Conservative tailoring suits STB

Essentially the bank got ahead of the curve, when it started tailoring its loan exposure once evidence of cyclical change in credit markets became apparent. That put an end to sub-prime motor finance and medium-term unsecured personal loans, as the bank launched a new mortgage division and placed greater emphasis on areas such as retail and invoice financing. The transition to a more conservative, and lower-margin profile was reflected in the December sale of a portfolio of unsecured personal loans to Alpha Credit Solutions, generating approximately £36.6m in net proceeds.

The changes under way meant the net interest margin contracted 60 basis points to 8.1 per cent, although this was partially offset by the reduction in funding costs. STB seeks to limit exposure to short-term wholesale funding and interbank markets, but there could be further changes in the bank's finances, as it signalled it might take greater advantage of the reduced cost of debt capital.

Prior to these figures, Edison was guiding for tangible net assets of 1,383p a share for December 2018, rising to 1,529p in 2019.