Shares in Secure Trust Bank PLC (LSE:STB) fell 19% after it warned on profits due to a decline in net lending in the past quarter, driven by a quicker-than-expected reduction in its motor finance portfolio, where it made a strategic exit in the summer.
The board now expects full-year underlying profit before tax to fall up to £9 million below market expectations, though still up around 30% year-on-year.
Total net lending was down 4.1% the third quarter of 2025, with core net lending down 2.2% on the second quarter but up 10.3% year-on-year at £3.2 billion.
Retail finance and real estate finance delivered annual growth of 9.1% and 12.6% respectively.
Non-core lending, comprising the vehicle finance portfolio that is wrapped up in the Financial Conduct Authority's consultation announced earlier this week, dropped 15.8% on the prior quarter and 12.4% year-on-year to £469 million.
A faster reduction in the motor finance book had lowered expected full-year income from the division, while management promised to provide a further update on the FCA consultation on a planned industry-wide motor finance redress scheme.
Impairment charges were higher than anticipated, as improvements in probability of default rates were not yet reflected in accounting models.
The group said it may need to recognise additional exceptional costs relating to onerous supplier contracts linked to vehicle finance originations too.
Deposits declined 1.7% in the quarter to £3.45 billion, though were up 9.8% on a year ago.
STB shares, after last November sinking to an all-time low below 350p, had climbed above 1,200p in the past week, boosted by a reassuring half-year update and this week's FCA news on the compensation scheme, which had seemed less onerous than many expected.