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Secure Trust Bank PLC on Friday warned that underlying continuing pretax profit will be ‘materially’ below market expectations. In response, Secure Trust shares were down 13% to 490.82 pence each on Friday morning in London. The Solihull, England-based retail bank cautioned that it will take longer than expected to recover value from defaulted vehicle finance balances. The company said net lending in the third quarter of 2024 was £3.44 billion, up 7.1% from £3.21 billion a year ago. Deposits increased 16% to £3.14 billion from £2.72 billion. Secure Trust noted a recent UK Court of Appeal verdict which sided with consumers. The company provides motor finance through the V12 Vehicle Finance and Moneyway brands. Secure Trust now expects underlying continuing pretax profit to ‘fall materially below market expectations by between £10 million and £15 million’ in 2024. Chief Executive Officer David McCreadie said: ‘We are disappointed that it will take longer than expected to recover value from the excess level of defaulted Vehicle Finance balances, and the recent Court of Appeal decisions have added additional uncertainty on the benefits to be realised in 2024. Notwithstanding the near-term impacts of the excess defaults in Vehicle Finance, we have seen arrears in Vehicle Finance fall to the lowest level since 2021, have continued to grow total net lending, continued to optimise our cost base, made good progress on early repayments of TFSME funding, and see continued growth opportunities ahead of us.’ TFSME is a Bank of England term funding scheme with additional incentives for small and medium enterprises. Last week, the Court of Appeal ruled in favour of the appeals of three claimants, Johnson, Wrench and Hopcraft, against FirstRand Bank and Close Brothers Group PLC - the so-called Hopcraft case. Copyright 2024 Alliance News Ltd. All Rights Reserved.
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