Secure Trust posts leap in profits despite pulling back from risky lending

Paul Lynam, chief executive of Secure Trust, says he is still concerned about the squeeze on household incomes - warren allott/Telegraph

Challenger bank Secure Trust has posted a leap in profits after garnering one million customers, despite pulling back from more profitable, higher-risk lending.

The West Midlands-based lender delivered a 29pc rise in pre-tax profits to £25m in the year to Dec 31, while lending increased 27pc to £1.6bn.

Paul Lynam, chief executive, said the expansion had been achieved despite chasing only "lower credit risk" customers.

Mr Lynam said he shared regulators' concerns about Brtiain's consumer credit glut - with lending growing faster than wages - saying the company would only return to the market once the gap tightened further.

"There's an ongoing squeeze on customers. That gap has moderated, but it still exists," he said.

The company stopped offering subprime car loans and other unsecured lending a year ago, following the sale of subprime lender Everyday Loans in 2016.

Instead it is targeting growth in lending to housebuilders and professional buy-to-let landlords, as well as lending money against company invoices and supporting retailers to offer 'buy now pay later' finance.

The Bank of England warned last year lenders risked losing as much as £30bn on unsecured lending if the economy took a turn for the worse.

Secure Trust shares were up almost 3pc by lunchtime trading.