 | 2025 | Vesting | 2025 | 2025 | 2024 | |
Number | Number | Number | Number | Number | Number | dates | Years | £ | £ | |
Equity settled | ||||||||||
2017 Long-Term Incentive Plan | 892,621 | 685,332 | (283,660) | (60,373) | 1,233,920 | 7,236 | 2026-2030 | 2.4 | 0.21 | 0.40 |
2017 Sharesave Plan | 416,500 | 73,931 | (94,069) | (22,452) | 373,910 | 33,980 | 2026-2028 | 1.4 | 6.61 | 6.27 |
2017 Deferred Bonus Plan | 85,924 | 24,714 | – | (43,644) | 66,994 | 180 | 2026-2028 | 1.4 | 0.25 | 0.40 |
1,395,045 | 783,977 | (377,729) | (126,469) | 1,674,824 | 41,396 | 2.1 | 1.64 | 2.14 | ||
Weighted average exercise price | 2.15 | 0.86 | 1.92 | 1.67 | 1.64 | 5.72 | ||||
Cash settled | ||||||||||
‘Phantom’ share option scheme | 38,000 | – | (38,000) | – | – | – | 2019 | – | – | 25.00 |
Group | Group | Company | Company | |
2025 | 2024 | 2025 | 2024 | |
£million | £million | £million | £million | |
Expense incurred in relation to share-based payments | 2.1 | 2.3 | 1.8 | 2.3 |
36.1. Long-Term Incentive Plan (‘LTIP’)
The LTIP was established on 3 May 2017. During the year, a number of awards were made to
participants, as set out below.
36.1.1. LTIP Restricted share award
During the year, 46,483 (2024: 114,281) options were awarded that were not subject to any
performance conditions. The awards will vest three years from the date of grant. The original grant
date valuation was determined using a Black–Scholes model. Measurement inputs and assumptions
used for the grant date valuation were as follows:
Awarded | Awarded | |
during 2025 | during 2024 | |
Share price at grant date | £6.00 | £6.90 |
Exercise price | – | £0.40 |
Expected dividend yield | 6.68% | 5.10% |
Expected stock price volatility | 47.86% | 36.72% |
Risk free interest rate | 4.22% | 4.35% |
Average expected life (years) | 3.00 | 3.00 |
Original grant date valuation | £4.91 | £5.57 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
185
continued
36. Share-based payments
36.1.2. LTIP
During the year, 638,849 (2024: 308,830) options were awarded that are subject to four performance
conditions. Details of the performance conditions can be found on pages 107 and 108.
The awards have a performance term of three years. The awards will vest on the date on which the
Board determines that these conditions have been met.
The original grant date valuation was determined using a Black-Scholes model for the return on
average equity, earnings per share and risk management tranches (modified for probability of
outturn), and a Monte Carlo model for the total shareholder return tranche. Measurement inputs
and assumptions used for the grant date valuation were as follows:
Awarded | Awarded | ||||
Awarded | during 2025 | during 2025 | Awarded | Awarded | |
during 2025 | Two year | Two year | during 2024 | during 2024 | |
No holding | holding | holding | No holding | Two year | |
period | period | period | period | holding period | |
Number of shares | 131,226 | 215,776 | 66,141 | 136,895 | 171,935 |
Share price at grant date | £6.00 | £6.00 | £10.35 | £6.90 | £6.90 |
Exercise price | £0.40 | £0.40 | £0.40 | £0.40 | £0.40 |
Expected dividend yield | 5.10% | 5.10% | 5.10% | 5.10% | 5.10% |
Expected stock price volatility | 45.00% | 45.00% | 45.00% | 35.00% | 35.00% |
Risk free interest rate | 4.30% | 4.28% | 3.97% | 4.51% | 4.19% |
Average expected life (years) | 3.00 | 5.00 | 5.00 | 3.00 | 5.00 |
Original grant date valuation | £4.04 | £4.47 | £7.72 | £4.40 | £3.95 |
36.2. Sharesave Plan
The Sharesave Plan was established on 3 May 2017. This plan allows all employees to save for
three years, subject to a maximum monthly amount of £250 (2024: £250), with a maximum savings
amount across all schemes of £500, and the option to buy shares in Secure Trust Bank PLC when the
plan matures. Participants cannot change the amount that they have agreed to save each month, but
they can suspend payments for up to twelve months. Participants can withdraw their savings at any
time but, if they do this before the completion date, they lose the option to buy shares at the Option
Price, and in most circumstances if participants cease to hold plan-related employment before the
third anniversary of the grant date, then the options are also lost. The options ordinarily vest
approximately three years after grant date and are exercisable for a period of six months
following vesting.
The original grant date valuation was determined using a Black–Scholes model.
Measurement inputs and assumptions used were as follows:
Awarded | Awarded | |
during 2025 | during 2024 | |
Share price at grant date | £11.00 | £8.14 |
Exercise price | £9.08 | £6.99 |
Expected stock price volatility | 47.62% | 37.22% |
Expected dividend yield | 6.68% | 5.10% |
Risk free interest rate | 4.02% | 3.75% |
Average expected life (years) | 3.00 | 3.00 |
Original grant date valuation | £3.23 | £2.07 |
36.3. Deferred Bonus Plan
The Deferred Bonus Plan was established on 3 May 2017. In 2025 and 2024, awards were granted
to certain senior managers of the Group. The awards vest in three equal tranches after one, two and
three years following deferral. Accordingly, the following awards remain outstanding under the
plan, entitling the members of the scheme to purchase shares in the Company:
Awards | Awards | Awards | ||
granted | granted | granted | ||
Vesting after | Vesting after | Vesting after | Awards | |
one year | two years | three years | granted | |
Number | Number | Number | Total | |
At 1 January 2024 | 25,693 | 30,434 | 32,406 | 88,533 |
Granted | 14,385 | 14,385 | 14,392 | 43,162 |
Exercised | (23,295) | (16,179) | (6,297) | (45,771) |
At 31 December 2024 | 16,783 | 28,640 | 40,501 | 85,924 |
Granted | 8,236 | 8,236 | 8,242 | 24,714 |
Exercised | (16,603) | (14,255) | (12,786) | (43,644) |
At 31 December 2025 | 8,416 | 22,621 | 35,957 | 66,994 |
Vested and exercisable | 180 | – | – | 180 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
186
continued
36. Share-based payments
The original grant date valuation was determined using a Black–Scholes model.
Measurement inputs and assumptions used were as follows:
Granted in |
Granted in |
Granted in |
|
2025 |
2025 |
2025 |
|
Awards |
Awards |
Awards |
|
vesting after |
vesting after |
vesting after |
|
one year |
two years |
three years |
|
Share price at grant date |
£6.00 |
£6.00 |
£6.00 |
Exercise price |
– |
– |
– |
Expected dividend yield |
9.34% |
7.01% |
6.68% |
Expected stock price volatility |
62.33% |
49.36% |
47.86% |
Risk free interest rate |
4.11% |
4.23% |
4.22% |
Average expected life (years) |
1.00 |
2.00 |
3.00 |
Original grant date valuation |
£5.46 |
£5.22 |
£4.91 |
Granted in |
Granted in |
Granted in |
|
2024 |
2024 |
2024 |
|
Awards |
Awards |
Awards |
|
vesting after |
vesting after |
vesting after |
|
one years |
two years |
three years |
|
Share price at grant date |
£6.90 |
£6.90 |
£6.90 |
Exercise price |
£0.40 |
£0.40 |
£0.40 |
Expected dividend yield |
5.10% |
5.10% |
5.10% |
Expected stock price volatility |
32.51% |
38.89% |
36.72% |
Risk free interest rate |
4.78% |
4.52% |
4.35% |
Average expected life (years) |
1.00 |
2.00 |
3.00 |
Original grant date valuation |
£6.18 |
£5.87 |
£5.57 |
36.4. Cash settled share-based payments
On 16 March 2015, a four-year ‘phantom’ share option scheme was established in order to provide
effective long-term incentive to senior management of the Group. Under the scheme, no actual
shares would be issued by the Company, but those granted awards under the scheme would be
entitled to a cash payment. The amount of the award is calculated by reference to the increase in the
value of an ordinary share in the Company over an initial value set at £25 per ordinary share, being
the price at which the shares resulting from the exercise of the first tranche of share options under
the share option scheme were sold in the market in November 2014. The options vested during
2019 and are exercisable for a period of 10 years after grant date, after which the options lapse.
As at 31 December 2024, using any reasonable range of inputs and assumptions, the fair value of
the ‘phantom’ options is £nil. Accordingly, no liability was recognised in the consolidated financial
statements at 31 December 2024. As at 31 December 2025 the shares had lapsed.
For each award granted during the year, expected volatility was determined by calculating the
historical volatility of the Group’s share price over the period equivalent to the expected term
of the options being granted. The expected life used in the model has been adjusted, based on
management’s best estimate, for the effects of non-transferability, exercise restrictions,
and behavioural considerations.
The fair value of equity settled share-based payment awards are calculated at grant date and
recognised over the period in which the employees become unconditionally entitled to the
awards (the vesting period). The amount is recognised in operating expenses in the income
statement, with a corresponding increase in equity. Further details of the valuation
methodology are set out above.
The fair value of cash settled share-based payments is recognised in operating expenses in
the income statement with a corresponding increase in liabilities over the vesting period.
The liability is remeasured at each reporting date and at the settlement date based on the
37.1. Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents comprise the following
balances with less than three months’ maturity from the date of acquisition.
Group |
Group |
Company |
Company |
|
2025 |
2024 |
2025 |
2024 |
|
£million |
£million |
£million |
£million |
|
Cash and Bank of England reserve account |
528.1 |
445.0 |
528.1 |
445.0 |
Loans and advances to banks |
36.8 |
24.0 |
36.1 |
23.6 |
Less: |
||||
Initial margin account |
(5.1) |
– |
(5.1) |
– |
559.8 |
469.0 |
559.1 |
468.6 |
The Group and Company has no access to the initial margin account, so this amount does not
meet the definition of cash and cash equivalents, and accordingly, is excluded from cash and
cash equivalents.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
187
continued
37. Cash flow statement
37.2. Changes in liabilities arising from financing activities
All changes in liabilities arising from financing activities arise from changes in cash flows, apart
from £0.1 million (2024: £0.1 million) of lease liabilities interest expense, as shown in Note 29,
and £0.2 million (2024: £0.2 million) amortisation of issue costs on subordinated liabilities,
as shown in Note 32.
hand and demand deposits, and cash equivalents, being highly liquid investments, which are
convertible into cash with an insignificant risk of changes in value with a maturity of three
months or less at the date of acquisition, including certain loans and advances to banks and
By their nature, the Group’s activities are principally related to the use of financial instruments.
The Directors and senior management of the Group have formally adopted a Group risk appetite
statement that sets out the Board’s attitude to risk and internal controls. Key risks identified by
the Directors are formally reviewed and assessed at least once a year by the Board. In addition,
key business risks are identified, evaluated and managed by operating management on an ongoing
basis by means of procedures, such as physical controls, credit and other authorisation limits and
segregation of duties. The Board also receives regular reports on any risk matters that need to be
brought to its attention. Significant risks identified in connection with the development of new
activities are subject to consideration by the Board. There are budgeting procedures in place and
reports are presented regularly to the Board detailing the results of each principal business unit,
variances against budget and prior year, and other performance data.
A more detailed description of the risk governance structure is contained in the Principal risks and
uncertainties section beginning on page 30.
Included within the principal financial risks inherent in the Group’s business are credit risk
The Company and Group take on exposure to credit risk, which is the risk that a counterparty
will be unable to satisfy their debt servicing commitments when due. Counterparties include the
consumers to whom the Group lends on a secured and unsecured basis and Small and Medium size
Enterprises (‘SMEs’) to whom the Group primarily lends on a secured basis, as well as the market
counterparties with whom the Group deals.
Impairment provisions are provided for expected credit losses at the statement of financial position
date. Significant changes in the economy could result in losses that are different from those
provided for at the statement of financial position date. Management, therefore, carefully manages
the Group’s exposures to credit risk as it considers this to be the most significant risk to the business.
Disclosures relating to collateral on loans and advances to customers are disclosed in Note 15.
The Board monitors the ratings of the counterparties in relation to the Group’s loans and advances
to banks. Disclosures of these at the year-end are contained in Note 13. There is no direct exposure
to the Eurozone and peripheral Eurozone countries.
See page 32 for further details on the mitigation and change during the year of credit risk.
Group and Company
With the exception of loans and advances to customers, the carrying amount of financial assets
represents the maximum exposure to credit risk. The maximum exposure to credit risk for loans and
advances to customers by portfolio and IFRS 9 stage without taking account of any collateral held or
other credit enhancements attached was as follows:
Stage 1 |
Stage 2 |
Stage 3 |
||||
Total gross |
||||||
loans and |
||||||
advances |
||||||
<= 30 days |
> 30 days |
to |
||||
past due |
past due |
Total |
customers |
|||
31 December 2025 |
£million |
£million |
£million |
£million |
£million |
£million |
Consumer Finance |
||||||
Retail Finance |
1,419.1 |
62.3 |
4.9 |
67.2 |
13.3 |
1,499.6 |
Business Finance |
||||||
Real Estate |
||||||
Finance |
1,277.9 |
85.4 |
– |
85.4 |
112.0 |
1,475.3 |
Commercial |
||||||
Finance |
321.8 |
43.3 |
– |
43.3 |
1.3 |
366.4 |
Total drawn |
||||||
exposure |
3,018.8 |
191.0 |
4.9 |
195.9 |
126.6 |
3,341.3 |
Off balance sheet |
||||||
Loan |
||||||
commitments |
386.9 |
10.9 |
– |
10.9 |
– |
397.8 |
Total gross |
||||||
exposure |
3,405.7 |
201.9 |
4.9 |
206.8 |
126.6 |
3,739.1 |
Less: |
||||||
Impairment |
||||||
allowance |
(14.5) |
(8.7) |
(2.5) |
(11.2) |
(19.8) |
(45.5) |
Provision for loan |
||||||
commitments |
(1.0) |
– |
– |
– |
– |
(1.0) |
Total net exposure |
3,390.2 |
193.2 |
2.4 |
195.6 |
106.8 |
3,692.6 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
188
continued
39. Credit risk
Stage 1 | Stage 2 | Stage 3 | ||||
Total gross | ||||||
loans and | ||||||
<= 30 days | > 30 days | advances to | ||||
past due | past due | Total | customers | |||
31 December 2025 | £million | £million | £million | £million | £million | £million |
Assets held for sale: | ||||||
Vehicle Finance | ||||||
Gross exposure | 328.4 | 53.1 | 18.5 | 71.6 | 34.8 | 434.8 |
Less: Impairment | ||||||
allowance | (10.7) | (5.3) | (4.8) | (10.1) | (23.2) | (44.0) |
Total net exposure | 317.7 | 47.8 | 13.7 | 61.5 | 11.6 | 390.8 |
Of collateral in the form of property, £156.1 million (2024: £110.1 million) has been pledged
as security for Real Estate Finance Stage 3 balances of £104.0 million (2024: £86.1 million).
Of collateral in the form of vehicles, £21.5 million (2024: £37.4 million) has been pledged
as security for Vehicle Finance Stage 3 balances of £11.6 million (2024: £20.7 million).
Stage 1 | Stage 2 | Stage 3 | ||||
Total gross | ||||||
loans and | ||||||
<= 30 days | > 30 days | advances to | ||||
past due | past due | Total | customers | |||
31 December 2024 | £million | £million | £million | £million | £million | £million |
Consumer Finance | ||||||
Retail Finance | 1,324.1 | 48.1 | 4.1 | 52.2 | 11.6 | 1,387.9 |
Vehicle Finance | 500.7 | 40.0 | 21.0 | 61.0 | 65.0 | 626.7 |
Business Finance | ||||||
Real Estate | ||||||
Finance | 1,046.9 | 209.0 | 0.1 | 209.1 | 97.9 | 1,353.9 |
Commercial | ||||||
Finance | 332.9 | 6.7 | – | 6.7 | 12.2 | 351.8 |
Total drawn | ||||||
exposure | 3,204.6 | 303.8 | 25.2 | 329.0 | 186.7 | 3,720.3 |
Off balance sheet | ||||||
Loan | ||||||
commitments | 262.4 | 0.8 | – | 0.8 | – | 263.2 |
Total gross | ||||||
exposure | 3,467.0 | 304.6 | 25.2 | 329.8 | 186.7 | 3,983.5 |
Less: | ||||||
Impairment | ||||||
allowance | (29.6) | (8.6) | (7.3) | (15.9) | (66.3) | (111.8) |
Provision for loan | ||||||
commitments | (0.9) | – | – | – | – | (0.9) |
Total net exposure | 3,436.5 | 296.0 | 17.9 | 313.9 | 120.4 | 3,870.8 |
A reconciliation of opening to closing allowance for impairment of loans and advances to customers
is presented in Note 17.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
189
continued
39. Credit risk
Company
In addition to the previous tables, counterparties to the Company include subsidiary undertakings.
For the ECL on amounts due from related companies, see Note 26.
39.1. Concentration risk
Management assesses the potential concentration risk from geographic, product and individual
loan concentration. Due to the nature of the Group’s lending operations, the Directors consider the
lending operations of the Group as a whole to be well diversified. Details of the Group’s loans and
advances to customers and loan commitments by product is provided in Notes 3 and 33,
respectively.
Geographical concentration
The Group’s Real Estate Finance loan book is secured against UK property only. The geographical
concentration of these business loans and advances to customers, by location of the security,
is as follows:
Group and Company
2025 |
2024 |
|
£million |
£million |
|
Central England |
134.2 |
113.2 |
Greater London |
711.2 |
691.5 |
Northern England |
176.0 |
124.8 |
South East England (excl. Greater London) |
251.9 |
273.5 |
South West England |
107.4 |
54.4 |
Scotland, Wales and Northern Ireland |
94.6 |
96.5 |
Gross loans and receivables |
1,475.3 |
1,353.9 |
Allowance for impairment |
(8.4) |
(12.5) |
Total |
1,466.9 |
1,341.4 |
39.2. Forbearance
Consumer Finance
Throughout the year, the Group did not routinely reschedule contractual arrangements where
customers default on their repayments. In cases where it offered the customer the option to reduce
or defer payments for a short period, in line with our responsibilities from a conduct perspective,
the loans retained the normal contractual payment due dates and were treated the same as any
other defaulting cases for impairment purposes. Arrears tracking would continue on the account,
with any impairment charge being based on the original contractual due dates for all products.
All forbearance arrangements are formally discussed and agreed with the customer in accordance
with regulatory guidance on the support of customers. By offering customers in financial difficulty
the option of forbearance, the Group potentially exposes itself to an increased level of risk through
prolonging the period of non-contractual payment. All forbearance arrangements are reviewed and
monitored regularly to assess the ongoing potential risk, suitability and sustainability to the Group.
As at the year-end, the Consumer Finance business approximately had the following cases (by
volume) in forbearance:
• Retail Finance 0.10% (2024: 0.14%); and
• Vehicle Finance: 0.70% (2024: 0.59%).
In respect of Vehicle Finance, where forbearance measures are not possible or are considered not
to be in the customer’s best interests, or where such measures have been tried and the customer
has not adhered to the forbearance terms that have been agreed, the Group will consider realising
its security and taking possession of the vehicle in order to sell it and clear the outstanding debt.
Where the sale of the vehicle does not cover all of the remaining loan, normal credit collection
procedures may be carried out in order to recover the outstanding debt, or the debt may be sold
to a third party debt recovery agent, or in certain circumstances, the debt may be written off.
Real Estate Finance
Where clients provided evidence of payment difficulties, they were supported by the provision of
extensions to loan maturity dates. A small number of clients, who experienced difficulties in meeting
their financial commitments, were offered concessions (facility restructures or amendments) that
Real Estate Finance would not have provided under normal circumstances. As at 31 December
2025, 3.0% of accounts were classed as forborne (2024: 4.9%). Where forbearance measures are
not possible, or are considered not to be in the client’s best interests, or where such measures have
been tried and the customer has not adhered to the forbearance terms that have been agreed, the
The Group’s market risk is primarily linked to interest rate risk. Interest rate risk refers to the
exposure of the Group’s financial position to adverse movements in interest rates.
When interest rates change, the present value and timing of future cash flows change. This, in turn,
changes the underlying value of the Group’s assets, liabilities and off-balance sheet instruments,
and hence, its economic value. Changes in interest rates also affect the Group’s earnings by altering
interest-sensitive income and expenses, affecting its net interest income.
The principal currency in which the Group operates is Sterling, although a small number of
transactions are completed in US dollars, Euros and other currencies in the Commercial Finance
business. The Group has no significant exposures to foreign currencies and hedges any residual
currency risks to Sterling. The Group does not operate a trading book.
See page 35 for further details on the mitigation and change during the year of market risk.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
190
continued
40. Market risk
Interest rate risk
Group and Company
The Group seeks to ‘match’ interest rate risk between its assets and liabilities in the first instance
and hedges any material residual risks using interest rate derivatives in accordance with the Group’s
risk appetite.
The Group monitors its exposure to interest rate risk on at least a weekly basis, using market value
sensitivity and earnings at risk, which were as follows at 31 December:
2025 |
2024 |
|
£million |
£million |
|
Market value sensitivity |
||
+200bp parallel shift in yield curve |
2.9 |
1.5 |
-200bp parallel shift in yield curve |
(3.1) |
(1.6) |
Earnings at risk sensitivity |
||
+100bp parallel shift in yield curve |
0.4 |
1.5 |
-100bp parallel shift in yield curve |
(0.6) |
(1.5) |
The Directors consider that 200bps in the case of market value sensitivity and 100bps in the case
of earnings at risk are a reasonable approximation of possible changes.
During the year, the methodology for earnings at risk sensitivity was updated to a more appropriate
calculation based on a constant balance sheet approach compared to a run off balance sheet
Liquidity and funding risk is the risk that the Group is unable to meet its obligations as they fall
due or can only do so at excessive cost. The Group maintains adequate liquidity resources and
a prudent, stable funding profile at all times to cover liabilities as they fall due in normal and
stressed conditions.
The Group manages its liquidity in line with internal and regulatory requirements, and at least
annually assesses the robustness of the liquidity requirements as part of the Group’s Internal
Liquidity Adequacy Assessment Process (‘ILAAP’).
See page 33 for further details on the mitigation and change during the year of liquidity and
funding risk.
The tables below analyse the contractual undiscounted cash flows for financial liabilities into
relevant maturity groupings:
More than |
More than |
|||||
three |
one year |
|||||
months |
but |
|||||
Gross |
Not more |
but less |
less than |
|||
Carrying |
nominal |
than three |
than |
five |
More than |
|
amount |
outflow |
months |
one year |
years |
five years |
|
At 31 December 2025 |
£million |
£million |
£million |
£million |
£million |
£million |
Due to banks |
205.9 |
208.6 |
30.2 |
178.4 |
– |
– |
Deposits from customers |
3,509.6 |
3,624.3 |
2,379.8 |
473.4 |
767.7 |
3.4 |
Subordinated liabilities |
93.5 |
125.1 |
5.9 |
5.9 |
113.3 |
– |
Lease liabilities |
4.4 |
5.1 |
0.3 |
0.8 |
2.2 |
1.8 |
Other financial liabilities |
87.0 |
87.0 |
87.0 |
– |
– |
– |
3,900.4 |
4,050.1 |
2,503.2 |
658.5 |
883.2 |
5.2 |
|
Derivative financial |
||||||
liabilities |
0.1 |
0.1 |
0.1 |
– |
– |
– |
3,900.5 |
4,050.2 |
2,503.3 |
658.5 |
883.2 |
5.2 |
More than |
More than |
|||||
three |
one year |
|||||
months |
but |
|||||
Gross |
Not more |
but less |
less than |
|||
Carrying |
nominal |
than three |
than |
five |
More than |
|
amount |
outflow |
months |
one year |
years |
five years |
|
At 31 December 2024 |
£million |
£million |
£million |
£million |
£million |
£million |
Due to banks |
365.8 |
374.1 |
52.6 |
321.5 |
– |
– |
Deposits from customers |
3,244.9 |
3,336.5 |
2,058.0 |
674.8 |
601.0 |
2.7 |
Subordinated liabilities |
93.3 |
136.8 |
– |
11.7 |
125.1 |
– |
Lease liabilities |
1.8 |
1.9 |
0.3 |
0.8 |
0.8 |
– |
Other financial liabilities |
23.1 |
23.1 |
23.1 |
– |
– |
– |
3,728.9 |
3,872.4 |
2,134.0 |
1,008.8 |
726.9 |
2.7 |
|
Derivative financial |
||||||
liabilities |
10.0 |
10.2 |
2.0 |
3.4 |
4.8 |
– |
3,738.9 |
3,882.6 |
2,136.0 |
1,012.2 |
731.7 |
2.7 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
191
continued
41. Liquidity and funding risk
Company
The contractual undiscounted cash flows for financial liabilities of the Company are the same as
above except for the following:
More than | More than | |||||
three | one year | |||||
months | but | |||||
Gross | Not more | but less | less than | |||
Carrying | nominal | than three | than | five | More than | |
amount | outflow | months | one year | years | five years | |
At 31 December 2025 | £million | £million | £million | £million | £million | £million |
Lease liabilities | 4.2 | 4.9 | 0.3 | 0.6 | 2.2 | 1.8 |
Other financial liabilities | 100.8 | 100.8 | 100.8 | – | – | – |
Non-derivative financial | ||||||
liabilities | 3,914.0 | 4,063.7 | 2,517.0 | 658.3 | 883.2 | 5.2 |
Total | 3,914.1 | 4,063.8 | 2,517.1 | 658.3 | 883.2 | 5.2 |
More than | More than | |||||
three | one year | |||||
months | but | |||||
Gross | Not more | but less | less than | |||
Carrying | nominal | than three | than | five | More than | |
amount | outflow | months | one year | years | five years | |
At 31 December 2024 | £million | £million | £million | £million | £million | £million |
Lease liabilities | 1.6 | 1.7 | 0.3 | 0.7 | 0.7 | – |
Other financial liabilities | 33.6 | 33.6 | 33.6 | – | – | – |
Non-derivative financial | ||||||
liabilities | 3,739.2 | 3,882.7 | 2,144.5 | 1,008.7 | 726.8 | 2.7 |
Total | 3,749.2 | 3,892.9 | 2,146.5 | 1,012.1 | 731.6 | 2.7 |
Capital risk is the risk that the Group will have insufficient capital resources to absorb potential
losses. The Group adopts a conservative approach to managing its capital and at least annually
assesses the robustness of the capital requirements as part of the Group’s Internal Capital
Adequacy Assessment Process (‘ICAAP’). The Group has Tier 1 and Tier 2 capital resources,
noting the regulatory adjustments required in the table on the next page.
The following table, which is unaudited and, therefore, not in scope of the Independent Auditor’s
Report, shows the regulatory capital resources for the Group.
2025 | 2024 | |
£million | £million | |
(unaudited) | (unaudited) | |
Common Equity Tier 1 (‘CET 1’) | ||
Share capital | 7.6 | 7.6 |
Share premium | 84.2 | 84.0 |
Retained earnings | 284.4 | 271.1 |
Own shares | (1.9) | (2.2) |
IFRS 9 transition adjustments | – | 0.1 |
Goodwill | (1.0) | (1.0) |
Intangible assets net of attributable deferred tax | (4.1) | (4.0) |
CET 1 capital before foreseeable dividend | 369.2 | 355.6 |
Foreseeable dividend | (4.4) | (4.2) |
CET 1 and Tier 1 capital | 364.8 | 351.4 |
Tier 2 | ||
Subordinated liabilities | 89.5 | 89.3 |
Less ineligible portion | (25.9) | (25.0) |
Total Tier 2 capital¹ | 63.6 | 64.3 |
Own funds | 428.4 | 415.7 |
Reconciliation to total equity: | ||
IFRS 9 transition adjustments | – | (0.1) |
Eligible subordinated liabilities | (63.6) | (64.3) |
Cash flow hedge reserve | – | – |
Goodwill and other intangible assets net of attributable deferred tax | 5.1 | 5.0 |
Foreseeable dividend | 4.4 | 4.2 |
Total equity | 374.3 | 360.5 |
Note:
1. Tier 2 capital comprises solely subordinated debt, excluding accrued interest, capped at 25% of the Pillar 1
and 2A requirements as set by the PRA.
The Group elected to adopt the IFRS 9 transitional rules. The initial IFRS 9 transitional adjustment
ended in 2022. The ‘quick fix’ part of the relief, for increases in provisions since 1 January 2020,
except where these provisions relate to defaulted accounts, were added back to eligible capital
(net of attributable deferred tax) at 25% in 2024. This relief ended on 1 January 2025.
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
192
continued
42. Capital risk (unaudited)
The Group’s regulatory capital is divided into:
• CET 1 capital, which comprises shareholders’ funds (excluding employee benefit trust own
shares), after adding back the IFRS 9 transition adjustment and deducting qualifying intangible
assets and prudent valuation adjustments. IFRS 9 transition adjustment and intangible assets
are both net of attributable deferred tax; and
• Tier 2 capital, which is solely subordinated debt net of unamortised issue costs,
capped at 25% of the capital requirement.
The Group operates the standardised approach to credit risk, whereby risk weightings are applied
to the Group’s on and off balance sheet exposures. The weightings applied are those stipulated in
the UK Capital Requirements Regulation.
Further information on capital is included within our Pillar 3 disclosures, which can be found on
the Group’s website
(www.securetrustbank.com/pillar3)
. See page 34 for further details on the
mitigation and change during the year of capital risk.
The Group is subject to capital requirements imposed by the PRA on all financial services firms.
All financial assets and liabilities at 31 December 2025 and 31 December 2024 were carried at
amortised cost, except for derivative financial instruments that are at fair value through profit and
loss. Therefore, for these assets and liabilities, the fair value hierarchy noted below relates to the
disclosure in this note only.
Group
Total |
Fair |
Total |
Fair |
|||
carrying |
Fair |
Value |
carrying |
Fair |
Value |
|
amount |
value |
hierarchy |
amount |
value |
hierarchy |
|
2025 |
2025 |
level |
2024 |
2024 |
level |
|
£million |
£million |
2025 |
£million |
£million |
2024 |
|
Cash and Bank of England reserve |
||||||
account |
528.1 |
528.1 |
Level 1 |
445.0 |
445.0 |
Level 1 |
Loans and advances to banks |
36.8 |
36.8 |
Level 2 |
24.0 |
24.0 |
Level 2 |
Debt securities |
1.0 |
1.0 |
Level 1 |
– |
– |
– |
Loans and advances to customers |
3,295.8 |
3,289.0 |
Level 3 |
3,608.5 |
3,612.3 |
Level 3 |
Derivative financial instruments |
0.2 |
0.2 |
Level 2 |
14.3 |
14.3 |
Level 2 |
Other financial assets |
1.7 |
1.7 |
Level 3 |
2.0 |
2.0 |
Level 3 |
3,863.6 |
3,856.8 |
4,093.8 |
4,097.6 |
|||
Due to banks |
205.9 |
205.9 |
Level 2 |
365.8 |
365.8 |
Level 2 |
Deposits from customers |
3,509.6 |
3,530.7 |
Level 3 |
3,244.9 |
3,254.0 |
Level 3 |
Derivative financial instruments |
0.1 |
0.1 |
Level 2 |
10.0 |
10.0 |
Level 2 |
Lease liabilities |
4.4 |
4.4 |
Level 3 |
1.8 |
1.8 |
Level 3 |
Other financial liabilities |
87.0 |
87.0 |
Level 3 |
23.1 |
23.1 |
Level 3 |
Subordinated liabilities |
93.5 |
104.2 |
Level 2 |
93.3 |
90.2 |
Level 2 |
3,900.5 |
3,932.3 |
3,738.9 |
3,744.9 |
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
193
continued
43. Classification of financial assets and liabilities
Company
Total |
Fair |
Total |
Fair |
|||
carrying |
Fair |
Value |
carrying |
Fair |
Value |
|
amount |
value |
hierarchy |
amount |
value |
hierarchy |
|
2025 |
2025 |
level |
2024 |
2024 |
level |
|
£million |
£million |
2025 |
£million |
£million |
2024 |
|
Cash and Bank of England reserve |
||||||
account |
528.1 |
528.1 |
Level 1 |
445.0 |
445.0 |
Level 1 |
Loans and advances to banks |
36.1 |
36.1 |
Level 2 |
23.6 |
23.6 |
Level 2 |
Debt securities |
1.0 |
1.0 |
Level 1 |
– |
– |
– |
Loans and advances to customers |
3,295.8 |
3,289.0 |
Level 3 |
3,608.5 |
3,612.3 |
Level 3 |
Derivative financial instruments |
0.2 |
0.2 |
Level 2 |
14.3 |
14.3 |
Level 2 |
Other financial assets |
26.7 |
26.7 |
Level 3 |
4.0 |
4.0 |
Level 3 |
3,887.9 |
3,881.1 |
4,095.4 |
4,099.2 |
|||
Due to banks |
205.9 |
205.9 |
Level 2 |
365.8 |
365.8 |
Level 2 |
Deposits from customers |
3,509.6 |
3,530.7 |
Level 3 |
3,244.9 |
3,254.0 |
Level 3 |
Derivative financial instruments |
0.1 |
0.1 |
Level 2 |
10.0 |
10.0 |
Level 2 |
Lease liabilities |
4.2 |
4.2 |
Level 3 |
1.6 |
1.6 |
Level 3 |
Other financial liabilities |
100.8 |
100.8 |
Level 3 |
33.6 |
33.6 |
Level 3 |
Subordinated liabilities |
93.5 |
104.2 |
Level 2 |
93.3 |
90.2 |
Level 2 |
3,914.1 |
3,945.9 |
3,749.2 |
3,755.2 |
Fair value classification
The tables above include the fair values and fair value hierarchies of the Group and Company’s
financial assets and liabilities. The Group measures fair value using the following fair value hierarchy
that reflects the significance of the inputs used in making measurements.
• Level 1: Quoted prices in active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: Inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
Debt securities
The fair value of debt securities is based on the quoted price where available.
Loans and advances to customers and Deposits from customers
The fair value of the financial assets and liabilities is calculated based upon the present value of the
expected future principal and interest cash flows. The rate used to discount the cash flows was a
market rate of interest at the balance sheet date. For loans and advances to customers, the same
assumptions regarding the risk of default were applied as those used to derive the carrying value.
Derivative financial instruments
The fair value of derivative financial instruments is calculated based on the present value of the
expected future cash flows of the instruments. The rate used to discount the cash flows was the
SONIA forward curve at the balance sheet date.
Subordinated liabilities
The fair value of subordinated liabilities is calculated based on quoted market prices where
available, or where an active market quote is not available, it is calculated based on the present
value of the expected future cash flows of the instruments. The rate used to discount the cash
flows was the UK Government five year bond plus the initial spread on the instruments.
For all remaining financial assets and liabilities, the fair value of financial assets and liabilities is
Strategic Report
Corporate Governance
Financial Statements
Other Information
continued
Notes to the consolidated financial statements
Secure Trust Bank PLC Annual Report & Accounts 2025
194
Related parties of the Company and Group include subsidiaries, key management personnel, close
family members of key management personnel and entities that are controlled, jointly controlled or
significantly influenced, or for which significant voting power is held, by key management personnel
or their close family members.
At 31 December 2025, £0.3 million (2024: £0.1 million) deposits were outstanding in relation to key
management personnel.
The Company undertook the following transactions with other companies in the Secure Trust
Bank Group:
2025 |
2024 |
|
£million |
£million |
|
Interest income and similar income |
(30.4) |
(30.3) |
Operating expenses |
(0.1) |
(0.4) |
Allowances for impairment of amounts due from related companies |
– |
0.2 |
Investment income |
10.8 |
9.5 |
(19.7) |
(21.0) |
|
Equity contribution to subsidiaries re. share-based payments |
0.2 |
0.2 |
The loans and advances with, and amounts receivable and payable to, related companies are
noted below:
Company |
Company |
|
2025 |
2024 |
|
£million |
£million |
|
Amounts receivable from subsidiary undertakings |
25.3 |
2.3 |
Amounts due to subsidiary undertakings |
(15.7) |
(12.5) |
9.6 |
(10.2) |
All amounts above are repayable on demand and the Company charged interest at a variable rate on
amounts outstanding.
The Directors’ emoluments (including pension contributions and benefits in kind) for the year are
disclosed in the Directors’ Remuneration Report on page 103.
At the year-end the ordinary shares held by the Directors, holdings of share options, as well
as details of those share options exercised during the year are disclosed in the Directors’
The Capital Requirements (Country-by-Country Reporting) Regulations 2013 introduced reporting
obligations for institutions within the scope of CRD V. The requirements aim to give increased
transparency regarding the activities of institutions. The Country-by-Country information is set
out below:
Average |
Profit |
||||||
Nature |
number of |
before |
Tax paid |
||||
of |
Turnover |
FTE |
tax |
on profit |
|||
Name |
activity |
Location |
£million |
employees |
£million |
£million |
|
Secure Trust |
Banking |
||||||
31 December 2025 |
Bank PLC |
services |
UK |
387.1 |
860 |
27.5 |
12.0 |
Secure Trust |
Banking |
||||||
31 December 2024 |
Bank PLC |
services |
UK |
385.2 |
915 |
29.2 |
8.8 |
There have been no significant events between 31 December 2025 and the date of approval of
these Financial Statements, which would require a change to or additional disclosure in the
financial statements.
The sale of the Consumer Vehicle Finance business completed on 25 February 2026. The Group will
undertake servicing of the loan portfolio on behalf of the purchaser post completion until a target
migration date of 30 May 2026. The Group will remain responsible for administering, and retain
liability for, payments due to customers under the FCA’s motor finance commission redress scheme
(when concluded) for any relevant loans in the portfolio.
Further information will be included in the Group’s Interim Report for the six months ended
Five-year summary (unaudited)
2025
£million
2024
£million
2023
£million
2022
£million
2021
£million
Profit for the year
Continuing operations
Interest and similar income
301.8
296.8
244.9
156.4
125.9
Interest expense and similar charges
(150.7)
(159.5)
(121.5)
(42.7)
(21.9)
Net interest income
151.1
137.3
123.4
113.7
104.0
Net fee and commission income
14.1
18.2
15.4
15.6
11.6
Operating income
165.2
155.5
138.8
129.3
115.6
Net impairment charge on loans and
advances to customers
(31.4)
(23.2)
(28.4)
(16.9)
(4.9)
Other gains/(losses)
0.1
(0.4)
–
1.1
1.5
Fair value and other gains/(losses) on
financial instruments
0.1
1.2
0.5
(0.3)
(0.1)
Operating expenses¹
(74.7)
(72.2)
(71.5)
(74.6)
(72.7)
Profit before income tax before
exceptional items
59.3
60.9
39.4
38.6
39.4
Exceptional items
–
(1.5)
(1.8)
–
–
Profit before income tax
59.3
59.4
37.6
38.6
39.4
Discontinued operations
(Loss)/profit before income tax before
exceptional items
(7.7)
(21.8)
0.5
5.4
16.6
Exceptional items
(24.1)
(8.4)
(4.7)
–
–
(Loss)/profit before income tax
(31.8)
(30.2)
(4.2)
5.4
16.6
Total profit before income tax
27.5
29.2
33.4
44.0
56.0
Continuing
2025
£million
Continuing
2024
£million
Continuing
2023
£million
Continuing
2022
£million
Continuing
2021
£million
Earnings per share for profit attributable
to the equity holders of the Company
during the year (pence per share)
Basic earnings per ordinary share
238.8
227.7
149.9
156.9
172.2
1
Group transfer pricing changed after 2022, therefore 2022 and 2021 operating expenses represents
management accounts at that time and are prepared under a different basis.
2025
£million
2024
£million
2023
£million
2022
£million
2021
£million
Financial position
Cash and Bank of England reserve account
528.1
445.0
351.6
370.1
234.0
Loans and advances to banks
36.8
24.0
53.7
50.5
52.0
Debt securities
1.0
–
–
–
25.0
Loans and advances to customers
3,295.8
3,608.5
3,315.3
2,919.5
2,530.6
Fair value adjustment for portfolio hedged risk
7.3
(6.8)
(3.9)
(32.0)
(3.5)
Derivative financial instruments
0.2
14.3
25.5
34.9
3.8
Assets held for sale
390.8
–
–
–
1.3
Other assets
56.0
31.7
35.8
36.6
42.7
Total assets
4,316.0
4,116.7
3,778.0
3,379.6
2,885.9
Due to banks
205.9
365.8
402.0
400.5
390.8
Deposits from customers
3,509.6
3,244.9
2,871.8
2,514.6
2,103.2
Fair value adjustment for portfolio hedged risk
4.7
(3.4)
(1.4)
(23.0)
(5.3)
Derivative financial instruments
0.1
10.0
22.0
26.7
6.2
Subordinated liabilities
93.5
93.3
93.1
51.1
50.9
Other liabilities
127.9
45.6
46.0
83.5
37.7
Total shareholders’ equity
374.3
360.5
344.5
326.2
302.4
Total liabilities and shareholders’ equity
4,316.0
4,116.7
3,778.0
3,379.6
2,885.9
Secure Trust Bank PLC Annual Report & Accounts 2025
195
Strategic Report
Corporate Governance
Financial Statements
Other Information
Appendix to the Annual Report (unaudited)
Key performance indicators and other alternative performance measures
All key performance indicators are based on continuing operations and continuing loans and
advances to customers, unless otherwise stated.
(i) Continuing loans and advances to customers
A reconciliation of total loans and advances to customers to continuing operations loans and
advances to customers is set out below:
2025
£million
2024
£million
2023
£million
Loans and advances to customers
3,295.8
3,608.5
3,315.3
Assets held for sale – Vehicle Finance
390.8
–
–
Total loans and advances to customers
3,686.6
3,608.5
3,315.3
Less discontinued loans and advances
to customers:
Vehicle Finance (Held for sale in 2026)
(390.8)
(558.3)
(467.2)
Continuing loans and advances to customers
3,295.8
3,050.2
2,848.1
(ii) Continuing average equity
Continuing average equity is calculated by multiplying the percentage of the average of the monthly
total Group equity balances over the total Group average risk-weighted assets (‘RWAs’), by the
continuing average RWAs.
2025
£million
2024
£million
2023
£million
Total Group average equity
371.7
355.3
334.9
Total Group average RWAs
2,857.9
2,732.9
2,500.0
13.0%
13.0%
13.4%
Continuing average RWAs
2,399.6
2,279.7
2,100.2
Continuing average equity
312.1
296.4
281.3
(iii) Net interest margin, net revenue margin and risk adjusted margin ratios
Net interest margin is calculated as net interest income for the financial year as a percentage of the
average loan book. Risk adjusted margin is calculated as risk adjusted income for the financial year
as a percentage of the average loan book. Net revenue margin is calculated as operating income for
the financial year as a percentage of the average loan book. The calculation of the average loan book
is the average of the monthly balance of loans and advances to customers, net of provisions, over
13 months.
Continuing operations
2025
£million
2024
£million
2023
£million
Net interest income
151.1
137.3
123.4
Net fee and commission income
14.1
18.2
15.4
Operating income
165.2
155.5
138.8
Average loan book
3,184.3
2,908.4
2,669.9
Net revenue margin
5.2%
5.3%
5.2%
Net interest margin
4.7%
4.7%
4.6%
Retail Finance
2025
£million
2024
£million
2023
£million
Net interest income
97.5
86.8
73.1
Average loan book
1,405.6
1,285.9
1,143.4
Net interest margin
6.9%
6.8%
6.4%
Net interest income
97.5
86.8
73.1
Net fee and commission income
3.7
3.2
3.2
Net impairment charge on loans and advances to
customers
(19.2)
(13.3)
(15.9)
Risk adjusted income
82.0
76.7
60.4
Risk adjusted margin
5.8%
6.0%
5.3%
Real Estate Finance
2025
£million
2024
£million
2023
£million
Net interest income
34.2
32.6
29.7
Net fee and commission income
0.3
0.4
0.9
Operating income
34.5
33.0
30.6
Net impairment charge on loans and advances to
customers
(8.8)
(4.0)
(4.5)
Risk adjusted income
25.7
29.0
26.1
Average loan book
1,417.2
1,269.5
1,177.7
Net revenue margin
2.4%
2.6%
2.6%
Risk adjusted margin
1.8%
2.3%
2.2%
Secure Trust Bank PLC Annual Report & Accounts 2025
196
Strategic Report
Corporate Governance
Financial Statements
Other Information
Appendix to the Annual Report (unaudited)
continued
Key performance indicators and other alternative performance
measures
continued
(iii) Net interest margin, net revenue margin and risk adjusted margin ratios
continued
Commercial Finance
2025
£million
2024
£million
2023
£million
Net interest income
12.1
12.2
13.2
Net fee and commission income
10.1
14.5
11.3
Operating income
22.2
26.7
24.5
Net impairment charge on
loans and advances to customers
(3.4)
(5.9)
(8.0)
Risk adjusted income
18.8
20.8
16.5
Average loan book
361.5
353.0
348.8
Net revenue margin
6.1%
7.6%
7.0%
Risk adjusted margin
5.2%
5.9%
4.7%
Discontinued: Vehicle Finance
2025
£million
2024
£million
2023
£million
Net interest income
47.5
47.6
44.1
Average loan book
519.5
505.4
429.6
Net interest margin
9.1%
9.4%
10.3%
Net interest income
47.5
47.6
44.1
Net fee and commission income
0.8
0.8
1.8
Net impairment charge on loans and advances
to customers
(26.6)
(38.7)
(14.8)
Other (losses)/gains: gains on modification of
financial assets
0.1
0.1
0.3
Risk adjusted income
21.8
9.8
31.4
Risk adjusted margin
4.2%
1.9%
7.3%
These ratios show the net return on our lending assets, with and without adjusting for cost of risk.
(iv) Return on average equity
Total return on average equity is calculated as the total profit after tax for the previous 12 months
asa percentage of average equity. Total adjusted return on average equity is calculated as the
total adjusted profit after tax for the previous 12 months as a percentage of average equity.
Average equity is calculated as the average of the monthly equity balances.
2025
£million
2024
£million
2023
£million
Total profit after tax
17.6
19.7
24.3
Less: total exceptional items after tax
21.2
8.9
5.9
Total adjusted profit after tax
38.8
28.6
30.2
Average equity
371.7
355.3
334.9
Total return on average equity
4.7%
5.5%
7.3%
Total adjusted return on average equity
10.4%
8.0%
9.0%
Continuing return on average equity is calculated as the continuing profit after tax from the
previous 12 months as a percentage of average continuing equity. Continuing adjusted return on
average equity is calculated as the continuing adjusted profit after tax for the previous 12 months
as a percentage of average continuing equity. Average equity is calculated as the average of the
monthly equity balances.
2025
£million
2024
£million
2023
£million
Continuing profit after tax
44.6
43.4
28.1
Less: continuing exceptional items after tax
–
1.1
1.8
Continuing adjusted profit after tax
44.6
44.5
29.9
Average continuing equity
312.1
296.4
281.3
Continuing return on average equity
14.3%
14.6%
10.0%
Continuing adjusted return on average equity
14.3%
15.0%
10.6%
Return on average equity is a measure of the Group’s ability to generate profit from the equity
available to it.
Secure Trust Bank PLC Annual Report & Accounts 2025
197
Strategic Report
Corporate Governance
Financial Statements
Other Information
Appendix to the Annual Report (unaudited)
continued
Key performance indicators and other alternative performance
measures
continued
(v) Cost to income ratio
Total cost to income is calculated as total operating expenses for the financial year as a
percentage of total operating income for the financial year. Adjusted cost to income is calculated
as adjusted operating expenses for the financial year as a percentage of total operating income for
the financial year.
2025
£million
2024
£million
2023
£million
Total operating expenses
128.3
113.7
106.2
Less: exceptional items
(24.1)
(9.9)
(6.5)
Total adjusted operating expenses
104.2
103.8
99.7
Total operating income
213.5
203.9
184.7
Total cost to income ratio
60.1%
55.8%
57.5%
Adjusted cost to income ratio
48.8%
50.9%
54.0%
Continuing cost to income is calculated as continuing operating expenses for the financial year as a
percentage of continuing operating income for the financial year. Continuing adjusted cost to
income is calculated as continuing adjusted operating expenses for the financial year as a
percentage of continuing operating income for the financial year.
2025
£million
2024
£million
2023
£million
Continuing operating expenses
74.7
73.7
73.3
Less: continuing exceptional items
–
(1.5)
(1.8)
Continuing adjusted operating expenses
74.7
72.2
71.5
Continuing operating income
165.2
155.5
138.8
Continuing cost to income ratio
45.2%
47.4%
52.8%
Continuing adjusted cost to income ratio
45.2%
46.4%
51.5%
The cost to income ratio measures how efficiently the Group is utilising its cost base to
produce income.
(vi) Continuing cost of risk
Continuing cost of risk is calculated as the total of the net impairment charge on continuing
loans and advances to customers for the financial year as a percentage of the average continuing
loan book.
Continuing
2025
£million
2024
£million
2023
£million
Net impairment charge on loans and advances to customers
31.4
23.2
28.4
Average loan book
3,184.3
2,908.4
2,669.9
Continuing cost of risk
1.0%
0.8%
1.1%
The cost of risk measures how effective the Group has been in managing the credit risk of its
lending portfolios.
(vii) Continuing cost of funds
Cost of funds is calculated as the interest expense for the financial year expressed as a percentage
of average loan book.
Continuing
2025
£million
2024
£million
2023
£million
Interest expense and similar charges
150.7
159.5
121.5
Average loan book
3,184.3
2,908.4
2,669.9
Continuing cost of funds
4.7%
5.5%
4.6%
The cost of funds measures the cost of money being lent to customers.
Secure Trust Bank PLC Annual Report & Accounts 2025
198
Strategic Report
Corporate Governance
Financial Statements
Other Information
Key performance indicators and other alternative performance
measures
continued
(viii) Funding ratio and loan to deposit ratio
The funding ratio is calculated as the total funding at the year-end divided by total loans and
advances to customers at the year-end. The loans to deposit ratio is calculated as total loans
and advances to customers at the year-end divided by deposits from customers at the year-end:
2025
£million
2024
£million
2023
£million
Deposits from customers
3,509.6
3,244.9
2,871.8
Term Funding Scheme with additional incentives
for SMEs and sale and repurchase agreements
(including accrued interest)
201.2
358.9
395.1
Tier 2 capital (including accrued interest)
93.5
93.3
93.1
Equity
374.3
360.5
344.5
Total funding
4,178.6
4,057.6
3,704.5
Total loans and advances to customers
3,686.6
3,608.5
3,315.3
Funding ratio
113.3%
112.4%
111.7%
Loan to deposit ratio
105.0%
111.2%
115.4%
The funding ratio and loan to deposit ratio measure the Group’s excess of funding that
provides liquidity.
(ix) Tangible book value per share
Tangible book value per share is calculated as the total equity less intangible assets divided by the
number of shares in issue at the end of the year less own shares.
2025
£million
2024
£million
Total equity
374.3
360.5
Less: Intangible assets
(5.1)
(5.0)
Tangible book value
369.2
355.5
Shares
18,715,773
19,071,408
Tangible book value per share
£19.73
£18.64
Tangible book value per share is a measure of the Group’s value per share.
Appendix to the Annual Report (unaudited)
continued
Secure Trust Bank PLC Annual Report & Accounts 2025
199
Strategic Report
Corporate Governance
Financial Statements
Other Information
Term
Explanation
ALCO
The Assets and Liabilities Committee.
BiFD
Borrowers in Financial Difficulty.
CET 1 capital
Common Equity Tier 1 capital comprises share capital, share premium,
retained earnings, own shares and regulatory adjustments.
CET 1
capital ratio
The Common Equity Tier 1 capital ratio is the ratio of the bank’s CET 1 capital
to its Total Risk Exposure. This signifies a bank’s financial strength. The CET 1
capital ratio is monitored by regulators and investors because it shows how
well a bank can withstand financial stress and remain solvent.
DBP
Deferred Bonus Plan.
Discontinued
operations
Operating lines which meet the IFRS 5 criteria to be disclosed as discontinued.
In the current year this comprises the Group’s Vehicle Finance business.
EAD
Exposure At Default. EAD represents the expected exposure in the event
of a default.
EBT
Employee Benefit Trust. A trust established by a company to hold shares
on behalf of its employees.
EBT Trustee
Ocorion Limited, trustee of the EBT.
ECL
Expected Credit Loss. ECL is the probability-weighted estimate of credit losses
over the expected life of a financial instrument.
EIR
Effective Interest Rate. EIR is the rate that exactly discounts the estimated
future cash flows to the gross carrying amount of a financial asset or amortised
cost of a financial liability.
EPS
Earnings Per Share.
ESG
Environmental, Social and Governance. A framework measuring a company’s
sustainability and ethical impact.
Feefo
Feefo collects independent reviews from the customers of businesses across
many sectors, including financial services.
Financial
Conduct
Authority
The Financial Conduct Authority is the conduct regulator for financial
services firms and financial markets in the UK. Its aims are to protect
consumers, enhance market integrity and promote competition.
Term
Explanation
FSCS
Financial Services Compensation Scheme
FVOCI
Fair Value Through Other Comprehensive Income. One of three classification
categories for financial assets under IFRS 9.
FVTPL
Fair Value Through Profit or Loss. One of three classification categories for
financial assets under IFRS 9.
Held for Sale
Assets meeting the IFRS 5 criteria to be Held for Sale. In the current year this
comprises the Group’s Vehicle Finance business.
High Quality
Liquid Assets
High Quality Liquid Assets are assets with a high potential to be converted
easily and quickly into cash. This comprises cash, the Bank of England reserve
account and gilts.
IAS
International Accounting Standards.
IASB
International Accounting Standards Board.
ICO
Information Commissioner’s Office.
ICAAP
Internal Capital Adequacy Assessment Process. A firm must carry out an
ICAAP in accordance with the PRA’s rules. They include requirements on the
firm to undertake a regular assessment of the amounts, types and distribution
of capital that it considers adequate to cover the level and nature of the risks to
which it is or might be exposed.
IFRS
International Financial Reporting Standards.
ILAAP
The Internal Liquidity Adequacy Assessment Process allows firms to assess
the level of liquidity and funding that adequately supports all relevant current
and future liquidity risks in their business. In undertaking this process, a firm
should be able to ensure that it has appropriate processes in place to ensure
compliance with regulatory requirements. This requires firms to develop and
use appropriate risk and liquidity management techniques.
LCR
The Liquidity Coverage Ratio regime requires management of net 30-day cash
outflows as a proportion of High Quality Liquid Assets. The Group has set a
more prudent internal limit than that set by the regulator.
LGD
Loss Given Default. Estimated loss when a borrower defaults on a loan.
LTIP
Long-Term Incentive Plan. A delayed compensation scheme used to motivate
participating employees over a defined time-period.
Glossary
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Term
Explanation
OIS
Overnight Indexed Swap.
OLAR
The Overall Liquidity Adequacy Rule is the Board’s own view of the Group’s
liquidity needs, as set out in the Board-approved ILAAP.
Pillar 1, Pillar 2
and Pillar 3
Basel III uses a ‘three pillars’ concept: (1) Pillar 1 – minimum capital
requirements (addressing risk) using a standardised approach for credit,
market and operational risk; (2) Pillar 2 – supervisory review process;
and (3) Pillar 3 – market discipline and enhanced disclosures.
Pillar 2 (for tax
purposes)
The Organisation for Economic Cooperation and Development Pillar
Two framework
PD
Probability of Default. The likelihood that a borrower will default on their
debt obligation.
POCI
Purchased or Originated Credit-Impaired financial assets. Financial assets
that are already impaired when they are purchased or originated.
PRA
The Prudential Regulation Authority is a part of the Bank of England
and responsible for the prudential regulation and supervision of banks,
building societies, credit unions, insurers and major investment firms.
It sets standards and supervises financial institutions at the level of the
individual firm. The PRA’s objectives are set out in the Financial Services
and Markets Act 2000, but the main objective is to promote the safety
and soundness of the firms it regulates.
RoAE
Return On Average Equity. A financial ratio that measures performance
by comparing profit after tax to average shareholders’ equity.
SDDT
Small Domestic Deposit Taker regime
SME
Small to Medium-sized Enterprises.
SPPI
Solely Payments of Principal and Interest. Cash flows from a financial
asset that are solely payments of principal and interest on the outstanding
principal amount.
Term
Explanation
TFSME
Term Funding Scheme with additional incentives for SMEs. The TFSME was
launched in March 2020 as part of measures to respond to the economic shock
from COVID-19. The scheme was designed to incentivise eligible participants
to provide credit to businesses and households to bridge through the current
period of economic disruption, with additional incentives to provide credit
to SMEs.
This scheme allowed access to four-year funding at rates very close to Bank of
England Base Rate, allowing eligible participants to borrow central bank reserves
in exchange for eligible collateral and was repaid in 2025.
Tier 2 capital
Tier 2 capital is the secondary component of bank capital, in addition to Tier 1
capital, and is composed of subordinated liabilities, net of issue costs.
Total Capital
Requirement
Guidance given to a firm about the amount and quality of capital resources
that the PRA considers that the firm should hold at all times under the overall
financial adequacy rule as it applies on a solo level or a consolidated level.
Total Risk
Exposure
Total Risk Exposure is the total of the Group’s risk-weighted assets.
TSR
Total Shareholder Return. A financial metric that measures the performance
of a share over time.
Glossary
continued
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Corporate contacts and advisers
Secretary and Registered Office
Lisa Daniels ACIS
Yorke House
Arleston Way
Solihull
B90 4LH
T 0121 693 9100
F 0121 693 9124
Independent Auditor
Deloitte LLP
Four Brindleyplace
Birmingham
B1 2HZ
Bankers
Barclays Bank PLC
NatWest Bank PLC
Stockbrokers
Investec
30 Gresham Street
London
EC2V 7QN
Shore Capital Stockbrokers
57 St James’s Street
London
SW1A 1LD
Registrar
MUFG Corporate Markets
(formerly Link Group)
Central Square
29 Wellington Street
Leeds
LS1 4DL
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Secure Trust Bank PLC
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T 0121 693 9100
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