Annual Report & Accounts 2024

Helping more consumers and

businesses

fulfil their ambitions

Strategic Report

Group at a glance

1

Our strategy

1

Our business model

2

Our strategic progress

3

Chair’s statement

4

Chief Executive’s statement

6

Financial review

12

Business review

Consumer Finance

18

Business Finance

22

Savings

26

Market review

28

Principal risks and uncertainties

30

Viability and going concern

40

Managing our business responsibly

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

71

Governance framework

74

Corporate Governance report

75

Nomination Committee report

80

Audit Committee report

83

Risk Committee report

90

Directors’ Remuneration Report

94

Directors’ report

112

Directors’ responsibility statement

119

Independent Auditor’s report to the members

of Secure Trust Bank PLC

120

Financial Statements

Consolidated statement of comprehensive income

130

Consolidated and Company statement

of financial position

131

Consolidated and Company statement

of changes in equity

132

Consolidated statement of cash flows

133

Company statement of cash flows

134

Notes to the consolidated financial statements

135

Five-year summary (unaudited)

175

Appendix to the Annual Report (unaudited)

176

Other Information

Glossary

179

Corporate contacts and advisers

181

securetrustbank.com

We are an award-winning UK

specialist lender, providing savings

accounts and lending services

to over 1.4 million customers.

The Group has been helping

consumers and businesses fulfil

their ambitions for over 70 years.

Pages 1 to 67 form the Strategic Report. It includes our

market review, strategy, financial review and a business review

for each of the lines of business. Pages 112 to 118 form the

Directors’ report.

All key performance indicators are presented on a continuing

basis, unless otherwise stated.

Adjusted profit before tax refers to Profit before income tax

from continuing operations before exceptional items.

Further information on exceptional items are included on page

14, and discontinued operations are included in Note 10 to the

Financial Statements.

Adjusted profit before tax

£39.1m

2023: £42.6 million

Common Equity Tier 1 ratio

12.3%

2023: 12.7%

Customer lending

£3.6bn

2023: £3.3 billion

Statutory profit before tax

£29.2m

2023: £36.1 million

Strategic Report

Corporate Governance

Financial Statements

Other Information

About us

In this report

Our vision

To be the most trusted

specialist lender in the UK

Our purpose

To help more consumers

and businesses fulfil

their ambitions

Our strategic priorities

Our strengths

Group at a glance

Our strategy

Specialist

Diverse

Expert

Ambitious

Our values

Stakeholders

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

Customers

Business

partners

Shareholders

and investors

Regulators

Employees

Communities

and society

Customer

Focused

Risk Aware

Future

Orientated

Teamwork

Ownership

Performance

Driven

Secure Trust Bank PLC

Annual Report & Accounts 2024

01

Strategic Report

Corporate Governance

Financial Statements

Other Information

What we do

How we do it

2024 in numbers

Business Finance

Real Estate Finance

We lend money against residential

properties to professional

landlords and property developers.

Commercial Finance

We provide asset based

lending solutions.

Refer to page 22

Consumer Finance

Retail Finance

We provide finance options

at the point of purchase.

Vehicle Finance

We provide financing for

consumers and dealerships.

Refer to page 18

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.

Refer to page 16

Savings

We offer a full range of customer

savings products including

Access Accounts, Fixed Term

Bonds and ISAs.

Refer to page 26

We pay interest to

our customers

We earn

interest income

We pay interest to

investors and dividends

to shareholders

We earn interest

and fee income

Our strengths

Strategic priorities

Net lending

Funding

Specialist

Expert

Diverse

Ambitious

Simplify

Enhanced customer

experience

Leverage networks

Enabled

by technology

Simplify

Initial Project Fusion

target achieved, with

£5 million annualised

cost savings¹

Organisational

redesign completed

with IT and Operations

consolidated

under a single

management structure

New Project Fusion

target announced at

half year on track to

achieve an

additional

£3 million annualised

cost savings

1

in 2025

Delivered over

50%

reduction

in Scope

1 and Scope 2 CO

2

target for

emissions

one year early

(since 2021)

Delivering our cost

savings target improves

our

cost income ratio

and return on equity

Leverage

networks

Extended contracts

with key furniture and

jewellery retailers in

Retail Finance

Extensive distribution

relationships

across

consumer businesses

Repeat business

and

client retention

within

Business Finance

from

established

relationships

Market share gains

of

new business in both

Retail Finance and

Vehicle Finance

Driving growth in

net lending and net

interest margin

as

our balance sheet

mix moves towards

consumer lending

Enabled by

technology

Vehicle Finance

rate for risk

platform launched,

facilitating applicants

to be matched to

our products

Use of

AI tools

and automated

data gathering

in

complaints handling

Savings app

enhancements,

with

more transactional

activity and

over 30%

of customers registered

Platforms proven

to be

scalable

and flexible with

increased partner

API integrations

A digital-first

approach supports

cost-efficiencies and

growth capacity

Enhance

customer

experience

Digital-first approach

for Savings, delivering

an

enhanced online

application process

Over 87% self-

service adoption

in

Retail Finance, and

app rollout to allow

customer self-servicing

Automated

savings bond

maturity process

implemented

Customer

Feefo score

of

4.7 stars

and

4.6

stars

for

Trustpilot

Delivering

cost-

efficiency and

balance sheet

growth

by retaining

satisfied customers

1.

£5.0 million cost savings relative to operating expenses for the 12 months ended December 2021. The additional £3.0 million savings will be relative to annualised operating expenses for the six months ended 30 June 2024.

Secure Trust Bank PLC

Annual Report & Accounts 2024

03

Focused on

strategic progress

We have delivered a resilient performance in

2024, in a challenging operating environment with

elevated inflation, continued high interest rates,

a new UK government and slowing economic

growth, causing uncertainty across the markets

in which we operate. In addition, like many other

firms across the sector, we faced significant legal

and regulatory headwinds, which have created

further uncertainty and disruption.

Despite these challenges, we have continued to

focus on delivering for our customers, which has

driven continued lending growth across both our

Consumer and Business Finance segments. During

the year, we have taken decisions to refocus our

Vehicle Finance business, invest in our collections

capability and simplify our organisational design,

further reducing complexity and costs.

First impressions

I joined Secure Trust Bank because I believe in the underlying

strength of the business and the strategic growth opportunities

available. Since my appointment as Chair in May 2024, I have

engaged with many people across the business and visited our

key offices, which has served to reinforce my initial views. I have

been particularly impressed by the commitment shown by our

people, who are dedicated to delivering for our customers

and helping them to fulfil their ambitions. This focus on our

customers and achieving good outcomes for them, will drive

our future success.

I have welcomed the opportunity to meet with many of our

major shareholders and hear their views, on the business and

the markets in which we operate. This engagement has been

very valuable as I have transitioned into the Chair role.

In-line with feedback from shareholders, we have enhanced

our segmental reporting, providing greater granularity on

the performance of each business unit, further information

on which can be found in Note 3 to the Financial Statements

from page 137.

Business performance

Adjusted

1

profit before tax for the year ended 31 December

2024 was £39.1 million (2023: £42.6 million) and statutory

profit before tax was £29.2 million (2023: £36.1 million).

Excluding impairment charges, which were impacted by

the FCA’s Borrowers in Financial Difficulty (‘BiFD’) review as

explained in the following section, adjusted

1

profit before

tax pre-impairments increased 18.0% to £100.9 million

(2023: £85.5 million).

Adjusted

1

return on average equity has decreased to 8.0%

from 9.6% in 2023; improving the bank’s return on equity

across the business units is a key area of focus for the Board

and management.

We have taken several decisions during the year to accelerate

the growth in our return on equity, particularly within our

Vehicle Finance business, where we have refined our strategy

to focus on higher returning segments of the market and made

further investments to improve our collections processes.

Across the Group we have implemented centralised operating

and governance models, which have reduced complexity,

improved the consistency of service to clients, delivered cost

efficiencies and resulted in a more agile organisation.

Legal and regulatory developments

The FCA’s BiFD review and subsequent engagement with the

regulator meant the Group paused collections processes in

our Vehicle Finance business during the second half of 2023.

During the year, we have invested in our collections capabilities,

to enhance the outcomes for our customers and improve our

processes. The reduced collections activity into 2024 resulted

in a material increase in our impairment charges in 2024, which

impacted our profitability for the year. Collections activity

returned to normalised levels during H2 24 and we are

considering options to manage the level of defaulted stock.

Separately, in January 2024 the FCA launched a review of

the historic use of discretionary commission arrangements

(‘DCAs’) in the motor finance market. DCAs were prohibited

by the FCA in 2021, although the Group ceased these types

of arrangements well before in June 2017.

“We will continue to focus on

building business momentum,

the effective deployment of

capital and increasing our

return on equity.”

Jim Brown

Chair

1.

Adjusted metrics exclude exceptional items of £9.9 million (2023: £6.5 million). Details can be found in Note 8 to the Financial Statements.

Secure Trust Bank PLC

The Court of Appeal’s October 2024 judgment on three motor

commission cases led to lending pauses and uncertainty across

the motor finance market and is the subject of a Supreme Court

appeal. There are important differences in the fact patterns in

those cases and our lending model. We also believe that key

aspects of the judgment, if upheld, go beyond the regulatory

requirements applied by the FCA, and generally understood

by market participants, at the time. Further information can be

found in Note 29 to the Financial Statements on page 162.

Immediately before the Court of Appeal’s judgment, the

Company’s share price had increased by 18% for the year

to October. After this judgment and with the continuing

uncertainty in the sector, our share price fell by 48% to £3.62

as at 31 December 2024, significantly below the Group’s

tangible book value of £18.64.

Capital management and dividend

As at 31 December 2024 the Group’s Common Equity Tier

1 ratio was 12.3% (2023:12.7%). The optimal deployment of

our capital and the returns it generates will be a key area of

focus during 2025, as we balance maintaining a healthy capital

surplus with investing for growth and returns to shareholders.

With effect from the 2024 AGM we implemented a new

progressive dividend policy, which means dividends will be

no less than that of the previous year. Under the policy the

Board will consider the Group’s capital requirements, liquidity

and market expectations in determining the specific amount.

In-line with that policy the Board proposes a final dividend

of 22.5 pence per share (2023: 16.2 pence per share), which if

approved by shareholders at the Company’s 2025 AGM, will be

paid on 22 May 2025 to those shareholders on the register on

25 April 2025.

Governance

There have been a number of changes to the Board during

the year. Victoria Stewart, a Non-Executive Director and

Chair of the Remuneration Committee, stood down from the

Board on 31 December 2024, after entering her ninth year as

a Director. I would like to thank Victoria for her stewardship

of the Remuneration Committee and her wider contribution

to the development of the Group throughout her tenure.

In October, we welcomed Julie Hopes to the Board, who

succeeded Victoria as Chair of the Remuneration Committee

with effect from 31 December 2024. Julie has strong experience

of Chairing Remuneration Committees, particularly within

Financial Services, and brings a strategic mindset, experience

of business transformation and a strong focus on consumers.

In October, we also appointed Victoria Mitchell, an

existing Non-Executive Director to our Risk Committee.

Victoria previously served as the Chief Risk Officer of Capital

One (Europe) plc and her experience further strengthens and

broadens the experience of the Risk Committee.

Outlook

We have a strong, diversified business and see significant

growth opportunities in sectors in which we operate.

We believe our customer focus positions us well to capitalise

on these opportunities and increase our return on equity.

As highlighted, there remains significant legal and regulatory

uncertainty across the motor finance sector and the wider

macroeconomic environment. Supporting the management

team to address the potential implications of the Supreme

Court’s decision is a priority for the Board.

Throughout this, we will continue to focus on building

momentum across our business units, the effective deployment

of our capital and increasing our return on equity.

I would like to sincerely thank our customers for their

continued trust and our colleagues for their hard work

throughout the year; they have demonstrated their

resilience and have remained dedicated to delivering

for our customers, shareholders and other stakeholders.

Jim Brown

Chair

12 March 2025

Secure Trust Bank PLC

Annual Report & Accounts 2024

05

Strategic Report

Corporate Governance

Financial Statements

Other Information

Chair’s statement

As the year

progressed,

momentum

seen across core

performance metrics

There were a number of challenges that presented

themselves during the year, and so, I was pleased

that while navigating those, we were also able to

deliver improvements, particularly in the second

half of the year across lending growth, net interest

margin and adjusted

1

cost income ratio. This has

been achieved with a Common Equity Tier 1 (‘CET

1’) ratio of 12.3%. Full-year adjusted1 profit before

tax pre impairments increased by 18.0% to £100.9

million (2023: £85.5 million). Statutory profit before

tax was £29.2 million (2023: £36.1 million).

Progress against our medium-term targets has been

encouraging. We achieved an 8.8% growth in net lending

(2024: £3.6 billion; 2023: £3.3 billion), moving us closer to our

£4.0 billion target and stabilised our net interest margin at

5.4% (2023: 5.4%), just below our target of greater than 5.5%,

despite incurring higher funding costs. Project Fusion, our

cost optimisation programme, prudent cost management and

continued income growth contributed to an improvement

in our adjusted

1

cost income ratio to 50.9% (2023: 54.0%), a

reduction of 310 basis points. Statutory cost income ratio was

55.8% (2023: 57.5%). This is excellent progress towards our

target of 44% to 46%. Continued growth in net lending and

net interest margin and effective cost management will drive

us towards delivering our target return on average equity

(‘ROAE’) of 14% to 16%.

Although the year saw a reduction in the Bank of England

Base Rate, we have operated in a highly competitive interest

rate environment for Savings accounts. We continue to offer

competitive rates to depositors, attracting significant levels of

new funding (£1.6 billion), as well as retaining matured funds

(£0.9 billion). Our deposits are entirely from retail customers

and more than 95% of deposits are fully covered by the FSCS.

We have achieved this, despite the challenges we have faced

in 2024, with a high interest rate environment and uncertainty

around timing of interest rate cuts, slowing economic growth

and political changes. This has impacted demand for credit,

particularly in Business Finance. We continued to manage

credit exposures in a disciplined way and remained agile

in managing our balance sheet.

Cost of risk increased from 1.4% to 1.8% and was impacted

by the secondary impact of the pause in our collection

processes in Vehicle Finance during the second half of

2023, which resulted in an elevated stock of defaulted loans

(see section on Regulatory and legal interventions), which

increased impairment charges for the year. As a consequence,

the cost of risk for Vehicle Finance increased from 3.4% in 2023

to 7.7%. Unfortunately, the initiatives we hoped would restore

performance of the Vehicle Finance portfolio towards a normal

level for year-end, were not possible to fully execute due to the

market environment. We continue to pursue strategic options

to manage down the stock of historic defaulted balances.

Retail Finance cost of risk improved to 1.0% (2023: 1.4%)

reflecting the quality of business written and IFRS 9 model

enhancements, which resulted in some

one-off provision releases.

As a result, we delivered an adjusted

1

profit before tax of

£39.1 million (2023: £42.6 million) in the year, which impacted

our adjusted

1

ROAE of 8.0% (2023: 9.6%). Total ROAE was

5.5% (2023: 7.3%). Three of our specialist businesses grew

profitability year-on-year. The higher cost of risk in Vehicle

Finance impacted our overall results. Further insight is shared

in our segmental reporting which can be found in Note 3 to

the Financial Statements.

With our four specialist lending segments all offering

compelling propositions in large addressable markets, we

have solid foundations in place to make further market share

gains. This is demonstrated by our strong track record in

recent years. We saw gains in Retail Finance’s market share

of new business, which grew to 15.3%

2

; this continues to grow

year-on-year (2023: 13.5%). Vehicle Finance’s market share

of new business was 1.4%

3

increasing its position from 2023

(1.2%). As a result, this contributed to net lending growth in

the Consumer Finance businesses of 13.4% (£225.7 million)

since 2023. Business Finance increased by £67.5 million,

despite a subdued trading environment.

“Foundations in place to support

net lending growth ambition.”

David McCreadie

Chief Executive

1.

Adjusted metrics exclude exceptional items of £9.9 million (2023: £6.5 million). Details can be found in Note 8 to the Financial Statements.

2.

Source: Finance & Leasing Association (‘FLA’): New business values within retail store and online credit: 2024 15.3% (2023: 13.5%): FLA total and Retail Finance new business of £8,427million

(2023: £8,810 million) and £1,289.7 million (2023: £1,185.4 million) respectively. As published at 31 December 2024.

3.

Source: FLA. Cars bought on finance by consumers through the point of sale: New business values: 2024 1.4% (2023: 1.2%): Used cars: 2024, FLA total and Vehicle Finance total of

£21,281 million (2023: £22,082 million) and £294.4 million (2023: £260.0 million) respectively. As published at 31 December 2024.

Secure Trust Bank PLC

Key performance indicators

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

Why we measure this

The CET 1 ratio demonstrates

the Group’s capital strength

2024

2021

2020

2022

2023

14.0

12.3

14.5

14.0

12.7

Common Equity Tier 1 (‘CET 1’) ratio

(%)

Why we measure this

Measures how effectively the Group manages

the credit risk of its lending portfolios

Why we measure this

Shows the growth in the Group’s lending

balances, which generate income

Why we measure this

Measures the Group’s ability to generate

profit from the equity available to it

Why we measure this

Shows the interest margin earned on the

Group’s lending balances, net of funding costs

2024

2021

2020

2022

2023

2.0

1.8

0.2

1.4

1.4

Cost of risk

(%)

2024

(£bn)

2024

2021

2020

2022

2023

5.9

5.5

15.9

10.8

7.3

Total return on average equity

(%)

2024

2021

2020

2022

2023

6.1

5.4

6.1

5.7

5.4

Net interest margin

(%)

Why we measure this

Measures how efficiently the Group uses its

cost base to produce income

2024

2021

2020

2022

2023

56.6

55.8

60.0

55.0

57.5

Cost to income ratio

(%)

54.0

50.9

Financial

Why we measure this

Indicator of customer satisfaction with

the Group’s products and services

Non-financial

2024

2021

2020

2022

2023

4.7

4.7

4.6

4.6

4.6

Customer Feefo ratings

(Stars)

1

Why we measure this

Indicator of employee engagement and satisfaction

Why we measure this

Indicator of the Group’s impact on the environment

2024

2021

2020

2022

2023

82.0

74.0

80.0

85.0

83.0

Employee survey trust index score

(%)

2024

2021

2020

2022

2023

3.1

1.5

3.0

2.8

2.0

Environmental intensity indicator

2

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 176 to 178.

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 12 to 17. Further explanation of the non-financial key performance indicators is provided in the Managing our business responsibly (pages 42

to 65) and Climate-related financial disclosures (pages 54 to 65) sections.

The Directors’ Remuneration report, starting on page 94, sets out how executive pay is linked to the assessment of key financial and non-financial performance indicators.

During the year, we took the opportunity to showcase our Real

Estate Finance and Commercial Finance businesses at Capital

Markets events held in July and November. Further details

can be found on our website (

www.securetrustbank.com/

presentations

).

Strategic priorities

Our strategic priorities are simplifying the Group, enhancing

customer experience and leveraging our networks, all enabled

by technology. These are the right priorities to Optimise for

Growth, and will enable us to progress towards delivering all

of our medium-term targets.

Simplify

A key initiative of simplification has been Project Fusion, where

we achieved the target of £5 million

1

in annualised savings

at the end of 2024. This was achieved through a sustained

focus on cost discipline and we contained our year-on-year

cost growth at 4.1%. We continued with supplier reviews

to crystallise cost savings, and implemented technology

enhancements. This year, this included migrating the e-signing

of lending agreements to use in-house developed technology

for our Retail Finance business, eliminating the need to use a

third party.

The update in our Project Fusion target, announced at the

half year, to £8 million

1

in annualised savings reflected material

cost savings from organisational redesign. In the first half of

the year, we consolidated our IT and Operations teams under

the Group’s Chief Operating Officer, and in the second half

of the year this was further refined where we amalgamated

product-specific teams under a single management structure.

In addition, there were changes within Finance and the Risk

Function to ensure they are configured to support the business

in the most effective way, this also led to the creation of several

new roles. The organisational changes will drive a simpler

and more cost-efficient structure, remove duplication and

provide clearer career paths and development opportunities.

The changes did result in a redundancy programme, which

resulted in some colleagues leaving the organisation, at a cost

of £1.5 million. I would like to thank all colleagues who have

left the business for their hard work and dedication and wish

them well for the future. Although not an easy decision to

make, these changes position the Group for future success.

The organisational changes work was completed in December

2024, and the £3 million cost savings will be fully realised

in 2025.

Combined, these initiatives give us high confidence in driving

our cost income ratio to our target of 44 to 46% as we achieve

our ambition for net lending of £4 billion. With that in mind,

we are currently undertaking a strategic review of our business

activities and future opportunities to inform the Group’s future

ambition and objectives beyond 2025.

Enhance customer experience

We are pleased to see that our customers are taking advantage

of our digital platforms. During the year, we invested in

enhancing our savings application process by simplifying

the customer journey on our website. This included making

the process a lot more user friendly, and better supporting

customers with accessibility needs.

Over 97.1% of our Savings customers are registered to use

online banking (2023: 95.8%). Since the launch of our Savings

app in 2023, we have seen further uptake of app registrations,

which is now at 30.1% and saw over half of servicing

transactions being submitted on the Savings app for Access

and Notice accounts.

More customers than ever (87.4%) have registered with

our Retail Finance online account management system

(2023: 80.4%). We also re-launched our AppToPay app, which

now offers a mobile-based service platform for all our Retail

Finance products, allowing customers to self-serve and initiate

payments (see below for further details).

We continue to focus on customer outcomes and improving

customer satisfaction, and again we score highly with Feefo,

achieving 4.7 (2023: 4.6) for our Consumer Finance businesses.

In addition, our Retail Finance business was nominated for Best

Consumer Credit Product at the Credit Awards.

Within Business Finance, our Commercial Finance business

was recognised by TheBusinessDesk.com North West

Rainmakers Award, and was nominated for the ‘Asset- based

Lending Team’. In September, the business surpassed this

and won the ABL/Non-Bank Lender of the Year award at the

Midlands Insider Deal Makers Awards, a great achievement.

Internal customer satisfaction reviews showed a 97%

satisfaction score, which is a testament to a business that

is highly reliant on expertise and relationship management

model. In Real Estate Finance, 100% of respondents rated

the service they receive from the team as ‘Excellent’.

Leverage networks

Our relationships with partners, retailers, car dealers,

intermediaries, new business originators and advisers support

our growth.

Our Retail Finance net lending balance of £1.4 billion

(2023: £1.2 billion) was supported by nearly 1,100 retail partners.

2024 saw the business secure longer-term contracts with a

large furniture retailer and a jewellery retailer, and gaining new

retailers in the lifestyle sector. Vehicle Finance saw an increase

of 19.5% in its net lending balance growing from £0.47 billion

to £0.56 billion.

API integration is a key feature in our offering to our consumer

distribution networks. This enables us to work seamlessly

with our partners, creating efficient working practices across

both partner organisations and internally. This has long been

an advantage as part of our Retail Finance offering to retail

partners, integrating at speed.

The power of our relationship model in Real Estate Finance

has seen new lending to existing clients increase from 36% in

2021 to 67% in 2024, with reliance on new lending origination

from brokers declining from 42% to 13% over the same

period. This retention model has the benefit of reduced cost

of customer acquisition and provides greater knowledge of

customers’ risk profiles.

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) will be relative to annualised operating expenses for the six months ending 30 June 2024.

Secure Trust Bank PLC

Annual Report & Accounts 2024

09

Strategic Report

Enabled by technology

In October, we rolled-out the enhanced capability of our

modern Vehicle Finance origination and loan management

platform, which is now capable of hosting all new business

across products and risk segments. Importantly, customer

applications submitted by intermediaries will cascade through

our credit tiers and be matched to the most appropriate

product terms, which will enable us to offer loans to more

customers. This represents a significant investment made over

several years allowing us to move forward with technology

designed for the market and allow us to migrate away from

legacy high maintenance systems.

As noted, we re-launched our AppToPay proposition in

December. Initial data shows customers taking advantage

of making payments through open-banking, which is more

convenient for the customer, and more cost-efficient for the

Group. The app provides the initial foundations for providing

customers and retailers opportunities to access our full Retail

Finance product suite.

Regulatory and legal interventions

As highlighted at the end of 2023, we were working on

improving our collections processes, procedures and policies

following the FCA’s review of Borrowers in Financial Difficulty

(‘BiFD’) across the industry. Customers are now being offered

a wider range of forbearance options to support them through

financial difficulties. We have identified that it is appropriate

to pay £2.2 million to customers (of which £2.0 million was

recognised in 2023) where we could have supported them

better due to their individual circumstances. A significant part

of the customer communications have now been distributed,

and we expect to complete activities by the middle of 2025.

This was a delay on our initial timetable, as we took additional

time to ensure the quality and clarity of our correspondence

was appropriate for our customers. We incurred an additional

£1.5 million of costs (treated as exceptional) during 2024,

primarily in relation to managing the programme.

The BiFD review resulted in a larger stock of defaulted

loans within our Vehicle Finance business and increased the

associated loan impairment provision. The stock of defaulted

Vehicle Finance loans has remained elevated throughout

the year, and as noted above, market conditions were not

conducive to deliver on our strategic plans to normalise the

position by year-end. The impairment charges recognised on

the defaulted stock is not a reflection of the underlying quality

of the business being originated. Collections activities returned

to normal as the year progressed and arrears levels have

reduced over the year.

In light of legal and regulatory developments, including the

FCA’s ongoing review of historical discretionary commission

arrangements (‘DCA’) in the motor finance market, and the

Court of Appeal’s judgment which is currently under appeal,

we have recognised costs of £6.9 million (£5.2 million redress,

£1.7 million costs) for both DCA and fixed commission

structures. There are important factual differences between

those cases and how we operated. Further information can

be found in Note 29 to the Financial Statements.

Environmental, Social and Governance (‘ESG’)

We have made progress against all our ESG focus areas during

the year and refreshed our strategy to ensure it is reflective of

our ESG aspirations moving forwards.

We were again recognised by UK’s Best Workplaces™ by Great

Place to Work

®

for a number of accolades. This is supported

by colleagues completing employee opinion surveys at the

end of 2023. The Group undertook a survey towards the end

of 2024 and achieved a trust index score of 74% (2023: 83%).

We had anticipated this fall, with the survey being undertaken

during the rollout of our organisational redesign programme,

which led to a period of uncertainty for many colleagues and

a number of roles ultimately being made redundant. However,

the score remained high against similar size organisations,

which is positive considering the wide impact of change.

I appreciate this time has been very challenging for those

impacted as well as those remaining within the organisation.

I would like to extend my personal thanks to colleagues for

their hard work and commitment while we worked through

this period of change.

Fundraising for good causes by

teams taking on the Yorkshire

and Welsh Three Peaks Challenge

Secure Trust Bank PLC

Annual Report & Accounts 2024

10

Strategic Report

Corporate Governance

Financial Statements

Other Information

Chief Executive’s statement

Our colleagues continued to work hard to donate their time

and efforts to support and raise funds for charity across a

number of events, which included a golf day and the Three Peaks

Challenge, raising nearly £100,000 for great causes this year.

As part of our ongoing work on Climate Action, we have

become members of the Partnership for Carbon Accounting

Financials (‘PCAF’). Our membership of PCAF underlines

our ongoing commitment to monitor and manage our

environmental impacts as part of our ESG strategy. We have

enhanced our emission disclosures around Scope 3, which

can be found on pages 60 to 62. We also surpassed our goal

to reduce our Scope 1 and 2 emissions by 50% (from 2021) a

year early. During 2024, initiatives such as reducing our office

footprint have contributed towards this reduction. We continue

to look at internal initiatives to also support the impact we have

on the environment, having launched a new employee benefit,

a green car scheme, that is enabling our colleagues to lease

brand new electric or plug-in hybrid vehicles.

Changes in Executive Committee

During the year, we saw some changes to our Executive

Committee. John Bevan who oversaw the Commercial Finance

business retired at the end of the year. John was with the

Group for over 10 years, establishing the Commercial Finance

business in 2014 and growing it to be a significant player in

the asset-based lending market. Geoff Ray, Managing Director

of the Real Estate Finance business, will retire in April 2025.

Geoff joined the business in its early days and has been an

integral part of its leadership team. Both have played a key role

in developing their teams and growing their franchises with

huge passion for their respective sectors. I would like to thank

them both for the valuable contribution and wish them well in

their retirement.

I would like to welcome Luke Jooste, who joined us on

1 March 2025 from Momenta Finance where he was the Chief

Executive Officer. Luke has been appointed as Managing

Director, Business Finance and will provide a fresh perspective

to both Commercial and Real Estate Finance, and be the

Executive Committee lead in setting the future strategy

for our proposition to business customers.

Outlook

On balance, 2024 ended with a more positive economic

outlook than 2023 with issues such as COVID and the

cost-of-living crisis seeming to be largely behind us.

However, the expected stability and optimism for growth

that was promised from a change in UK government has not

yet materialised. Whilst interest rates have started to slowly

come down following a period of stabilised inflation figures,

concerns over growth in the UK economy and the perceived

adverse impact of the new Chancellor’s Budget on the market,

businesses and consumer confidence. There has also been

additional geopolitical uncertainty due to the change of

legislature in the US.

2024 has been extremely challenging for specialist banks due

to the legal and regulatory developments relating to motor

finance commissions. We are hopeful that the industry will

receive the clarity it needs in 2025, and that we can move

forward with confidence and renewed focus on delivering

against our strategic objectives.

Subject to no adverse changes in the economy and trading

environment, we expect by the end of 2025 we will have clear

line of sight to delivering against our medium-term targets.

With that in mind, we are currently undertaking a Group-wide

review of our business activities. We have made an initial

decision to re-focus the Vehicle Finance business on higher

returning segments. I intend to provide an update on the

outcome of this work in our 2025 Interim Report.

David McCreadie

Chief Executive

12 March 2025

Best Workplaces in

Large Organisations

TM

Best Workplaces in Financial

Services & Insurance

TM

Best Workplaces

for Development

TM

Best Workplaces

for Women

TM

Best Workplaces

for Wellbeing

TM

Secure Trust Bank PLC

Annual Report & Accounts 2024

11

Strategic Report

Corporate Governance

Financial Statements

Other Information

“Strong lending performance

driving income growth with costs

kept under control.”

Rachel Lawrence

Chief Financial Officer

Operating

leverage being

delivered

Income statement

2024

£million

2023

£million

Movement

%

Continuing operations

Interest income and similar income

366.0

304.0

20.4

Interest expense and similar charges

(181.1)

(136.5)

32.7

Net interest income

184.9

167.5

10.4

Fee and commission income

19.2

17.3

11.0

Fee and commission expense

(0.2)

(0.1)

100.0

Net fee and commission income

19.0

17.2

10.5

Operating income

203.9

184.7

10.4

Net impairment charge on loans and advances to customers

(61.9)

(43.2)

43.3

Other (losses)/gains

(0.3)

0.3

(200.0)

Fair value and other gains on financial instruments

1.2

0.5

140.0

Operating expenses

(103.8)

(99.7)

4.1

Profit before income tax from continuing operations before exceptional items

39.1

42.6

(8.2)

Exceptional items

(9.9)

(6.5)

52.3

Profit before income tax from continuing operations

29.2

36.1

(19.1)

Income tax expense

(9.5)

(9.7)

(2.1)

Profit for the year from continuing operations

19.7

26.4

(25.4)

Discontinued operations

Loss before income tax from discontinued operations

–

(2.7)

(100.0)

Income tax credit

–

0.6

(100.0)

Loss for the year from discontinued operations

–

(2.1)

(100.0)

Profit for the year

19.7

24.3

(18.9)

Basic earnings per share (pence) – Adjusted

150.1

172.3

(12.9)

Basic earnings per share (pence) – Continuing

103.4

140.8

(26.6)

Basic earnings per share (pence) – Total

103.4

129.6

(20.2)

Secure Trust Bank PLC

Annual Report & Accounts 2024

Selected key performance

indicators and

performance metrics

2024

%

2023

%

Percentage

point

movement

Net interest margin

5.4

5.4

–

Net revenue margin

6.0

6.0

–

Adjusted cost to income ratio

50.9

54.0

(3.1)

Statutory cost to income ratio

55.8

57.5

(1.7)

Cost of risk

1.8

1.4

0.4

Adjusted return on

average equity

8.0

9.6

(1.6)

Total return on average equity

5.5

7.3

(1.8)

Common Equity Tier 1 ratio

12.3

12.7

(0.4)

Total capital ratio

14.6

15.0

(0.4)

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

176 to 178.

All key performance indicators are presented on a

continuing basis, unless otherwise stated. Adjusted profit

before tax refers to profit before income tax from

continuing operations before exceptional items.

Further information on exceptional items are included

on page 14 and discontinued operations are included in

Note 10 to the Financial Statements.

The Directors’ Remuneration report, starting on page 94,

sets out how executive pay is linked to the assessment of

key financial and non-financial performance metrics.

In 2024, we delivered strong lending growth,

particularly within our Consumer Finance

businesses, with net lending growth, of 8.8%

driving income growth of 10.4% at a stable net

interest margin. Cost growth has been actively

managed and contained at 4.1%, but we have

incurred higher impairments within our Vehicle

Finance business due to the operational impacts

of the FCA’s review of Borrowers in Financial

Difficulty (‘BiFD’). The Group achieved an adjusted

profit before tax of £39.1 million (2023: £42.6

million), with the Common Equity Tier 1

(‘CET 1’)

ratio of 12.3%.

Increased impairment charges have reduced profits, resulting

in total Earnings Per Share (‘EPS’) decreasing from 129.6 pence

per share (2023) to 103.4 pence per share. On an adjusted

basis, EPS decreased to 150.1 pence per share (2023: 172.3

pence per share). Total return on average equity decreased

from 7.3% (2023) to 5.5%. On an adjusted basis, return on

average equity decreased to 8.0% (2023: 9.6%).

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.

Operating income

The Group’s operating income increased by 10.4% to

£203.9 million (2023: £184.7 million). Net interest income on the

Group’s lending assets continues to be the largest component

of operating income. This increased by 10.4% to £184.9 million

(2023: £167.5 million), driven by growth in net lending assets,

with average balances increasing by 10.1% to £3,413.9 million

(2023: £3,099.4 million).

The Group’s net interest margin was maintained at 5.4%

(2023: 5.4%) by actively increasing gross yields to reflect

the higher cost of funds.

The Group’s other income, which relates to net fee and

commission income, increased by 10.5% to £19.0 million

(2023: £17.2 million).

Impairment charge

Impairment charges increased to £61.9 million

(2023: £43.2 million) resulting in an increased Group

cost of risk

 

of 1.8% (2023: 1.4%).

Increased expected credit losses in the Vehicle Finance

business have been the principal reason for the increased

impairment charges. Vehicle Finance has experienced

increased levels of customer defaults due to a pause in

collections activities from second half of 2023 as the business

addressed the specific feedback received following the FCA’s

review of BiFD. The credit quality of new lending in the Vehicle

Finance business has improved over time and arrears levels

have reduced over the year.

Impairment charges are lower year on year across all other

lending businesses. Retail Finance has originated a greater mix

of higher-quality loans and also updated to reflect an improved

debt sale arrangement. Both Business Finance businesses have

incurred charges on specific cases but, overall, the portfolios

performed better than 2023.

Overall impairment provisions increased to £111.8 million

(2023: £88.1 million) with a total coverage level of 3.0%

(2023: 2.6%).

During the financial 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 weighting applied, are set out

in more detail in Note 16 to the Financial Statements.

Secure Trust Bank PLC

Annual Report & Accounts 2024

13

Strategic Report

1.

£5.0 million cost savings relative to operating expenses for the 12 months ended December 2021. The additional £3.0 million savings will be relative to annualised operating expenses for the six months ending 30 June 2024.

The Group has applied Expert Credit Judgements

(‘ECJ’s’) underlays totalling £5.7 million (2023: £1.2 million

underlay), where management believes the IFRS 9 modelled

output is not accurately reflecting current risks in the loan

portfolios. The majority of the ECJ underlays of £4.5 million

(2023: £2.1 million) relate to the Vehicle Finance lending

portfolios LGD stage 1 and 2 recovery assumptions being

understated in the model; which will be updated in 2025.

Further details of these ECJs are included in Note 16 to the

Financial Statements. During the year, the Group implemented

a new IFRS 9 model for Vehicle Finance prime lending and

an enhanced Probability of Default model for Retail Finance.

These better reflect the underlying credit quality of business

written and has reduced the need for ECJ’s. We have also

updated IFRS 9 Significant Increase in Credit Risk (‘SICR’)

criteria, and implemented a new curing policy for Consumer

Finance, further information can be found in Note 16 to the

Financial Statements.

Fair value and other gains on financial instruments

The Group has highly effective hedge accounting relationships,

and, as a result, recognised a small hedging ineffectiveness

gain of £0.1 million (2023: £0.1 million gain) and £0.6 million

gain (2023: £nil) relating to hedge accounting inception

and amortisation adjustments (See Note 5 to the Financial

Statements). The Group also recognised a gain of £0.5 million

(2023: £0.8 million loss) 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.

During 2023, the Group realised a gain of £1.2 million

on the buy-back of the 2018 Tier 2 debt.

Operating expenses

The Group’s adjusted

cost income ratio improved to 50.9%

(2023: 54.0%) with the cost base increasing by 4.1% to

£103.8 million (2023: £99.7 million). The improved ratio reflects

both the increase in operating income and the ongoing

programme of initiatives that are driving more efficient and

effective operational processes, including digitalisation of

processes, supplier and procurement reviews, organisational

design and property management. As at the end of 2024,

Project Fusion has delivered £5 million of annualised cost

savings¹, and will deliver another £3 million of additional

annualised savings

1

in 2025. Statutory cost income ratio

inclusive of exceptional items was 55.8% (2023: 57.5%).

Taxation

The effective tax rate on continuing activities of 32.5%,

increased compared with 2023 (26.9%) primarily as a

result of non-deductible expenses in exceptional items.

Exceptional items

The Group recognised charges for exceptional items of

£9.9 million during the year (2023: £6.5 million).

Further costs have been recognised in 2024 following the

FCA’s review of BiFD across the industry of £1.5 million

(£1.3 million costs and £0.2 million potential redress/goodwill).

£4.7 million was recognised in 2023 (£2.7 million costs and

£2.0 million potential redress/goodwill).

In light of the FCA’s ongoing review of historical discretionary

commission arrangements (‘DCA’) in the motor finance market,

and the Court of Appeal’s judgment which is currently under

appeal, we have recognised costs of £6.9 million (£5.2 million

redress, £1.7 million costs) for both DCA and fixed commission

structures. Further information can be found in Note 29 to the

Financial Statements.

Following an organisational redesign in 2024, £1.5 million was

incurred for restructuring costs. In 2023, the Group recognised

charges in relation to non-recurring corporate activity of

£1.8 million.

Further details on all Exceptional items are included

in Note 8 to the Financial Statements.

Distributions to shareholders

The Board recommended the payment of a final dividend

for 2024 of 22.5 pence per share, which together with the

interim dividend of 11.3 pence per share, represents a total

dividend for the year of 33.8 pence per share (2023: 32.2

pence per share). This is in line with the Group’s progressive

dividend policy.

Secure Trust Bank PLC

Annual Report & Accounts 2024

14

Strategic Report

Corporate Governance

Financial Statements

Other Information

Financial review

Summarised balance sheet

Assets

2024

£million

2023

£million

Cash and Bank of England

reserve account

445.0

351.6

Loans and advances to banks

24.0

53.7

Loans and advances to customers

3,608.5

3,315.3

Fair value adjustment

for portfolio hedged risk

(6.8)

(3.9)

Derivative financial instruments

14.3

25.5

Other assets

31.7

35.8

4,116.7

3,778.0

Liabilities

Due to banks

365.8

402.0

Deposits from customers

3,244.9

2,871.8

Fair value adjustment

for portfolio hedged risk

(3.4)

(1.4)

Derivative financial instruments

10.0

22.0

Tier 2 subordinated liabilities

93.3

93.1

Other liabilities

45.6

46.0

3,756.2

3,433.5

New business

2024 was another positive year for new business with

new lending of £2,331.9 million, up 1.1% year on year

(2023: £2,305.4 million). Consumer Finance, which grew by

11.2% over 2023, offset by lower Business Finance, 24.6%

lower than in 2023 due to more challenging market conditions.

Further details on the divisional split of this new business can

be found in the Business review on pages 18 to 27.

Customer lending and deposits

Group lending assets increased by £293.2 million (8.8%) to

£3,608.5 million (2023: £3,315.3 million), continuing our growth

towards our net lending ambition of £4.0 billion.

Consumer Finance balances grew by £225.7 million or

13.4% driven by strong demand from strategic partner

retailers, supported by Business Finance balances growth of

£67.5 million (4.2%).

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 16 to the Financial Statements.

Customer deposits include Fixed term bonds, ISAs, Notice and

Access accounts. Customer deposits increased by 13.0% to

£3,244.9 million (2023: £2,871.8 million) driven by lending book

growth and as part of the strategy to replace drawings from

the Bank of England Term Funding Scheme with additional

incentives for SMEs (‘TFSME’) funding. Total funding ratio of

112.4% increased slightly from 31 December 2023 (111.7%).

As set out on page 17, the mix of the deposit book has

continued to change as the Group has adapted to the interest

rate environment, with a focus on meeting customer demand

for Access products, and retaining stable funds, which is

reflected in the proportion of Fixed term bonds and ISAs.

Loans and advances to customers

New business volumes

2023: £3,315.3m

£3,608.5m

Vehicle Finance

£558.3

m

Retail Finance

£1,357.8

m

Real Estate Finance £1,341.4

m

£351.0

m

Commercial Finance

2023: £2,305.4m

£2,331.9m

Vehicle Finance

£552.9

m

Retail Finance

£1,289.7

m

Real Estate Finance

£383.5

m

£105.8

m

Commercial Finance

Secure Trust Bank PLC

Annual Report & Accounts 2024

Corporate Governance

Financial Statements

Other Information

Investments and wholesale funding

Amounts due to banks include drawings from the TFSME

facility of £230.0 million, reducing from 2023 (£390.0 million) as

the Group actively prepays this funding. In addition, it includes

£125.0 million drawn from the Indexed Long-Term Repo (‘ILTR’)

facility as at the end of 2024 (2023: £nil), a routine sterling

liquidity management facility provided by the Bank of England.

Tier 2 subordinated liabilities

Tier 2 subordinated liabilities represent £90.0 million of 10.5-

year 13.0% Fixed Rate Callable Subordinated Notes, which

qualify as Tier 2 capital.

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, while 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 year from £397.6 million to

£415.7 million. This includes the proposed 2024 final dividend

of £4.2 million. The increase was primarily in CET 1 capital and

was driven by total profit for the year of £19.7 million, offset

by the final 2024 dividend of £4.2 million, and the expected

reduction in the IFRS 9 transitional adjustment of £2.0 million.

The remainder of the increase was from Tier 2 (£4.6 million) as

capital eligibility increased through asset growth.

The resultant CET 1 and Total capital ratios are 12.3%

(2023: 12.7%) and 14.6% (2023: 15.0%) respectively.

Capital

2024

£million

2023

£million

CET 1 capital, excluding

IFRS 9 transitional adjustment

351.3

335.8

IFRS 9 transitional adjustment

0.1

2.1

CET 1 capital

351.4

337.9

Tier 2 capital

1

64.3

59.7

Total capital

415.7

397.6

Total risk exposure

2,855.7

2,653.4

Capital ratios

2024

%

2023

%

CET 1 capital ratio

12.3

12.7

Total capital ratio

14.6

15.0

CET 1 capital ratio (excluding IFRS

9 transitional adjustment)

12.3

12.7

Total capital ratio (excluding IFRS 9

transitional adjustment)

14.5

14.9

Leverage ratio

9.5

9.7

1.

Tier 2 capital, which is solely subordinated debt net of unamortised issue costs, capped at

25% of total Pillar 1 and Pillar 2A requirements.

Capital requirements

The Total Capital Requirement, set by the PRA, includes both

the calculated requirement derived using the standardised

approach and the additional capital required, derived from

the Internal Capital Adequacy Assessment Process (‘ICAAP’).

In addition, capital is held to cover generic buffers set at a

macroeconomic level by the PRA.

2024

£million

2023

£million

Total Capital Requirement

257.0

238.8

Capital conservation buffer

71.4

66.3

Countercyclical buffer

57.1

53.1

Total

385.5

358.2

The increase in lending balances through the year resulted in

an increase in risk weighted assets over the period, bringing the

total risk exposure up from £2,653.4 million to £2,855.7 million.

Secure Trust Bank PLC

Annual Report & Accounts 2024

16

Strategic Report

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.

• ‘HQLA’ are held in the Bank of England Reserve Account

and UK Treasury Bills. For LCR purposes, the HQLA excludes

UK Treasury Bills that are pledged as collateral against the

Group’s TFSME drawings with the Bank of England.

The Group was above the LCR minimum threshold

(100%) throughout the year, with the Group’s average

LCR being 219.6% (2023: 208.0%) based on a rolling 12

month-end average.

Liquid assets

We continued to hold significant surplus liquidity over the

minimum requirements throughout 2024, managing liquidity

by holding HQLA and utilising funding (predominantly from

retail funding) to support lending. Total liquid assets increased

to £469.0 million (2023: £400.3 million) which, amongst other

things, reflects the levels of liquidity at the end of 2024 to

support funding required to fund the pipeline and fixed term

bond maturities.

The Group is a participant in the Bank of England’s Sterling

Money Market Operations under the Sterling Monetary

Framework and has drawn £230.0 million under the TFSME

(2023: £390.0 million) and £125.0 million under the ILTR scheme

(2023: £nil). The ILTR scheme has used collateral already

prepositioned with the Bank of England and was initiated

during the year as part of the strategy to repay TFSME before

the end of its contractual term. Further drawings of ILTR are

planned in 2025 as the remaining balance of TFSME is repaid.

The Group has no liquid asset exposures outside the United

Kingdom and no amounts that are either past due or impaired.

Liquid assets

2024

£million

2023

£million

Aaa–Aa3

445.0

356.4

A1–A2

24.0

43.9

Total

469.0

400.3

We continue to attract customer deposits to support balance

sheet growth. The composition of customer deposits is shown

in the table below:

Customer deposits

2024

%

2023

%

Fixed term bonds

47

54

Notice accounts

2

6

ISAs

26

22

Access accounts

25

18

Total

100

100

Secure Trust Bank PLC

Annual Report & Accounts 2024

17

Strategic Report

Corporate Governance

Financial Statements

Other Information

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.

2024 performance

• Another record year for new lending led to lending

balances increasing by 11.0% with an increase in Retail

Finance’s market share of new business, which grew to

15.3%

1

 (2023: 13.5%).

• In the year, the lag effect of the steep increases in Base Rate

began to reverse, with a stable and now declining Base Rate,

such that margins expanded, resulting in net interest margin

increasing to 6.8% (2023: 6.4%).

• At the end of the year, 86.7% (2023: 86.3%) of the lending

book related to interest-free lending, and 87.4% (2023: 80.4%)

of customers have signed up to online account management

allowing self-service of their account.

Outlook

• Despite a challenging environment for both retailers and

consumers, we still anticipate further lending growth

from both new and existing retail partners, with potential

improvement in net interest margin. Cost of risk will

normalise to 2023 levels.

• Our operational plans now include our recently launched

AppToPay service, which will continue to digitalise our

processes to improve our customer and retail partners’

experience through app-based technology.

1,223.2

1,054.5

764.8

1,357.8

658.4

2024

2021

2020

2022

2023

1,185.4

1,124.3

771.5

1,289.7

614.5

2024

2021

2020

2022

2023

6.4

6.8

8.1

6.8

8.7

2024

2021

2020

2022

2023

5.3

5.6

7.8

6.0

6.7

2024

2021

2020

2022

2023

Exclusive deal

with Bensons

for Beds

“Our business has grown stronger with

the support of a trusted retail finance

provider. V12 has been attentive to our

needs, offering alternative solutions

and helping us enhance customer

service and profitability. We are excited

about the future and what it holds.”

Steve Adlington

Head of Services at Bensons for Beds

2024 Retail Finance

lending balances

£1.4bn

2023: £1.2 billion

Our partnership with Bensons for Beds

started in 2019 when we became their

exclusive online finance provider.

Sam Beresford, Account Manager, developed a strong

relationship with Bensons, focusing on increasing

sales and enhancing the customer experience.

One significant innovation was allowing customers to

apply for finance from anywhere using a bespoke link

after choosing their bed in-store. This idea was well-

received. By 2024, the trust and respect built over time

enabled Sam and the Retail Finance team to secure

a two-year exclusive deal worth around £160 million.

Today, Bensons thrives with Retail Finance by its side.

Sam says, “At V12 Retail Finance, our standout is

providing systems and service that retailers can trust.

It’s all about collaborating with our partners to drive

business forward. We’re not just there to provide the

tech; the support element is crucial, and we’re with

our retailers every step of the way.”

Market share¹

15.3%

2023: 13.5%

1.

Source: Finance & Leasing Association (‘FLA’): New business values within retail

store and online credit: 2024 15.3% (2023: 13.5%): FLA total and Retail Finance

new business of £8,427 million (2023: £8,810 million) and £1,289.7 million

(2023: £1,185.4 million) respectively. As published at 31 December 2024.

Consumer Finance

Vehicle Finance

We provide quick and easy used car

finance options at the point of purchase.

What we do

• We provide consumer lending products that are secured

against the second hand vehicle being financed.

• We also provide a vehicle stock funding product, which is

secured against dealer forecourt used car stock; sourced

from auctions, part exchanges or trade sources.

• Finance is provided via technology platforms, allowing us

to receive applications online from introducers; provide an

automated decision; facilitate document production through

to pay-out to dealer; and manage in-life loan accounts.

2024 performance

• Record new business of £552.9 million, resulted in lending

balances increasing by 19.5%. Our market share of new

business increased to 1.4%

1

(2023: 1.2%).

• Growth has come from higher-quality, lower-margin

consumer products and Stock Funding. Combined this has

reduced net interest margin to 9.4% (2023: 10.3%).

• Stock funding continued to grow despite the contraction of

the overall market with some competitors choosing to exit.

We now have 427 active dealers (2023: 297) with credit lines

of £70.8 million (2023: £51.5 million).

• Cost of risk increased to 7.6% (2023: 3.4%) largely driven

by the pause in consumer collections in the second half

of 2023 in relation to the FCA’s review of Borrowers in

Financial Difficulty.

• We have now completed the final phase of our Motor

Transformation Programme, including the rate for risk

module, and undertaken a pilot with a select number

of introducers. This allows us to price customer lending

based on the risk profile of the borrower.

Outlook

• We have already taken steps in 2025 to refine our strategy

in Vehicle Finance to focus on higher returning segments.

• We plan to complete the transfer of all future consumer

vehicle finance originations onto the new rate for risk

platform by the end of 2025.

467.2

373.1

263.3

558.3

243.9

2024

2021

2020

2022

2023

471.2

401.7

199.8

552.9

78.6

2024

2021

2020

2022

2023

10.3

12.0

13.1

9.4

12.8

2024

2021

2020

2022

2023

7.3

6.1

14.0

1.9

5.1

2024

2021

2020

2022

2023

“Our growth has been sizable. We have

gone from a start-up to a significant

player in the used vehicle Stock Funding

sector. This success is a direct result of

our dedication and our dealer partners’

trust in us. We are continually evolving to

meet the changing needs of the market.”

Tim Maffey

Stock Funding Director

Driving 5 years

of success with

Stock Funding

2024 Vehicle Finance

(Consumer and Stock

Funding) lending balances

£0.6bn

2023: £0.5 billion

The growth of Stock Funding over

the past five years is a testament to

our commitment to service.

Since our inception in 2019, we have expanded our

portfolio, introduced products, and forged strong

relationships with a range of dealers across the UK.

This growth has not only solidified our position in the

market but has also allowed us to continuously refine

and enhance our offerings to better serve our partners.

From inception we have partnered with 647 dealers and

provided funding of £692.6 million, which equates to

62,335 vehicles with the target to hit £1 billion funded

by September 2025. We are committed to driving

innovation in Stock Funding solutions, leveraging

technology and industry insights to stay ahead of

market trends. We aim to continue expanding our

reach, supporting more dealers, and encouraging

long-term partnerships that drive mutual success.

Consumer lending

market share¹

1.4%

2023: 1.2%

1.

Source: FLA. Cars bought on finance by consumers through the point of sale:

New business values: 2024 1.4% (2023: 1.2%): Used cars: 2024, FLA total and

Vehicle Finance total of £21,281 million (2023: £22,082 million) and £294.4 million

(2023: £260.0 million) respectively. As published at 31 December 2024.

Business Finance

Real Estate Finance

We lend money against residential

properties to professional landlords

and property developers.

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.

2024 performance

• Strong levels of new business, particularly in the

Residential Investment sector, built on a strong origination

team and the refinancing of existing loans through strong

customer relationships.

• Lending balances grew by 7.8% to a record high of

£1,341.4 million despite weak economic growth and

a challenging economy for investors and developers.

• The portfolio principally comprises lower risk residential

investment lending, 88.1% (2023: 83.8%). The remainder

of the book relates to development and commercial

investment lending.

• Our market remains competitive, however, net revenue

margin was maintained at 2.6% (2023: 2.6%).

• Impairment charges of £4.0 million (2023: £4.5 million)

remain higher than the historical average, primarily due

to one legacy development case, which is being actively

managed to achieve a timely exit. Despite this, we have

seen a 0.1% improvement in the risk adjusted margin.

• As at year-end, the loan book has an average loan-to-value

of 56.0% (2023: 57.2%).

Outlook

• With the economic outlook for house prices more stable

than in recent years, we see real growth opportunities in

our focused real estate segments supported by the new

UK government’s desire to build more homes.

1,243.8

1,115.5

1,109.6

1,341.4

1,051.9

2024

2021

2020

2022

2023

Loans and advances to customers

434.0

384.5

376.1

383.5

189.5

2024

2021

2020

2022

2023

New business

2.6

2.7

3.0

2.6

3.0

2024

2021

2020

2022

2023

Net revenue margin

2.2

2.6

3.0

2.3

2.5

2024

2021

2020

2022

2023

Risk adjusted margin

Contemporary

Essex

apartments

refinanced

“Harlow Flats is the latest addition

to a thriving area, and we are proud

to provide stunning accommodation

to its newest residents. Having

previously worked with Secure Trust

Bank we were confident that, even

with its complex nature, the deal

was in the right hands.”

Raj Shah

Prisma Property Developments

2024 Real Estate

Finance loans and

advances to customers

£1.3bn

2023: £1.2 billion

Real Estate Finance provided a £6.6 million

five-year residential investment loan to

refinance two contemporary apartment

blocks in West Essex.

Developed by Prisma Property Developments,

comprising 47 units in the Mayflower and Bluebell

House blocks of Harlow Flats. The collection of one and

two-bedroom apartments featured fully-fitted kitchens,

integrated appliances, spacious bathrooms and

ensuites, and a private terrace or balcony.

Harlow ranks among the top five commuter towns

for London. The flats are located under one mile

from Harlow Town train station, allowing residents

to reach the capital in half an hour.

Average

loan-to-value

56.0%

2023: 57.2%

Secure Trust Bank PLC

Business Finance

Commercial Finance

We support the growth of UK businesses

by enabling effective cash flow.

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.

2024 performance

• New business lending has been lower in 2024 due to limited

M&A activity in our target markets, and our unwillingness to

transact on riskier deal structures at low margins.

• Whilst year-end balances were 7.9% lower in 2024, average

lending balances were 1.2% higher year-on-year.

• The increase in net revenue margin was driven by fees

charged for new facilities, extensions and early terminations.

• The risk adjusted margin has increased to 5.9%, reflecting

the higher fees, but it included a higher cost of risk at

1.7% (2023: 2.3%) after a £5.6 million charge relating to a

specific client.

Outlook

• Economic and market conditions still remain challenging

for our clients, but we remain committed to supporting their

growth and success, and we look forward to partnering with

new businesses in 2025 as market conditions improve.

381.1

376.4

313.3

351.0

230.7

2024

2021

2020

2022

2023

Loans and advances to customers

214.8

157.3

93.7

105.8

126.1

2024

2021

2020

2022

2023

New business

7.0

6.4

5.7

7.6

5.5

2024

2021

2020

2022

2023

Net revenue margin

4.7

6.2

5.8

5.9

5.0

2024

2021

2020

2022

2023

Risk adjusted margin

UK’s oldest

commercial

vineyard secures

facility 

“In helping to ensure our growth

remained sustainable, the Secure

Trust Bank team worked closely

with us to really understand our

business, and what we were looking

to achieve over the coming years.”

Joe Jeffers

Finance & Operations Director of Hambledon Vineyard

2024 Commercial Finance 

lending balances

£0.4bn

2023: £0.4 billion

Commercial Finance provided a £10 million

facility to support Hambledon Vineyard in its

next stage of growth. The Hampshire-based

English Sparkling Wine producer is the UK’s

oldest commercial vineyard.

As the wine tourism sector continues to flourish,

Hambledon Vineyard had ambitious plans to increase

its market share, primarily through its newly opened

restaurant and visitor centre, along with UK distribution

channels and international markets. To consolidate

its growth, the business needed additional working

capital to maintain its level of production. The facility

received from Commercial Finance has enhanced the

investment into the winery and in its people.

Total facilities available

to clients

£0.6bn

2023: £0.7 billion

Secure Trust Bank PLC

£3,244.9m

ISA

£857.3m

£72.4m

£805.2m

£1,510.0m

Notice

Access

Term

2024

Savings

We look after our customers’ savings

and provide a competitive return.

1,719.1

1,210.1

661.3

1,604.2

535.9

2024

2021

2020

2022

2023

Total funds raised

(£m)

2,871.8

2,514.6

2,103.2

3,244.9

1,992.5

2024

2021

2020

2022

2023

Total deposits

(£m)

ISA

£629.6

m

£174.3

m

£521.3

m

£1,546.6

m

Notice

Access

Term

2023

£2,871.8m

Corporate Governance

Financial Statements

Other Information

Digital-first

approach for

savings

“Easy to use online platform with

prompt and clear communication.”

Customer feedback

Feefo, Savings Customer

2024

Customer deposits

£3.2bn

2023: £2.9 billion

Customers have continued to adopt a more

digital-first approach, with 97.1% registered

for internet banking, of which, 30.1% are

also registered for the mobile app.

To support this we continue to invest more in

technology to enhance the customer journey for our

customers, particularly for self-service capability.

This has included enhancements to streamline the

online journey, making it easier for new customers to

apply for our Savings Accounts and better supporting

customers with accessibility needs.

In addition, functionality has been added, including

single name account customers, can transfer money

between their accounts via internet banking and

single name Fixed term bond and ISA maturities have

been automated removing manual intervention from

operational teams for straightforward transactions.

Retail deposits

covered by FSCS

95.1%

2023: 95.6%

Secure Trust Bank PLC

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

Economic growth, measured in real annual UK Gross Domestic

Product (‘GDP’), was estimated to be 0.9% in 2024 (2023: 0.4%).

Economists’ base case forecasts indicate GDP growth will

increase in 2025, with full-year growth in GDP expected to

be 1.4%. However, there is some scepticism that the new

UK government’s first Budget will have the desired effects of

boosting growth, and that household savings are less available

to be deployed to boost consumer spending. This has led

to downward revisions in more recent UK GDP forecasts, in

contrast to global growth forecasts, which have improved

partly due to the expected loosening of US fiscal policy

under President Trump.

The rate of inflation fell sharply in 2024 and was largely back to

the Bank of England target of 2% by June 2024, but there was

a small increase to 2.5% by the end of the year and a further

increase to 3.0% in January 2025. Reflecting the 2024 fall in

inflation, the Bank of England reduced the Base Rate from

5.25% to 5.00% in August 2024 and from 5.00% to 4.75% in

November 2024. A further decrease to 4.50% was announced in

February 2025. Financial markets have responded to the Bank

of England reducing rates and the expectation that inflation

has largely stabilised by pricing in further Base Rate reductions

through 2025, albeit at a relatively cautious level.

Employment levels in December 2024 were 74.9%

1

which

represents a small decrease during the period from 75.0%

1

in December 2023. In line with this fall, unemployment has

risen from 3.9%

1

in December 2023 to 4.4%

1

at December

2024. Vacancies in the labour market were circa 0.8 million

and have been decreasing for two and a half years.

Although unemployment levels have risen during the period,

wage growth remained strong, at 5.9%

1

and remains ahead of

inflation. The latest forecasts suggest that unemployment has

peaked, and will remain near its current level throughout 2025.

UK house prices grew by 4.6%

2

in 2024 and the risk of a

large correction in prices has reduced. The uncertainty over

the timing and quantum of Base Rate cuts has given rise to

some mortgage rate volatility in the year, albeit the overall

position is one of lower rates being available than in recent

years. Net mortgage borrowing showed 1.5%

3

annual growth

in December 2024, with mortgage approvals up significantly

year on year.

Outlook

Interest rates are expected to fall further in 2025 with the

market expecting Base Rate to end the year below 4.00%.

The UK economy is expected to grow in 2025 by less than

1%

3

per the Bank of England’s latest forecast down from

its previous forecast of 1.5%. House prices are expected to

continue to grow as mortgage rates soften and borrower

affordability improves. Unemployment is expected to remain

near its current level of 4.4%

1

for 2025. The longer-term

expectation is that unemployment will recover towards a

long run level of 4.0% by 2028.

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 2024

are set out below.

Prudential regulation

During March 2024, the PRA issued PS5/24 ‘Solvent exit

planning for non-systemic banks and building societies’. This is

intended to provide an alternative to resolution and creates a

new requirement for non-systemic banks to perform a Solvent

Exit Analysis to develop an understanding of how firms would

exit from PRA-regulated activities, while remaining solvent,

the main barriers and risks faced in doing so, and how they

would make timely and effective decisions during the process.

The Group has commenced work on the Solvent Exit Analysis

ahead of the implementation date of 1 October 2025.

1.

Source: Office for National Statistics, data as at 31 December 2024, unless otherwise stated.

2. Source: HM Land Registry.

3. Bank of England.

Secure Trust Bank PLC

Annual Report & Accounts 2024

28

Strategic Report

Corporate Governance

Financial Statements

Other Information

Basel 3.1 changes remain the core focus of regulatory change

for the Group alongside the Small Domestic Deposit Takers

(‘SDDT’) regime. Slightly later than anticipated due to the

general election, in September 2024, the PRA issued PS9/24

‘Implementation of the Basel 3.1 Standards near-final part 2’

and four consultation papers relevant to the topic. The policy

statement set out the awaited changes to Credit Risk, Pillar

3 disclosures and consequential reporting changes, which

completed the framework when considering PS17/23, issued

in December 2023.

The simplified capital regime proposal for SDDT firms was set

out in CP7/24. The highlights from these proposals included

the removal of Pillar 1 requirements for counterparty credit

risk and credit valuation adjustment risk, simplified Pillar 2A

approaches to credit risk, credit concentration risk, operational

risk, the removal of some methodologies and proposed

replacement of Pillar 2B capital buffers with a new non-cyclical

Single Capital Buffer (‘SCB’). In addition, it also proposed

reduced reporting, including changes to the Internal Capital

Adequacy Assessment Process (‘ICAAP’).

The Group undertook an initial impact analysis of the

combined PS9/24 and PS17/23 amendments, also

considering the proposals set out in CP7/24 to understand

the impact under SDDT. The Group expects the impact to

be broadly neutral overall.

In the second half of 2024, the Group received confirmation

of its successful application to join the SDDT regime. PS17/23

confirmed that firms, that are part of the SDDT regime, do

not need to adopt full Basel 3.1 rules and can remain on the

interim rules equivalent to the current UK Capital Requirements

Regulation regime until the capital rules applicable to the

SDDT regime are applicable.

In November 2024, the PRA issued PS19/24 ‘Strong and simple

framework: The definition of an Interim Capital Regime’, which

set out the process firms should follow to apply to adopt the

Interim Capital Regime (‘ICR’). The ICR was expected to apply

from 1 January 2026 with the expected SDDT implementation

date being 1 January 2027. However, on 18 February 2025, the

PRA announced a delay to Basel 3.1 implementation by one

year to 1 January 2027. As a consequence we expect a delay in

the implementation date for SDDT. The Group has applied for

a Modification by Consent waiver to apply the ICR.

Conduct regulation

Throughout 2024, FCA publications focused on

Consumer Duty, including the findings from their review of

implementation, which highlighted good practice and areas of

improvement. Dear CEO letters and speeches have reiterated

the focus on ensuring firms prioritise areas where there is the

greatest risk of consumer harm, setting and testing higher

standards, and promoting competition and positive change.

The application of the Duty to closed products came into

force on 31 July 2024 with limited impact to the Group.

In January 2024, the FCA introduced temporary changes to

the rules for handling motor finance complaints. This was to

allow time for its review of historical discretionary commission

arrangements (‘DCAs’), information requests for which were

sent to motor finance firms in the period. On 25 October 2024,

the Court of Appeal issued its decision on three motor finance

commission cases.

The lenders involved have been granted permission to appeal

the judgment to the Supreme Court, the hearing for which

will take place in April 2025. The FCA will update firms on its

next steps after the Supreme Court decision. The pause in

complaints responses was extended to 4 December 2025 for all

motor finance commission complaints. The FCA also issued a

Dear CEO letter directing firms to maintain adequate financial

resources, with a view to the implications for firms of any

potential remedial activities arising from DCAs. Further details

on the impact of these developments can be found in Note 29

to the Financial Statements.

In April 2024, the FCA published two policy statements.

One on protections for Borrowers in Financial Difficulty,

incorporating aspects of the Tailored Support Guidance into

the FCA’s sourcebooks with effect from November 2024; the

requirements for this have been addressed through an internal

project. The other bringing Consumer Credit product sales

data reporting into force in Q4 2025. This will be the focus of

an internal project during 2025.

Government and monetary policy

The Bank of England MPC announced two rate reductions over

2024, 0.25% rate cuts in August and November 2024, reducing

UK Bank Base Rate to 4.75% as at 31 December 2024.

Secure Trust Bank PLC

Annual Report & Accounts 2024

29

Strategic Report

Corporate Governance

Financial Statements

Other Information

Market review

Risk management

The effective management of risk is a key part of the Group’s

strategy and is underpinned by its Risk Aware value. This helps

to protect the Group’s customers and generate sustainable

returns for shareholders. The Group is focused on maintaining

sufficient levels of capital, liquidity, operational control, and

acting in a responsible way.

The Group’s Chief Risk Officer is responsible for leading the

Group’s Risk function, which is independent from the Group’s

operational and commercial teams. The Risk function is

responsible for designing and overseeing the embedding

of appropriate risk management frameworks, processes

and controls, to enable key risks to be identified, assessed,

monitored, and accepted or mitigated in line with the Group’s

risk appetite. The Group’s risk management practices are

regularly reviewed and enhanced to reflect changes in its

operating environment. The Chief Risk Officer is responsible

for reporting to the Board on the Group’s principal risks and

how they are being managed against agreed risk appetite.

Risk appetite

The Group has identified the risk drivers and major risk

categories relevant to the business, which has enabled it

to agree a suite of risk appetite statements and metrics to

underpin the strategy of the Group. The Board approves

the Group’s risk appetite statements annually and these

define the level and type of risk that the Group is prepared

to accept in the pursuit of its strategic objectives.

Risk culture

A strong risk-aware culture is integral to the successful delivery

of the Group’s strategy and the effective management of risk.

The Group’s risk culture is shaped by a range of factors

including risk appetite, risk frameworks and policies, values

and behaviours, as well as a clear tone from the top.

The Group looks to enhance continually its risk culture, and

performs an annual assessment against standards based

on industry best practice and guidance from the Institute

of Risk Management.

Risk governance

The Group’s approach to managing risk is defined within its

Enterprise-Wide Risk Management Framework. This provides

a clear risk taxonomy and an overarching framework for risk

management supported by frameworks and policies for

individual risk disciplines. These frameworks set the standards

for risk identification, assessment, mitigation, monitoring

and reporting.

The Group’s risk management frameworks, policies and

procedures are regularly reviewed and updated to reflect the

evolving risks that the Group faces in its business activities.

They support decision making across the Group and are

designed to ensure that risks are appropriately managed

and reported 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.

Secure Trust Bank PLC

Annual Report & Accounts 2024

30

Strategic Report

Corporate Governance

Financial Statements

Other Information

Principal risks and uncertainties

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 2024 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 2024. Notes 37 to 40 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

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

.

Board and Board Committees

See Corporate Governance section on pages 68 to 111.

Group Executive Committee

Chair: Chief Executive Officer

Provides an 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.

Executive Risk Committee

Chair: Chief Risk Officer

Responsible for overseeing the Group’s risk profile,

its adherence to regulatory compliance and monitoring

these against the risk appetite set by the Board.

Monitors the effective implementation of the risk

management framework across the Group.

Assets and Liabilities Committee (‘ALCO’)

Chair: Chief Financial Officer

Responsible for implementing and controlling the liquidity,

and asset and liability management risk appetite of the

Group, providing high-level control over the Group’s

balance sheet and associated risks.

Set out controls, capital deployment, treasury strategy

guidelines and limits, and focuses on the effects of future

plans and strategy on the Group’s assets and liabilities.

Credit Risk

Committees

Responsible for making

decisions and providing oversight of

credit scorecards and modelling.

Non-Financial Risk

Committee

Responsible for providing oversight

of all non-financial risks, including,

Financial Crime, Operational,

Conduct and Compliance, Climate

Change, Information Security, IT and

Change risk.

Model Governance

Committee

Responsible for understanding,

challenging and assessing risk

and appropriateness of statistical

and financial models, and to

challenge model assumptions,

and to provide oversight of

model validation.

Assumptions

Committee

Responsible for approving

assumptions that have a material

impact on the Group’s reporting

and/or decision-making processes.

Secure Trust Bank PLC

Annual Report & Accounts 2024

31

Strategic Report

Corporate Governance

Financial Statements

Other Information

Principal risks and uncertainties

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 cautious 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, security is taken for Vehicle Finance lending

and 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.

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 2024, economic conditions continued to be challenging in the UK, with high

levels of inflation and cost-of-living pressures for consumers. The lower Base Rate

environment in the second half of 2024 has, however, had a positive impact upon

the property market.

The Group’s lending portfolios performed satisfactorily in 2024. Vehicle Finance saw

increased levels of arrears at the beginning of 2024 following changes to collections

procedures and the introduction of new forbearance options in the latter part of

2023. Performance has improved over 2024 from a new business perspective with

lower delinquency rates being observed, as well as at a portfolio level with roll and

cure rates improving during the year. Retail Finance saw a small increase in arrears,

following a relaxation of strategy but remains well within risk appetite.

The Real Estate Finance and Commercial Finance businesses are performing

satisfactorily, with key risk metrics remaining within appetite. Some customers have

been impacted by higher inflation and lower consumer demand; however, they

have been managed closely with low levels of customer defaults resulting.

Real Estate Finance at a portfolio level is performing well, with continued strong

rental demand supporting valuations 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, however, this is mainly due to existing

defaulted balances being held for longer than anticipated, leading to increased

non-recovery of interest.

Similarly, the Commercial Finance business is performing well at a portfolio level.

There has been one write-off taken at the end of 2024, attributable to a historic

case that was impacted by loss of consumer demand and withdrawal of trade

credit insurance. However, in general within 2024, we have seen lower levels of

attrition due to client failure, compared to 2023. The overall rating for the year

is driven by the continuing uncertainty in the external economic environment.

Secure Trust Bank PLC

Annual Report & Accounts 2024

32

Strategic Report

Corporate Governance

Financial Statements

Other Information

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.

In line with the Prudential Regulation Authority’s (‘PRA’) 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 received regulatory permission to move to the Small Domestic Deposit

Takers (‘SDDT’) regime during 2024, the simplified liquidity rules became effective

from 1 July 2024.

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, continue to be

maintained so that there is no material risk that liabilities cannot be met as they

fall due.

The Group has reviewed funding requirements ahead of the upcoming Term

Funding Scheme with additional incentives for SMEs (‘TFSME’) maturities in

2025 to manage the associated refinancing risk and increased competition for

retail funding, and during 2024 has repaid £160.0 million of TFSME earlier than

the contractual maturity.

Secure Trust Bank PLC

Annual Report & Accounts 2024

33

Strategic Report

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 increased since the

beginning of the year as the Group continues to grow its core businesses

organically. Despite the growth in its balance sheet, the Group has continued to

maintain adequate capital, and all capital ratio measures have been exceeded

throughout the period. Details of the Common Equity Tier 1 ratio, total capital

ratio and leverage ratio are included in the Financial review on page 16.

The 2024 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 of severe but plausible outcomes in

relation to potential redress payments related to historical motor commissions (see

page 40 for further information) against our 2024 ICAAP and Recovery Plan and

are satisfied the Group could maintain capital adequacy in such a scenario.

The Group has assessed the high-level impact of the proposed Basel 3.1 rules and

the PRA Interim Capital Regime, and has taken this into consideration as part of

the capital planning.

Secure Trust Bank PLC

Annual Report & Accounts 2024

34

Strategic Report

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.

Despite changes in the Bank of England Base Rate during 2024, and continued

uncertainty over interest rate movements, interest rate risk and foreign exchange

risk remain well managed. Risk exposures are actively managed through

increased frequency of monitoring and in 2024, the Group has successfully

implemented central clearing to support increased derivative activity.

Secure Trust Bank PLC

Annual Report & Accounts 2024

35

Strategic Report

Corporate Governance

Financial Statements

Other Information

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,

including Cyber 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. This framework

defines and facilitates a range of activities, including:

• a Risk and Control Self-Assessment process to identify, assess and

mitigate risks across all business units through improvements to the

control environment;

• the governance arrangements for managing and reporting these risks;

• risk appetite statements and associated thresholds and metrics; and

• an incident management process that defines how incidents should

be managed and associated remediation, reporting and root-

cause analysis.

The framework is designed to ensure appropriate governance is in place

to provide adequate and effective oversight of the Group’s operational

risks. The governance framework includes the Non-Financial Risk,

Executive Risk and Board Risk Committees.

The Group has a defined set of qualitative and quantitative Operational

risk appetite measures. These measures cover all categories of

operational risk and are reported and monitored monthly.

In addition to the delivery of framework requirements, the Group has

focused on various thematic areas of operational risk in 2024, including

operational resilience where the Group is on track to meet the March

2025 regulatory deadline, and the integration of Artificial Intelligence (‘AI’)

risk 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 2024, the

Group has continued to enhance these standards and has introduced several

improvements to the control frameworks in place across its operational risks.

Overall, the assessment is that the level of risk has remained stable.

Secure Trust Bank PLC

Annual Report & Accounts 2024

36

Strategic Report

Corporate Governance

Financial Statements

Other Information

Description

Mitigation

Change during the year

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

Whilst the Group is not within the scope of the PRA’s Supervisory

Statement 1/23, it has aligned its model risk management practices to

this standard and has a model risk management framework, defined risk

appetite, a model Governance Committee, policies, procedures, model

development standards and model validation in place.

The Group has made progress in formally implementing stronger Model

Governance in 2024 and strengthening the scope, awareness and reporting of

its model inventory. The Group has clarified roles and responsibilities for model

owners and has produced internal independent validation reports for a number

of higher risk models.

Description

Mitigation

Change during the year

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 incidents 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 rating for the year is driven predominantly by the developments

regarding historical motor finance commissions.

Following the Court of Appeal’s rulings in October, the Group paused new

consumer lending in Vehicle Finance to consider the implications of the ruling

and commenced new business after three days with enhanced disclosures in

place about commission arrangements between the Group and its Vehicle Finance

introducers. The Group is continuing to track developments in order to respond

when the implications for the industry become clearer.

Other Compliance and Conduct risk areas of focus during the year related

to the Group’s review of its collections processes, procedures and policies

in Vehicle Finance, following its formal discussions with the FCA on its BiFD

review. The Group is in the final stages of this review.

Secure Trust Bank PLC

Annual Report & Accounts 2024

37

Strategic Report

Corporate Governance

Financial Statements

Other Information

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 policy 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.

Enhancements to the Group’s financial crime control environment have continued

with a focus on Authorised Push Payment Reimbursement policy requirements.

We are closely monitoring changes to financial crime regulation and guidance,

and responding to them.

Description

Mitigation

Change during the year

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 adjustment towards a carbon neutral

economy. The Group 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

limited, 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 now fully aligned.

Specific detail on each of the key risks identified and mitigation are covered

within the Strategy section on page 56. The Group continues to monitor

the evolving climate disclosure landscape and regulatory requirements and

expectations, including transition planning.

Secure Trust Bank PLC

Annual Report & Accounts 2024

38

Strategic Report

Corporate Governance

Financial Statements

Other Information

Strategic and emerging risks

The key strategic risk for the Group remains the macroeconomic 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, levels of economic activity and house prices will impact on levels of demand for the Group’s products and

services. As well as performance of its credit portfolios and achievable returns.

Whilst inflation pressures reduced significantly in 2024, this did not allow for material reductions in the Bank of England Base Rate, which remains high by recent standards. Whilst these issues

have not presented at a portfolio level 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 Group is tracking closely the potential legal and regulatory risk associated with the Court of Appeal rulings and Supreme Court appeal about the three historical motor commissions cases

(see Note 29 to the Financial Statements). The Group is awaiting the outcome of the Supreme Court appeal and other legal developments, and the FCA’s motor finance review to establish

whether and how its historical Vehicle Finance lending will be impacted.

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 impact.

Secure Trust Bank PLC

Annual Report & Accounts 2024

39

Strategic Report

Corporate Governance

Financial Statements

Other Information

Principal risks and uncertainties

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 2029. 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 2024 and the 2025 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 95.1%

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 conducting 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 has considered the potential impacts on

provisioning for customer redress and associated costs for a

severe but plausible and worst case outcome for future FCA

actions following the October 2024 Court of Appeal ruling

and April 2025 Supreme Court appeal on historical motor

finance commissions.

• 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 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 2025 to 2029 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 2024,

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 PRA’s published

macroeconomic stress and severe scenarios in order to

assess the adequacy of capital resources over the 2024

to 2028 period, was approved in August 2024. Within this

process, 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 level of provisions recognised for expected potential

redress and costs related to legal and regulatory

developments about historical motor finance commission

payments is based on probability weighting multiple

outcome scenarios (See Note 29 to the Financial Statements).

For the going concern and viability assessment the Group

has considered how the loss provision could change under a

severe but plausible and worst case outcome after applying

increased probability to adverse scenarios including: scope

of redress, customer journey; claims rates and the FCA

position on customer harm caused.

Secure Trust Bank PLC

Annual Report & Accounts 2024

40

Strategic Report

Corporate Governance

Financial Statements

Other Information

Viability and going concern

• The latest Group Recovery Plan was approved in October

2024 and confirmed that the Group has sufficient recovery

options available to recover from the severe combined

idiosyncratic and macroeconomic stress scenario modelled

over the 2024 to 2028 period. The primary recovery options

are to reduce the level of new lending, and thus slow down

the rate of growth, and raise new deposits.

• 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 2024 ILAAP included idiosyncratic, market-wide

and combined stress scenarios.

The idiosyncratic liquidity stress test assumed an operational

incident within the deposits operations team leads to adverse

media coverage across financial websites, newspapers and on

TV. This leads to a short-term loss in customer confidence and

makes it materially more challenging to retain maturing term

bonds, higher notice being served and customers withdrawing

Access deposits.

The market-wide stress is based upon the UK economy

entering a severe recession with rising unemployment and

inflation, falling house and equity prices, subdued wage

growth and a contraction in GDP, due to prolonged economic

uncertainty. Higher customer default rates (in line with the

Macro ICAAP stress) and the regulators decision to allow

consumer customers to take payment holidays results in lower

payment inflows. Completions on consumer contracts fall,

while requests for refinancing from business customers also

contracts in line with reduced economic activity. The combined

stress includes elements of the idiosyncratic and market

stresses, whereby the UK economy enters a severe recession,

and the Group suffers outflows due to poor customer services

at the same time.

A combined stress includes elements of the idiosyncratic and

market stresses, whereby the UK economy enters a severe

recession, and the Group suffers operational issues in the

deposits function at the same time.

In addition, the ILAAP includes sensitivity analysis to model the

impact of adverse variances in stress assumptions used in each

of these scenarios.

Reverse stress test modelling was also performed to identify the

type and severity of a stress required for the Group to no longer

be able to meet its liquidity requirements. Three scenarios

were assessed to consider the impact of: 1) an extreme retail

deposits stress leading to higher attrition and inability to raise

new deposits; 2) a significant reduction in lending inflows at the

same time as a full utilisation of Commercial Finance facilities;

and 3) the impact of Retail Finance loans becoming ineligible

for use in supporting Bank of England drawdowns.

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 2024 to 2028 period.

The macroeconomic stress included an unemployment peak

of 8.5% in Q2 2025, a 31.0% property price decline by mid-

2026, and an economic recovery beginning in 2026. 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

12.0%, a sharper decline in house prices to 48.3% 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 latest Group’s Recovery Plan confirmed that the Group has

sufficient recovery options available to recover from the severe

stress scenarios modelled over the 2024 to 2028 period.

The combined capital stress test included peak

unemployment of 12.0%, a 48.3% 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.

Secure Trust Bank PLC

Annual Report & Accounts 2024

41

Strategic Report

Corporate Governance

Financial Statements

Other Information

Viability and going concern

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 and to enable us

to develop products to meet these needs.

We also engage to seek feedback on the

service we provide and look continually

to improve.

Our customers want to borrow or save money

at competitive rates and under fair terms.

They want high levels of customer service and

to be able to access their accounts through

a variety of channels that suit their needs.

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 helps to

ensure that the retail customer voice is heard

in the boardroom and that their interests are

considered in our decision making.

• Feefo customer trust score of 4.7.

• Trustpilot scores of 4.6.

• Following the launch of a pilot scheme for our

Retail Finance AppToPay app last year, we

listened to the feedback from customers and

launched a revised version of the app this year,

to help our customers service their accounts in

an easy way.

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 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

a long-term sustainable business that has

strong governance and risk management.

Our Executive Directors, Chair and investor

relations team primarily undertake engagement

and run investor engagement programmes

after the release of our full-year and interim

results. The Chair of our Remuneration

Committee engages with shareholders

following the annual remuneration round.

All of our Directors are available to meet

with shareholders on request and attend the

Annual General Meeting, which provides

a valued opportunity to engage with our

smaller shareholders.

This year, our newly appointed Chair met with

major shareholders as part of his induction

programme and we undertook two capital

market day presentations focusing on our

Real Estate Finance and Commercial Finance

businesses. We also ran an independent

shareholder perceptions study.

• In 2024, we agreed a new more sustainable

dividend policy, which has enabled us to

continue our growth strategy. The first

dividend under the new policy was paid in

September 2024.

• Following feedback from our shareholders we

have enhanced our segmental reporting to

provide shareholders with greater information

on each of our business units.

Managing our business responsibly

Engaging with our stakeholders

Secure Trust Bank PLC

Annual Report & Accounts 2024

42

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

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 value to stakeholders.

We have an employee council, which is chaired

by Paul Myers, an independent Non-Executive

Director and the designated Director for

workforce engagement. The Council comprises

nominated representatives from key business

areas and discusses employee views on a

wide range of subjects. Paul Myers provides

feedback at the Board meetings following

Council meetings.

We have held regular employee townhalls

with updates on the Company’s strategy,

performance and ESG initiatives. We have

strong internal communications centred

around Hive (our intranet) and Viva engage and

our Chief Executive Officer (‘CEO’) regularly

provides business updates.

The Board reviews the results of our

employee engagement surveys and has

oversight of action plans to address items

raised. Our People team lead engagement

with employees and provide updates to the

Board. The Chair visited several of our offices

during the year and met with people across

the business.

• Successfully retained our Great Place to

Work

®

 (‘GPTW

®

’) accreditation.

• Achieved an overall employee trust index

score of 74%.

• Low rates of attrition with a voluntary

turnover rate of 13%.

• Employees participated in 4,592 hours

of training across the Group.

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 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.

The Board receives regular updates from

all business units and our Chief Operating

Officer who is also responsible for the Group’s

procurement team and any matters that

require escalation are done so through the

governance framework.

• 33.2 average creditor payment days.

• An assessment of 611 suppliers within

the Group’s supply chain was undertaken

in 2024, identifying nine 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 2024

43

Strategic Report

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

treat customers fairly, act with integrity and

transparency, and comply with 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 our practices and processes to

protect our customers, the level of capital we

hold, our governance 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. In addition,

we make regulatory applications, notifications

and filings in-line with requirements.

Our senior managers and Directors provide

feedback to the Board on our engagement

with regulators. The Risk Committee receives

updates from the Compliance team at

each meeting, which includes details of all

communications with our regulators and a

‘horizon scanning’ report, which identifies

legal and regulatory changes relevant to

our business.

• Continued compliance and enhancements

to the Group’s processes in relation to the

Consumer Duty requirements.

• Engagement with the regulator on legal

and regulatory developments in relation to

historical motor commissions.

• Common Equity Tier 1 (‘CET 1’) of 12.3%.

• Commenced the redress programme under

the Financial Conduct Authority’s Borrowers

in Financial Difficulty review.

Communities and society

We believe we have a responsibility to make a

wider contribution to society, which we primarily

achieve through our Environmental, Social and

Governance (‘ESG’) strategy.

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 enhance the

impact we have 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 22.8% against last year and

achieved our target of 50% reduction in Scope

1 and Scope 2 emissions by 2025, a year early

in 2024 (since 2021). Please see page 46 for

further information.

• £99,800 of charitable funds raised in 2024.

• 281 volunteer days donated by

our employees.

• The Board reviewed and challenged the

Group’s Modern Slavery Policy and Statement

which outline the steps taken by the Group to

prevent modern slavery and human trafficking

in its operations.

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 77.

Secure Trust Bank PLC

Annual Report & Accounts 2024

44

Strategic Report

Corporate Governance

Financial Statements

Other Information

Managing our business responsibly

What is our ESG strategy?

As a regulated bank, we put strong emphasis on ensuring

we are aligned to the external standards relevant to our

organisation, but our ESG strategy goes beyond this.

It commits us to prioritise the ESG focus areas material to our

organisation and stakeholders, and so is key to the delivery of

our business strategy and our ability to achieve success.

We have a process in place for regular senior oversight

and discussion of our ESG activities, their progress and any

potential risks to progress. In 2024, as part of this process,

we reviewed the ESG strategy launched at the start of 2023

resulting in some enhancements, which are effective from

the start of 2025, and are reflected in the ESG summary

graphic shown above and the strategy overview chart on

the following page.

What progress has been made against

our ESG strategy and priorities?

During 2024, we continued to make good progress across each

of our focus areas. This is reflected by the positive responses

of above 80% across all ESG-related questions in our annual

employee opinion survey.

In June, a series of ESG calibration meetings were held

focusing on our ESG focus areas, which fed into a senior

level discussion about how we ensure our ESG aspirations

remain as tightly aligned as possible to our business purpose

and strategy. The outcome covered anticipated disclosure

requirements about climate change and artificial intelligence,

but also an evolved approach within our ‘Communities and

Charities’ and ‘Education and Skills’ focus areas.

During 2024, we have made the ESG disclosures that we

committed to and largely met the targets that we set for the

period. Although the deadline for achieving the Group’s

published target of reducing Scope 1 and 2 CO

2

equivalent

(CO

2

e) emissions by 50% is not until the end of 2025 (since

2021), our published data shows that we have achieved this

target a year early, with further initiatives planned for 2025.

We published progress against the Women in Finance Charter

targets set at the start of 2024 in January 2025. This shows that

during 2024 we exceeded targets set for female representation

on our Executive Committee (33%), female participation in

leadership programmes (52%), flexible working requests

accepted (95%) and female participation in mentoring

programmes as mentees (54%). We also improved female

representation in senior management (grade seven and above,

excluding Executive Committee members) by 2% to 24%,

Our priorities

Environmental

Social

Governance

Sustainable Development Goals

Climate Action/Risk

Customer Trust

Equity, Diversity and Inclusion (‘ED&I’)

Education and Skills

Communities and Charities

Acting responsibly

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.

• Starting with the year beginning 1 January 2025 we are working

to be ready to publish a Transition plan following the Transition

Plan Taskforce Disclosure Framework and, when applicable,

related mandatory requirements.

Page 48

New

for 2025

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

demonstrating progress towards our end of 2025 30% target.

Although our employee engagement survey scores were

negatively impacted by the reorganisation implemented at the

end of 2024, they remain reassuringly high. For example, our

Trust Index at 74% and the proportion of colleagues who say

the Group is a great place to work (71%) remain well above the

average for UK companies surveyed in the most recent GPTW

®

population study.

Our ESG progress is supported by a range of partnerships

developed with organisations who have relevant expertise and

we will build on this further as we continue our ESG journey.

Who owns our ESG strategy?

Ultimate ownership and oversight of our ESG strategy is

with the Board, as it supports the business strategy set by it.

The Board delegates the implementation of our ESG strategy

to the CEO 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 working groups or committees for each of our

five focus issues identified under the Environmental and Social

part of our ESG strategy. These report progress to the senior

team on a regular basis.

More broadly, we require our people to act with integrity

and provide them with the necessary training and resources

to conduct themselves with due skill, care and diligence.

For example, we have a suite of policies to support the

conduct of our employees including, our Conflicts of Interest

and Conduct Risk policies. This is facilitated by a suite of

policies, which promote the good conduct of our employees,

and support our ESG principles, including our Anti-Harassment

and Bullying, Menopause, Wellbeing and Family Friendly

Policies. See page 66 for details on some of the Group’s

other policies, including our ED&I policy.

Secure Trust Bank PLC

Annual Report & Accounts 2024

46

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 2024

47

Strategic Report

2024 progress

Looking ahead

Climate

Action/Risk

We aim to support the government’s ambitions in terms of tackling climate change by minimising the harmful impact of our

business on the environment as well as protecting our business from climate-related risks and we have made good progress

in 2024.

• The Group committed to a 50% reduction in its own Scope 1 and 2 CO

2

e emissions by December 2025 (since 2021) and

this target was met at the end of 2024. Details of how this was achieved are included on page 62.

• We offer our employees an opportunity to participate in our ‘green car’ leasing scheme, which has the potential to

reduce Scope 3 emissions. This has been supported by a doubling of electric vehicle charging points at our head office.

• We joined the Partnership for Carbon Accounting Financials (‘PCAF’), which supported us in enhancing our Scope 3

emissions reporting capabilities, in particular the disclosure of financed emissions. Details can be found on page 61.

• We developed our own internal reporting and assurance model to give confidence to stakeholders and observers of

our progress, working in consultation with PCAF. We have updated the Executive Committee and our Board about the

Group’s alignment with the TCFD required disclosures.

• 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 2024 can be found within our Climate-related financial disclosures section

on pages 54 to 65.

The key focuses in 2025 will be:

• working towards the expected Transition

plan disclosure requirements anticipated

from 2026;

• embedding the Scope 3 emissions

reporting processes;

• embedding business unit climate strategies

developed in 2024; and

• implementing our energy savings plan

developed during 2024 and reducing our

office footprint where practicable.

In support of our CO

2

e emissions reduction

target, we invested in energy-saving solar panels

at our head office in Solihull in 2024, following

the successful installation of solar panels in the

Cardiff office in 2023.

By generating our own power, we save around 19 tonnes

of CO

2

annually, equivalent to planting 1,140 trees.

Around 94 MWh of solar energy will be produced from

the solar-powered system, which will help to power the

day-to-day electricity for our offices, dramatically reducing

the cost of energy bills. We have already moved to

renewable energy sources in these office locations.

Solar-powered offices

Our Cardiff and Solihull offices also have electric vehicle

chargers installed, which are free to use by colleagues.

In 2024, extra vehicle chargers were installed to meet

demand in Solihull. In the same year, as part of our Green

Car Scheme employee benefit, 27 electric vehicles were

delivered to employees who opted for environmentally

friendly travel via this scheme.

Secure Trust Bank PLC

Annual Report & Accounts 2024

48

2024 progress

Looking ahead

Customer

Trust

With a vision to become the UK’s most trusted specialist lender, developing customer trust is clearly a key priority for us and

the experience of our consumers is monitored regularly in great detail as part of our Consumer Duty processes.

• A key measure of customer trust is how satisfied our customers are. We achieved high scores for our Consumer Finance

and Savings business, 4.7 out of 5 stars for Feefo and 4.6 out of 5 stars for Trustpilot.

• In our Business Finance businesses, satisfaction has also remained high with 100% client satisfaction for Real Estate

Finance and 97% for Commercial Finance.

• The quality of the Group’s product and service provision is also reflected through external recognition, which in

2024 included:

-

Retail Finance: Won Best Retail Finance Provider (Interiors Monthly);

-

Retail Finance: Finalist for Best Consumer Credit Product (Credit Strategy 2024 Credit Awards); and

-

Commercial Finance: Won Asset Based Lender of the Year (Insider Media Midlands Dealmakers Awards 2024).

• At the start of the year, the Group received the government-backed Customer Service Excellence accreditation for

the 11th consecutive year and was awarded a Compliant Plus rating. The assessment concluded that the Group had

demonstrated year-on-year improvements to service delivery and sustained high levels of customer satisfaction in a

climate of global financial uncertainty.

• Technology has been a key enabler to improving customer experience during the year, as well as driving efficiency.

Our Digital Savings Experience project is a good example. Further details can be found on page 27.

The focus in 2025 will be on:

• continuing to embed Consumer Duty

principles within the Consumer businesses

and across teams following changes to our

organisational structure;

• building on, and acting on, customer insight;

• developing more opportunities to collect

real-time transactional customer feedback;

and

• supporting customer vulnerability through

targeted training of customer service agents.

Recognition is built into our culture and directly

linked to our purpose and values. We have created

opportunities to recognise colleagues who show

excellence when it comes to demonstrating our

values, one of which is ‘Customer Focus’.

These range from everyday e-thank yous linked to our values,

and our annual flagship ‘Outstanding Achievers’ special

event, to our quarterly Customer Trust Award. At the end of

each quarter, employees who receive one of our Be Valued

Awards for ‘Customer Focus’ are put forward for a Customer

Recognition for customer

service excellence

Trust Award, which is judged by senior colleagues who sit

on our Customer Experience Best Practice Working Group.

One of the standout winners in 2024 was Toni Melissa, one

of our Collections advisers.

The Customer Trust Award recognises colleagues across

all our businesses and support functions who deliver

good customer outcomes. Toni was also nominated as

a ‘Customer Service Hero’ during National Customer

Service Week for handling challenges effectively

and exceeding expectations.

Secure Trust Bank PLC

Annual Report & Accounts 2024

49

Strategic Report

Corporate Governance

Financial Statements

Other Information

2024 progress

Looking ahead

ED&I

ED&I remains an important focus for the Group. In 2024, we continued to work with Business in the Community (‘BiTC’), as

well as other partners, to move the agenda forwards in this area. Key areas of focus for 2024 included:

• BITC Workwell Commitment – to ensure ED&I is aligned more closely to wellbeing we launched a refreshed Wellbeing

strategy and signed up to BITC’s Workwell Commitment. This provides a framework for embedding health and wellbeing

into our organisational culture. This is supported by the appointment of volunteer Wellbeing Champions and the

introduction of a comprehensive new employee wellbeing offer.

• Evolving our ED&I agenda – BITC facilitated introductions with D&I leads at other organisations, to provide insight into best

practice, and a workshop with members of our Executive Committee to define our future commitment and actions in this area.

• Promoting diversity – we continue to promote understanding of the diverse characteristics within our colleague and

customer groups, through our award-winning internal lived experience podcasts, awareness raising campaigns and

through our network of ED&I Inclusioneer Champions. Following a recommendation for corporate attendance at Pride

events in key office locations, colleagues attended the Cardiff Pride event in 2024.

• Key achievements during the year were as follows.

-

Being placed 24 out of 90 in the GPTW

®

UK Best Workplaces for Women

TM

(Large category).

-

Meeting our stage two targets for Women in Finance due at the end of 2024.

-

Participating in the ENEI’s Talent, Inclusion and Diversity Evaluation (‘TIDE’) assessment, resulting in the Group retaining

the silver TIDE Mark for the fourth consecutive year.

-

Retaining our Disability Confident accreditation.

-

Publishing our 2024 Gender Pay Gap report early, which indicates gradual progress, although the biggest driver of our

gender pay gap is the shape of our workforce and that remains a key challenge to address over time.

• Our Learning and Development offering and colleague recognition suite are key to supporting achievement of our ED&I

targets and examples can be found on page 49.

The focus in 2025 will be on:

• continuing to embed and deliver our

ED&I priorities;

• maintaining/meeting our stage two Women

in Finance targets and reporting our Gender

Pay Gap figures;

• consider actions required in light of the

regulatory consultations on new measures to

enhance D&I in firms; and

• maintaining focus on diversity within

talent planning.

Following a proposal from our team of volunteer

ED&I champions, the Group was delighted to show

its commitment to diversity and inclusion by taking

part in its first Pride parade this year in Cardiff, the

home of our Retail Finance business.

Colleagues were invited from across the Group to join the Pride

Cymru parade and proudly sported V12 Retail Finance t-shirts,

banners and flags as they walked the 1.4 mile route.

Proudly marching at Pride

James Ablett, Operations Delivery Manager, Retail

Finance

, who joined in the parade said: “I loved the event;

I found it uplifting, the atmosphere was amazing and it was

awesome to see so many people supporting the event

both in terms of those marching as well as those cheering

from the sides. The uplifting sense was about seeing

everyone celebrating diversity ranging from very young to

very old and from all walks of life!”

The event received positive feedback and we will be

marching for LGBTQIA+ in Cardiff and Birmingham Pride

parades in 2025.

Secure Trust Bank PLC

Annual Report & Accounts 2024

50

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

4

50

2

7

64

Women

4

50

2

4

36

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

11

100

Mixed/Multiple ethnic groups

–

–

–

–

–

Asian/Asian British

–

–

–

–

–

Black/African/Caribbean/Black British

–

–

–

–

–

Other ethnic group

–

–

–

–

–

Not specified/prefer not to say

–

–

–

–

–

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.

Further details on Board diversity can be found in the Nominations Committee report on page 82.

We continue to make progress on our ED&I agenda as demonstrated by external benchmarks and our 2024 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

Male

50%

50%

100%

Female

Total

4

4

8

Senior

managers

1

and

their direct

reports

Male

Female

Total

54%

46%

100%

39

33

72

All other

employees

Male

Female

Total

48%

52%

100%

394

430

824

Total

employees

Male

48%

52%

100%

Female

Total

437

467

904

1.

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)), there were six male and three female senior managers.

Secure Trust Bank PLC

2024 progress

Looking ahead

Education

and Skills

Our focus on education and skills is aimed at embedding excellence in our culture and is primarily delivered through our

comprehensive Learning and People Development offering. This covers everything from mandatory regulatory learning

competencies to funding multiple professional qualifications.

We have enhanced our ESG strategy to ensure the emphasis is on developing skills to support better our business strategy

and needs, in addition to career progression.

A major focus in 2024 has been on transitioning learning programmes to an experiential approach, requiring a greater

commitment from delegates. This has been delivered through three key programmes.

• Management Zone, aimed at helping people leaders to shape team culture and drive optimum team performance.

• Blazing My Trail, a four-month programme designed specifically to support our ED&I aspirations and inspires colleagues

to take control of their careers and have the confidence to make changes to their lives that will help them take their next

career step and achieve their potential.

• MentorMe, our mentoring and reverse mentoring programme matches colleagues with team members who can enhance

their skill set and guide their career development. The reverse mentoring element is also aligned to our ED&I agenda by

enabling more junior team members to share their perspectives, experiences and skills with more senior team members

to build greater inclusivity.

Flagship programmes, including the Alan Karter Scholarship, have continued to have a positive impact and in May 2024

GPTW

®

published its first list of UK Best Workplaces for Development

TM

, where we ranked 26 out of 100 companies (‘Large’

category) and satisfaction scores for our Career and Development offer stand at over 97%.

The focus in 2025 will be on:

• supporting development in three areas,

leadership skills; management skills; and

business skills;

• measuring the impact of new skills on

the business;

• rolling out a new learning management

system, which allows tracking of progress

and performance and has the capability

to automate manual processes, including

our performance management framework,

longer term; and

• investing in apprenticeships, with the

focus on using our Apprenticeship Levy to

enhance business skills where possible, and

transfer unused Levy to local good causes

to support their apprenticeship initiatives,

in support of our Communities and

Charities activities.

The Group’s Alan Karter Scholarship was created in

memory of our highly regarded General Counsel,

who sadly passed away in 2020.

After its launch in 2021, Alan’s legacy has continued

to offer scholarship opportunities to a select group of

talented individuals each year, reflecting his passion for

professional development.

Run in partnership with the prestigious Cranfield Business

School, the Scholarship is open to all Group employees who

want to take the next step and believe they would benefit from

intensive professional development.

The Alan Karter

Scholarship

Since launch, competition has been strong to get awarded

one of the residential places on the scholarship and

this takes place via an interview and selection process.

Places are fully funded, showing our commitment to the

learning and career development of colleagues as well as

supporting our ED&I agenda.

Secure Trust Bank PLC

Annual Report & Accounts 2024

52

Strategic Report

2024 progress

Looking ahead

Communities

and Charities

We remain mindful that our role within wider society goes beyond making a profit. We have a duty to act as a good

corporate citizen, helping our stakeholder groups with key issues that are important to them, and where we can having

a positive influence. Key achievements for the year have included:

• The Group raised nearly £100,000 for good causes in 2024 (2023: £98,000). This was for employee-elected charities

(£53,000) as well as a wider range of colleague sponsored good causes through our £4£ Matched Funding programme

(which matches funds raised by individual staff of up to £400 per person each year).

• The Group exceeded its targets set by Charity Committees in Solihull (£100k over three years) and Cardiff (£25k in 2024).

• In 2024, our Solihull office completed three years with its current charity partner, Acorns Children’s Hospice and elected a

new partner for the next three-year period, Birmingham Children’s Hospital. 2025 will be the final year of our Cardiff office’s

three-year partnership with the children’s hospice,Ty Hafan.

• We have targeted different internal demographics to drive engagement as well as leveraging supplier and partner

involvement. The Group’s charity Golf Day and Real Estate Finance’s Ramble have become popular events in the annual

business calendar, offering teams a chance to build their business networks as well as support good causes.

• Colleagues are encouraged to use one paid day a year to make a difference in their local area. In 2024, the equivalent

of 281 days were recorded, supporting a range of organisations benefiting local causes.

• This year the Group extended its work with key charities and other good causes including MIND, the Samaritans and

Neurodiversity in Business, which are directly supportive of our ED&I and Customer Trust focus areas.

• The Group continued to work with its further education college partners to deliver a series of activities that support the

employability skills of young people in our local communities.

• The Group also aims to ensure timely payment of suppliers (average of 33 days) and has processes in place to raise awareness of,

and minimise the risk of, modern slavery within our own business and supply chains, as detailed in our modern slavery statement.

The focus in 2025 will be on:

• establishing a strong working relationship

between the Solihull office and Birmingham

Children’s Hospital and developing a plan to

cover the three-year partnership;

• providing additional volunteering

opportunities, including online volunteering

opportunities, to boost the contribution

our people already make to our local

communities; and

• enhancing our further education college

partner work with a more integrated

programme of activities and roll out to

other office locations, encouraging further

colleague support and involvement.

Secure Trust Bank has been working in partnership

with Solihull College & University Centre for many

years. The partnership is led by our Chief People

Officer, Anne McKenning, who is the College’s

volunteer Enterprise Adviser, working alongside the

Head of Careers for the college.

In 2024, 50 aspiring students from Solihull College spent the

day with our Learning and People Development team to gain

insights into a professional working environment.

Aspiring Solihull College

students visit head office

Students learnt about what it’s like to work at Secure Trust

Bank and how a bank operates, the importance of first

impressions and body language, introvert and extrovert

personalities, and how to spot a fraudulent scam.

The Group also runs an annual intervention with the

college to help business study students prepare for work by

working with them to hone employability skills including CV

development and interview techniques. We also support

the College through apprenticeship support, recruitment

fairs and work experience.

Secure Trust Bank PLC

Annual Report & Accounts 2024

53

Strategic Report

Corporate Governance

Financial Statements

Other Information

Managing our business responsibly

Climate-related financial disclosures

Climate change

Climate change, and society’s continued response to it,

presents risks and opportunities to the UK financial services

sector. While some of these risks may crystallise in the short

term, our sector also needs to be prepared to support and

help mitigate the impacts in both the medium and long-term

time horizons.

The Group continues to assess its risk exposure to both

the potential ‘physical’ effects of climate change and the

‘transitional’ risks from the UK’s target to bring all greenhouse

gas (‘GHG’) emissions to net zero by 2050. The Group remains

committed to aligning with legal and regulatory requirements

and is tracking developments via industry bodies and

public statements.

This report sets out how the Group is managing its exposure

to climate change risks and is aligning with the four key pillars

of the ‘Task Force for Climate-related Financial Disclosures’

(‘TCFD’), being Governance, Strategy, Risk management,

and Metrics and targets. The key risks, their mitigants and

assessments are covered under the Strategy and Risk

management sections of this report.

The Climate-related financial disclosures made by the Group

comply with the requirements of the Companies Act 2006 as

amended by the Companies (Strategic Report) (Climate-related

Financial Disclosure) Regulations 2022.

The Group has also complied with the requirements of UK

Listing Rule 16.3.23(R) by including Climate-related financial

disclosures consistent with the recommendations and

recommended disclosures of the TCFD within this Annual

Report and Accounts, being fully compliant with each of the

11 statements, successfully closing the two gaps highlighted

for 2023:

• Strategy (b): In 2024, the Group conducted workshops to

identify risks and opportunities across its businesses and

reviewed how its financial planning timelines aligned with

the Group strategy.

• Metrics (b): To support the development of its reporting

capabilities, the Group designed and implemented new

models to report its Scope 3 emissions across all reportable

Consumer and Business lending activity. Details of these are

in the Scope 1, 2 and 3 GHG emissions section. See pages

60 to 62.

A review of disclosures by banks was undertaken to establish

current best practice for metric publication and following this,

the Group decided to enhance the reporting from 2023. As a

result, the Group has disclosed greater detail of its existing

metrics and provided improved insights in this report.

To align our reporting better with industry benchmarks, the

Group joined with the Partnership for Carbon Accounting

Financials (‘PCAF’) in May 2024. Access to PCAF data and

methodologies has helped us develop enhanced Scope

3 reporting.

The Group is working towards the expected Transition plan

disclosure requirements pending a government consultation

anticipated for later in 2025 about mandating them, and for

the likely endorsement by the government of sustainability

reporting driven by the IFRS International Sustainability

Standards Board (‘ISSB’) Disclosure Standards S1: General

Requirements for Disclosure of Sustainability-related

Financial Information and S2: Climate-related Disclosures.

Secure Trust Bank PLC

Annual Report & Accounts 2024

54

Strategic Report

Corporate Governance

Financial Statements

Other Information

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’).

The Board has delegated responsibility for oversight of Climate change risk to the Executive Risk Committee (‘ERC’). The ERC members include the Chief Executive Officer, Chief Financial Officer

and Chief Operating Officer. The Group’s risk governance structure can be found on pages 30 to 31.

Disclosure

Approach and 2024 progress

Looking forward

The Board’s oversight

of climate-related risks

and opportunities

• The Board approved an updated ESG strategy for the Group with a continued 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 six occasions. The Board receives reports on progress related to climate

change activities (including metrics and targets).

• The Board approved the annual review of the climate change risk appetite statement and metrics.

• The Board received updates on climate change over 2024, and in its October update discussed transitional

planning and regulatory developments.

• 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 be engaged and will

provide oversight to the development of the

Group’s Transition plan.

• As the Group Climate change risk approach

matures and becomes further 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 Risk and Control Self-Assessment process, which is performed by first

line risk owners with oversight provided by the second-line risk team. Monitoring of these risks is performed by

the ERC and BRC.

• During 2024, the Group has worked to develop management’s understanding of Climate change risk and

opportunities as well as enhancing its suite of metrics and reporting at a business unit level.

• 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 attend

industry meetings, and will provide guidance to

management on best practice.

Secure Trust Bank PLC

Annual Report & Accounts 2024

55

Strategic Report

Corporate Governance

Financial Statements

Other Information

Managing our business responsibly

Climate-related financial disclosures

Strategy

The Group’s updated ESG strategy was approved by the Board in October 2024 and this strategy includes a focus on climate action. Cognisant of the UK government’s 2050 net zero target,

the Group is committed to supporting the consumers and businesses it works with as the UK transitions to a low-carbon economy.

Disclosure

Approach and 2024 progress

Looking forward

Climate-related risks

and opportunities

identified over the

short, medium, and

long term

• In 2024, workshops were held across the Group’s business functions to review existing risks, identify any new

climate-related risks and to explore climate change opportunities. The Group has continued to drive ownership

and accountability for Climate change risk with the relevant accountable executives and the management of all

risks (including Climate change risk) remains embedded in the variable compensation structures for Executive

Directors and other key material risk takers. Details of the Group’s key Climate risks can be found on page 59.

• The current operational strategy includes the Group’s target to achieve a 50% reduction in Scope 1 and 2 CO

2

equivalent (‘CO

2

e’) emissions by December 2025, compared with a 2021 baseline. The Group has achieved this

target a year earlier than anticipated through targeted actions (further details can be found on page 62).

• The Group will continue to assess climate-related

opportunities and integrate climate-related decision

making into its activities. This work will support the

Group in developing its Transition plan.

• The Group has recently approved an Energy Savings

Opportunity Scheme development plan to continue

to drive a reduction in Scope 1 and 2 emissions from

our buildings.

The impact of

climate-related risks

and opportunities

on our businesses,

strategy, and

financial planning

• The Group has identified opportunities and assessed the impact of its climate-related risks and as having minimal

adverse impact on its business, strategy and financial planning over a five-year time horizon.

• The Group has also been monitoring the proposals for sustainability reporting in the UK. Although the

application of these proposals is yet to be finalised, the Group has raised awareness internally and upskilled

relevant employees.

• The Group will continue to respond to evolving

regulatory requirements and developments in

the broader industry, including the emergence of

best practice.

• 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 issues into the Internal Capital Adequacy Assessment Process

(‘ICAAP’) and IFRS 9 models.

• The outcome of this work demonstrated the Group’s continued resilience to Climate change in the scenarios

tested, for 2024 using the ‘Late Action’ and the ‘Early Action’ scenario basis. Further details are provided on

page 57.

• 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.

Secure Trust Bank PLC

Annual Report & Accounts 2024

56

Strategic Report

Corporate Governance

Financial Statements

Other Information

Managing our business responsibly

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 2024 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 remains 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. Each risk has an executive owner, reviewed and agreed at the ERC.

• The Group is actively developing its scenario analysis

capabilities, and future Climate stress testing will

be developed internally, to support a bespoke

approach for our distinct businesses.

Our processes

for managing

climate-related risks

• The Group uses established processes to support the management of Climate-related risks, which includes

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.

• Physical transitional risks continue to be managed and integrated within the Operational Risk and Credit Risk

Frameworks. This includes how risks are identified, assessed, prioritised, mitigated and any associated scenario

analysis outputs.

• 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.

• 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 integrated into the Group’s existing risk frameworks, and in-line with other key risks has

a Board-approved risk appetite statement, suite of quantitative metrics, reporting through governance bodies

including the ERC, BRC and Board and clear risk ownership and accountability.

• The Group will further embed climate change

into its risk management practices and decision

making, with a focus on developing awareness

and understanding of Climate change risk across

its employees to further improve its climate

risk management.

Stress testing/scenario analysis

In order 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.

The Group’s businesses have each undertaken scenario analysis (see pages 63 to 65), appropriate for their time horizon and plausible scenarios. Each scenario is reviewed for its insights as a

minimum every three years. This analysis has improved the Group’s understanding of the key drivers to its risks and therefore the mitigating actions required.

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

are designed 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 link 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 2025 ICAAP. The Group plans to develop further in

2025 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.

Secure Trust Bank PLC

Annual Report & Accounts 2024

57

Strategic Report

Corporate Governance

Financial Statements

Other Information

Managing our business responsibly

Metrics and targets

The Group seeks to understand and quantify its Climate change risk exposure, so the Group, working with its customers and clients, can minimise the financial risks associated with the transition to a

low-carbon economy and any impacts from climate change to our business.

Disclosure

Approach and 2024 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

• The Group has integrated climate change metrics into its Enterprise Wide Risk Management Framework.

There are a range of metrics, which are aligned to the Group’s risk appetite and are reported quarterly to the

ERC. These metrics include 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 and 64.

• The Group will continue to develop metrics and

measurement capabilities to monitor and manage

climate-related risks and opportunities.

Scope 1, Scope 2, and,

if appropriate, Scope

3 GHG emissions, and

the related risks

• In 2024 the Group joined PCAF, to access previously unavailable data points, and for the first time is now able to

report Scope 3 emissions for its Real Estate Finance and Commercial Finance lending portfolios as well as for its

purchased goods and services and capital goods. This is in addition to Vehicle Finance Scope 3 emissions which

have been published for the previous two years.

• 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

• In 2024, the Group achieved the target of a 50% 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 reached 55.5%.

• Each of the Group’s business metrics are reported alongside appropriate thresholds and target ranges.

This ensures the Group has a clear line of sight across each business, to give governance committees’

appropriate information and insight to Climate change risk.

• The Group will continue to monitor its metrics and

will develop its targets in line with its own climate

ambitions and the external environment.

Secure Trust Bank PLC

Annual Report & Accounts 2024

58

Strategic Report

Corporate Governance

Financial Statements

Other Information

Managing our business responsibly

Managing our business responsibly

Climate-related financial disclosures

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:

Physical risk

Source

Area

Risk

Timeframe

1

Assessment

2

Acute/Chronic

Operations

Impact of climate change interrupting our internal operations

e.g. floods.

Medium and

long-term

Low

Acute/Chronic

Operations

Impact of climate change interrupting our supply chain

e.g. floods.

Short, medium

and long-term

Low

Acute/Chronic

Real Estate

Finance

The value of the Group’s security may be negatively impacted

due to increased risk of flood associated with climate change.

Short, medium

and long-term

Low

Transitional risk

Source

Area

Risk

Timeframe

1

Assessment

2

Market

Vehicle

Finance

Failure to respond/recognise that the value of the loan

security may be negatively impacted by ‘transitional’

effects from climate change.

Short, medium

and long-term

Low

Emerging regulation

Real Estate

Finance

Failure to respond/recognise that the value of the loan

security may be negatively impacted by the effects of

climate change or through ‘transitional’ impacts.

Short, medium

and long-term

Low

Market and

emerging regulation

Commercial

Finance

Profitably or viability of our clients may be impacted by

the transitional effects of climate change.

Short, medium

and long-term

Low

Reputation

Group

The Group’s reputation is negatively impacted due to

failure to meet:

• climate change regulation;

• stakeholder expectations;

• the strategic responses needed to address changing

markets: and

• consumer demands/preferences.

Short, medium

and long-term

Low

1. Short-term 0 to 5 years, medium-term 5 to 10 years, long-term 10+ years.

2.

All risks have been assessed as low, based on impact and likelihood scoring with minimal adverse impact and rare likelihood (0 to 2% likelihood of occurrence).

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.

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 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.

Secure Trust Bank PLC

Annual Report & Accounts 2024

59

Managing our business responsibly

Climate-related financial disclosures

GHG emissions

Scope 1, 2, and 3 GHG emissions

The Group continues to develop its emission reporting

capability each year. Scope 3 emissions for 2024 now include

financed emissions for the Real Estate Finance and Commercial

Finance businesses, as well as emissions for purchased goods

and services and capital goods. The new reporting was

developed through a combination of external consultancy and

internal model validation. Due to the recent implementation

of these new models, we are unable to provide comparative

years performance of the measurement for these items.

Developing the Group’s reporting capabilities will remain a key

focus in 2025 as the regulatory landscape continues to mature.

The following tables set out the Group’s energy consumption

and CO

2

e emissions for 2024 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

UK government’s GHG Conversion Factors for Company

Reporting 2024.

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

2024

CO

2

e

tonnes

2023

CO

2

e

tonnes

Further

details

Scope 1, Scope 2 and Scope 3 (excluding categories 1, 2 and 15) CO

2

e emissions

307.4

369.1

1

See below

Scope 3 (1) Purchased goods and services; and (2) Capital goods

3,399.9

N/A

Page 61

Scope 3 (15) Financed Emissions

639,300.0

N/A

Page 61

Total Scope 1, Scope 2 and Scope 3 CO

e emissions

643,007.3

N/A

Measure

2024

kwh

2023

kwh

Movement

%

Scope 1 – Building energy: gas consumption

65,926

150,425

(56.2)

Scope 1 – Business travel: Group-leased vehicles

242,895

136,364

78.1

Scope 2 – UK electricity consumption

625,582

948,919

(34.1)

Scope 3 – Business travel: employee-owned vehicles

94,502

148,844

(36.5)

Total energy consumption

1,028,905

1,384,552

(25.7)

Measure (Location-based emissions

2

)

2024

CO

2

e

tonnes

2023

CO

2

e

tonnes

Movement

%

Scope 1 – Direct emissions from the combustion of fossil fuel

68.8

60.2

14.3

Scope 2 – Indirect emissions from purchased electricity

129.5

196.5

1

(34.1)

Scope 3 – Indirect emissions from the value chain – (see page 61 for categories

included)

109.1

112.4

(2.9)

Scope 1, Scope 2 and Scope 3 (excluding categories 1, 2 and 15) CO

e emissions

307.4

369.1

(16.7)

Measure: Total emissions excluding financed emissions per £ million Group operating income

2024

2023

Movement

%

Group operating income (£ million)

203.9

184.7

10.4

Environmental intensity indicator

1.5

2.0

(25.0)

1.

Restated due to certain emissions that were out of scope for reporting, which were identified through an external assurance process.

2.

Location-based emissions are calculated by multiplying electricity consumption for all sites by the government’s conversion factor for UK electricity.

• 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 2023 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

has been assured by a third party.

Managing our business responsibly

Climate-related financial disclosures

Scope 3 financed emissions

In 2024, 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.

We have established data for financed emissions for Real

Estate Finance and Commercial Finance in 2024. Due to the

recent implementation of these new models, we are unable to

provide comparative years performance of the measurement.

The Group intends to develop further its data and reporting

capabilities in 2025.

2024

CO

2

e

tonnes

2023

CO

2

e

tonnes

Further

details on

page:

Vehicle Finance

87,900

71,911

63

Real Estate Finance

7,900

N/A

64

Commercial Finance

543,500

N/A

65

Total financed emissions

639,300

N/A

The Group joined the PCAF and used standard PCAF

calculations to calculate emissions. The methodologies

have been provided by third party specialists and undergo

internal validation.

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

2024

CO

2

e

tonnes

2023

CO

2

e

tonnes

Purchased goods (1) and

services and capital goods (2)

3,400

N/A

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 81% of supplier spend, which

captures our top 100 suppliers.

The approach used to calculate these emissions has been

developed with support from an external consultancy and

the calculations have been validated internally.

Emissions analysis follows the formula prescribed in the

PCAF standard.

The scope will be developed in 2025, to include a greater

volume of suppliers by improving our data capabilities.

Forward look

The Group is well placed to support its customers as they

transition to a low-carbon economy and continues to invest in

internal expertise, engage with relevant bodies and to explore

climate opportunities in its range of products. In 2025 the

Group aims to prepare to publish its first Transition plan.

Scope 3 CO

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

Capital goods

3

Fuel and energy-related activities

(not included in Scope 1 or Scope 2)

4

Upstream transportation and distribution

5

Waste generated in operations

6

Business travel

7

Employee commuting

8

Upstream leased assets

9

Downstream transportation and distribution

10 Processing of sold products

11 Use of sold products

12 End-of-life treatment of sold products

13 Downstream leased assets

14 Franchises

15 Investments (Financed emissions)

1.

All material emissions from the leased assets are included in Scope 1 and 2 emissions.

Key

Included in Scope 3 reporting on page 60

Separately disclosed on this page

Not reported

Not applicable to the Group

Building energy:

UK electricity

42.1%

Scope 2

Business travel:

Vehicles not owned by the

Group and public transport

Other

3.7%

31.8%

Scope 3

Business travel:

Group-leased vehicles

18.4%

Building energy:

Gas consumption

4.0%

Scope 1

2024

• Total CO

2

e emissions from these categories have decreased by 16.7% against equivalent emissions reported in 2023.

• We successfully decreased electricity emissions (67.0 tonnes CO

2

e) and gas consumption (15.0 tonnes CO

2

e), however, this

was offset with increases in business travel in Group-owned vehicles (24.3 tonnes CO

2

e).

• Electricity and gas emissions have reduced by 34.1% and 54.7% respectively year-on-year, following the closure of two

buildings and the installation of solar panels at our two main offices. Gas usage reduced following the removal of a gas

appliances from our two main offices.

• Although electricity accounts for 42.1% of our emissions, 99.8% of our electricity is from REGO-certified 100% renewable sources.

• Although we have switched more drivers from plug-in hybrid to Electric Vehicles (‘EVs’), Group-leased vehicle emissions

increased by 24.3% year-on-year. The number of drivers and the amount of mileage travelled has increased to support the

growth in our Vehicle Finance and Retail Finance businesses.

We will continue to review our performance and implement initiatives designed to reduce further our CO

2

e emissions in the

coming year.

In 2021, our Scope 1 and 2 emissions were at 446 tonnes

CO

2

e. We set a target to reduce these emissions by 50% by

December 2025.

After implementing an extensive programme of work, we

reduced our Scope 1 and 2 emissions to 198 tonnes CO

2

e,

achieving our target a year early.

In just three years, we have achieved the following:

• Rationalised our building use (closing four offices).

• Switched to 100% renewable electricity and installed solar

panels at our two main offices.

• Removed all gas appliances from our head office.

• Phased out all petrol and diesel Group-leased vehicles

and switched many of these from plug-in hybrid to EVs.

Scope 1

Scope 2

2024

2021

2022

2023

132.4

148.3

60.2

68.8

313.3

252.2

196.5

129.5

Scope 1 and 2 CO

2

e emissions (tonnes)

Corporate Governance

Financial Statements

Other Information

Scope 1, Scope 2 and Scope 3 (excluding categories 1, 2 and 15) CO

2

e emissions

Retail Finance

The Retail Finance business supports the transition to a low-carbon economy through the

funding of EV chargers for home use and E-Bikes. The business is expecting the funding of

EV charging points to increase, as the EV market grows and is exploring partnerships with

solar panel and battery retailers.

The Vehicle Finance business provides lending for lower-emission vehicles and EVs with

current funding levels at 2.7% of overall lending as at 31 December 2024.

The key area of risk for the Vehicle Finance business is the implication of an accelerated

transition to the use of ‘non-fossil fuelled vehicles’ on the residual values of our security

on internal combustion engine vehicles.

We used scenario analysis (see page 57 to explore the impact of this transition). In the

unlikely event of the Group not taking any action to mitigate the potential impacts from

these scenarios, the increase in the level of ECLs would likely peak around 2031 for the

Early Action and Late Action Scenarios, albeit at a lower level in the Early Action scenario.

Management monitor the key indicators so that, if should elements of the scenarios unfold,

the Group can take corrective action through amending credit policies to reduce loan-to

value ratios and/or reduce lending on those vehicles likely most significantly reduced in value

from the transition. The outcomes from the scenarios undertaken indicate that currently there

is no significant link to ECLs due to climate change factors.

Vehicle Finance is enhancing its market intelligence, and monitoring key factors that will

influencing changes in this market (e.g. customer preferences, government intervention,

infrastructure, and vehicle developments). In addition, we are working with our Introducer

base to understand how we can develop our products and lending criteria, to support

demands for EV and hybrid vehicles.

Vehicle Finance

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.

Metrics

Metric example

Key risk

indicators

31 December

2024

Insight provided

Average CO

2

of each vehicle

Monitoring 150 CO

2

Trends of emission

averages per vehicle

New business, average age of the

vehicle being financed.

> 8 years

6.1 years

Consumer behaviour and

buying patterns for internal

combustion engines in

comparison to EVs

Scope 3: Financed emissions: 87,900 CO

2

e tonnes

Attribution factor:

Outstanding loan value / original vehicle value

Emissions:

Vehicle emissions annual Km x CO

2

Kg/Km)

Vehicle Finance emissions have grown broadly in line with the growth of the loan book.

External data sources including CAP code, attribution factors and emission factors have

been used.

Secure Trust Bank PLC

Annual Report & Accounts 2024

Real Estate Finance

There are two areas of potential Climate change risk that could impact the performance of

the Real Estate Finance portfolio. The first relates to flood risk and the risk that properties

we hold as security for our lending are subject to an increased risk of flooding or similar

risks associated with severe weather. The second area of risk is where the value of our

security could be impacted by transitional changes made or imposed on the sector

through government intervention to improve energy efficiency. These risks are mitigated

through climate-specific risk assessments for all potential deals and regular reviews across

the portfolio.

To understand better the potential implications of these risks, the Group has undertaken

a review of a range of scenario assessments (as described on page 57), 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.

Scope 3: Financed emissions: 7,900 CO

2

e tonnes

Metrics

Metric example

Key risk

indicators

31 December

2024

%

Insight provided

Energy Performance Certificate (‘EPC’)

• C or below

• Above C rating

Tracking

75.95

24.05

EPC risk exposure

of the portfolio

Security value of properties in high/very

high flood areas, divided by the total

portfolio security value

> 8%

5.52

Understanding the

impact on portfolio

of flood risk

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 89% (2023: 57%) of its database for its

climate assessment with the support of a new data provider.

Secure Trust Bank PLC

Annual Report & Accounts 2024

Managing our business responsibly

Climate-related financial disclosures

Operations

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.

Commercial Finance

The Group’s Commercial Finance clients cover a broad range of sectors. There is a risk that

their businesses and/or customers could be affected by the transitional impacts of climate

change, which in turn, could affect their ability to service their lending from the Commercial

Finance business.

This risk is mitigated through climate-specific risk assessments for all clients and the fact that

the portfolio is primarily composed of short-term, self-liquidating facilities secured principally

by receivables and stock.

Metrics

Metric example

Key risk

indicators

31 December

2024

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

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: 543,500 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. The business expects like for like

emissions values to reduce as government policy evolves around clean energy and targets

set nationally, however overall values will depend heavily on evolving composition of the

portfolio. Overall emissions are currently weighted towards one client which accounts for

almost 90% of Commercial Finance emissions.

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

2

Non-financial key

performance indicators

Chief Executive’s

statement

8

Climate-related

financial disclosures

Climate-

related financial

disclosures

54 to 65

Secure Trust Bank has a range of policies designed to support

effective governance within the organisation. Throughout the

year these policies have been implemented successfully

and have delivered the anticipated outcomes. We ensure

the effective implementation of our policies by fostering a

culture of integrity and accountability, regular review and

communication of the policies, and their requirements and

mandatory staff training where appropriate. The effectiveness

of these policies is reviewed by our risk and compliance

teams (second-line of defence) and Internal Audit (third-line

of defence). A summary of relevant key policies is detailed

as 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.

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.

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. The policy outlines clear

procedures for reporting and investigating such concerns

to maintain integrity and transparency.

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.

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.

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.

Secure Trust Bank PLC

Annual Report & Accounts 2024

66

Strategic Report

Corporate Governance

Financial Statements

Other Information

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. 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 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.

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

12 March 2025 and signed on its behalf by:

David McCreadie

Chief Executive Officer

Non-financial and sustainability information statement

Secure Trust Bank PLC

Annual Report & Accounts 2024

67

Strategic Report

Corporate Governance

Financial Statements

Other Information

2024 meeting attendance

Board member

Board

Audit Committee

Nomination Committee

Risk Committee

Remuneration Committee

Ann Berresford

18/18

6/6

6/6

6/6

–

Jim Brown

1

12/12

–

4/4

–

4/4

Lord Forsyth

2

9/9

–

2/2

–

3/3

Julie Hopes

3

3/3

1/1

1/1

–

1/1

Rachel Lawrence

17/18

–

–

–

–

David McCreadie

18/18

–

–

–

–

Victoria Mitchell

4

17/18

–

6/6

2/2

5/5

Paul Myers

18/18

–

6/6

6/6

5/5

Finlay Williamson

18/18

6/6

6/6

6/6

–

Victoria Stewart

5

18/18

6/6

6/6

–

5/5

Board and Committee

changes during 2024

March 2024

• Jim Brown appointed as a

Non-Executive Director, Chair Designate

and a member of the Nomination

and Remuneration Committees

May 2024

• Lord Forsyth steps down from the

Board and as Chair

• Jim Brown appointed as Chair of

the Board

October 2024

• Julie Hopes appointed a

Non-Executive Director, Chair designate

of the Remuneration Committee and as a

member of the Audit, Remuneration and

Nomination Committees

• Victoria Mitchell appointed a member

of the Risk Committee

December 2024

• Victoria Stewart steps down from

the Board and as Chair of the

Remuneration Committee

• Julie Hopes appointed Chair of the

Remuneration Committee

UK Governance Code compliance

The Company supports the principles of corporate governance as set out in the 2018 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 did not fully comply with provision 19 of the Code, between 1 January 2024 and 16 May 2024. Provision 19 states that the

Chair should not remain in post beyond nine years from the date of their first appointment to the Board. However, it also confirms that

this period can be extended for a limited time to facilitate effective succession planning, particularly in those cases where the Chair was an

existing Non-Executive Director on appointment.

The previous Chair, Lord Forsyth, was appointed to the Board in March 2014 and as Chair in October 2016 and, therefore, had exceeded

the nine-year period from his first appointment. However, Lord Forsyth remained in post to ensure an effective succession plan and an

appropriate handover of responsibilities. Jim Brown was appointed the Chair at the Company’s Annual General Meeting (‘AGM’) in May

2024 and from this date the Company has been fully compliant with the provisions of the Code.

Secure Trust Bank PLC Board

71% independent

Audit Committee

100% independent

Nomination Committee

100% independent

Remuneration Committee

100% independent

Risk Committee

100% independent

Committee structure

1.

Jim Brown was appointed a

Director effective 31 March 2024.

2.

Lord Forsyth stepped down from

the Board on 16 May 2024.

3.

Julie Hopes was appointed to the

Board effective 24 October 2024.

4. Victoria Mitchell was appointed

to the Risk Committee effective

24 October 2024.

5. Victoria Stewart stepped

down from the Board from

31 December 2024.

Secure Trust Bank PLC