Secure Trust Bank grows on property as asset-based lending cools

Secure Trust Bank, the Solihull-based specialist lender, said on 22 October 2026 that its continuing loan book grew 1.4% in the third quarter to £3.5bn. The same trading update carried a less comfortable line from chief executive Ian Corfield: “softer market conditions in asset-based lending have impacted fee income in Business Finance”, the division that lends to companies seeking working capital, professional landlords, property developers and housebuilders.

Asset-based lending (ABL) is the facility a company draws against its invoices, stock and equipment, usually to fund working capital. Lenders earn fees on these facilities as well as interest, so a quieter ABL market can show up in fee income.

ABL has now weighed on the bank’s fees in two successive updates. In its interim results on 13 August, the bank said group net fee and commission income fell 10.3% to £6.1m in the first half “due to lower fees generated by Asset Based Lending”. The third-quarter update repeats the point and puts it down to the market. In the first half, the bank said growth in Business Finance came from residential investment and bridging loans, both secured on property.

Secure Trust Bank’s business lending is expanding on residential investment and bridging loans, while the product built around a company’s working capital earns less in fees than it did. For finance directors and founders who fund stock and receivables through an ABL line, the figures describe a lender that still writes that business but is finding its growth in property-backed loans.

Where the book is growing

The interim results set out the split. Business Finance grew its loan book 5.3% to £1.9bn in the first half, and the bank said “growth was driven by strong lending in Residential Investment and supported by strong momentum in our new Bridging proposition”. Residential investment lending made up 72.9% of the division’s portfolio, at a loan-to-value of 59.6%. Bridging, launched this year, wrote about £40m of deals in the first half, and a digital broker portal had taken about £90m of inquiries since it went live.

New business moved the other way. Business Finance wrote £314.3m of new lending in the first half, down 16.2% from £374.9m a year earlier, and the division was the reason continuing new lending across the group fell 1.6% to £1,066.2m. A book that grows while new lending shrinks suggests balances are being held and added to in property rather than replenished by fresh deals across every product line, though the bank does not break the figures down by product.

In the third quarter the continuing book rose 1.4% “due to growth in Business Finance, despite a softer market for asset-based lending”, the update said. Year-to-date growth was 6.4% and year-on-year growth 9.5%, against full-year guidance of 8–10% net lending growth, which the bank left unchanged.

What the fee squeeze shows

Secure Trust Bank has not said its business clients are borrowing less, and the update gives no figure for ABL balances. What it has said is that the ABL market is softer and that fees from it are lower. A fall in fee income of this kind is consistent with fewer new facilities being arranged, smaller ones or existing clients drawing less against their lines. The update does not say which.

In August the bank said Business Finance “is managing the credit risk of clients within a difficult trading environment”, and in October Corfield said the group continued to show resilience “despite a challenging macroeconomic environment”. The update says credit performance across the group has held up. In the first half, the division’s net revenue margin still rose to 3.3% from 3.2%, which the bank put down to repricing of past due loans and early repayment charges, with lower fee income offsetting a better net interest margin.

For companies that rely on working-capital lines, a softer market may mean lenders competing harder for fewer deals. Nothing in either announcement shows whether that has reached pricing or terms.

A lender still building on ABL skills

The bank is still investing in the expertise behind the product. Its new Speciality Finance team had a £35m pipeline at the half-year, “building on capabilities already established within our asset-based lending product line”, the interim report said. The October update said all product initiatives launched in 2026 across both lending divisions are now generating new business, with “growing pipelines providing momentum into 2027”.

Secure Trust Bank is also a smaller group than a year ago. It sold its Consumer Vehicle Finance business to funds managed by LCM Partners on 25 February for £372.0m, cut full-time headcount from about 845 to about 650 and is targeting £25m of cost savings by its 2028 financial year. It has also completed a £10m share buyback funded by excess capital from that sale. Guidance for a cost income ratio of about 47% and a common equity tier 1 ratio of about 13.5% is unchanged, as are medium-term targets of about 10% annual lending growth and a return on average equity above 16%.

Corfield said the bank remains on track to deliver consensus full-year profit before tax, “supported by growth across the broader business”. The release puts that consensus, a company-compiled average of analysts’ forecasts for adjusted profit before tax, at £63.7m.

The numbers show a lender holding to its lending guidance on the strength of residential property, with nearly three-quarters of its business book in residential investment, while the facility companies draw against their invoices and stock has brought in lower fees in both of its latest updates.