Interim Results

Secure Trust Banking Group PLC
23 September 2003



                         SECURE TRUST BANKING GROUP PLC

               Interim results for the six months to 30 June 2003


                                   Key Points


   •  Operating income 21% ahead at £21.4m

   •  Profit before tax and exceptional items £3.9m (2002: £4.1m)

   •  EPS before exceptional items unchanged at 20.6p (2002: 20.6p)

   •  Interim dividend increased from 10p to 10.5p


Chairman, Henry Angest, commented:

'The first part of 2003 has been a period of considerable activity for Secure
Trust Banking Group. We have acquired Arbuthnot Securities, purchased new London
offices and continued our share buy-back programme.

At the same time, we have achieved a creditable result against the background of
difficult trading conditions. Whilst short-term market trends remain uncertain,
I believe that the steps we have taken to expand the business put us in good
shape for the longer-term future.'



Press enquiries for Secure Trust Banking Group PLC:

Henry Angest, Chairman                                     Tel: [phone]
Stephen Lockley, Finance Director                          Tel: [phone]

Katie Tzouliadis / Kathryn van der Kroft, Biddicks         Tel: [phone]




CHAIRMAN'S STATEMENT

Profit before tax and exceptional items of Secure Trust Banking Group for the
six months ended 30 June 2003 was £3.9 million (2002: £4.1 million). Excluding
some £0.25 million of interest (2002: £nil) paid on the subordinated loan stock
which was issued in late 2002, profits were marginally ahead of the same period
last year on operating income 21% ahead at £21.4 million. During the period,
part of the proceeds of the issue of subordinated loan stock were used to
continue our share buy-back programme. As a result, earnings per share before
exceptional items were unchanged at 20.6p.

These results have been achieved against the background of continued difficult
trading conditions. Equity markets fell again during the early part of the year,
with the FTSE 100 index declining a further 16% between 1 January and its low
point in March. Although there has been some recovery in share prices since
then, the FTSE 100 index remained some 13% lower at 30 June 2003 than its level
a year earlier. At the same time, our business was adversely affected by the
further reduction in interest rates. The average base rate was 3.78% during the
first half of 2003, compared with 4.0% during the first half of 2002.

After exceptional charges of £0.8 million, relating to reorganisation and
redundancy costs in Arbuthnot Latham and Arbuthnot Securities, Group profit
before tax was £3.1 million (2002: £4.1 million).

I am pleased to report that the interim dividend, which will be paid on 31
October 2003 to shareholders on the register at 3 October 2003 is increased from
10p to 10.5p.

Secure Trust Bank

We are continuing to invest in developing the Secure Trust Bank business and its
operating income rose by 3% over the period. However, this rise was offset by a
7% increase in costs, reflecting the development programme, such that pre-tax
profit fell by 5% to £3.4 million.

New personal lending advances grew by 6%, helping to contribute to a 5% rise in
net interest income. Fees and commissions receivable grew by 3%, with higher
insurance earnings from the sickness, accident and redundancy scheme in
particular. It is encouraging to report that the retail motor insurance
consultancy business achieved an increase in policy numbers despite operating in
a fiercely competitive market.

Arbuthnot Latham

The spread of businesses in the private and merchant banking division has served
us well in the difficult markets we have faced this year and profit before tax
and exceptional items of the division rose by 47% to £0.8 million.

The inevitable decline in income from fund management, pensions and investments
was offset by a strong performance in banking and corporate finance.
Consequently, fees and commissions receivable rose by 5%.

Business volumes in the banking book continued to be strong, with the loan book
11% higher than a year previously and customer deposits 27% higher. Whilst
lending margins held up very well, the reduction in base rates inevitably had a
depressing effect on deposit margins, as a result of which net interest income
declined by 1%.

Total operating income of the division therefore rose by 3%, whilst the impact
of a cost control programme resulted in overheads being 1% lower than in the
first half of last year, despite a significant investment in building the
corporate finance department.

Arbuthnot Securities

The Group completed the acquisition of Arbuthnot Securities (formerly Old Mutual
Securities) on 14 January 2003. Since then, we have strengthened the operational
management of the business and refined its focus and objectives. While the first
few months of trading under our ownership coincided with one of the most
depressed periods in the stock market for a long time, the business is now in a
significantly improved position to build market share. The trading losses
incurred over the period have been covered by the acquisition agreement, whereby
the vendor has underwritten trading losses (excluding any exceptional redundancy
costs) in 2003 up to a maximum of £1 million.

In the last few months, equity market conditions have shown some improvement.
However, a more sustained recovery in both share dealing volumes and corporate
activity levels is obviously required for Arbuthnot Securities to realise its
full potential. In the meantime, I am encouraged by the progress which is being
made in building a high quality team of people, winning new clients and growing
market share.

Property

On 29 August 2003, we completed the purchase of a freehold building in Ropemaker
Street, London EC2 for £15.7 million, broadly equal to its vacant possession
valuation of £15.8 million. A valuation reflecting the benefit of our occupation
was also carried out at the time of acquisition and this valued the property at
£20 million. This purchase provides us with modern, high specification office
space and will enable us to consolidate three locations into one, forming our
new London headquarters, with attendant operational benefits. By purchasing a
freehold building at the current point in the City property cycle, I believe
that we will avoid the disadvantage of upward only rent reviews as the market
recovers and have much greater control and flexibility with regard to our
premises.

Outlook

Looking ahead to the remainder of the current year, much depends on the extent
of any sustained recovery in financial markets. Commentators are divided as to
whether the recent share price rally will continue or alternatively prove to be
shortlived. At the same time, interest rates seem set to remain at relatively
low levels and consumer borrowing may yet slow should there be any further
cooling in the housing market. Against this background, the outlook remains
uncertain. However, the Directors are generally satisfied with the Group's
current trading.

The fundamental strengths of the Group's businesses and the healthy position of
our finances give me continued confidence in our longer term prospects. This is
reflected in a further increase in the dividend for shareholders.


Henry Angest





CONSOLIDATED PROFIT AND LOSS ACCOUNT

                               6 months to 30.6.03
              Profit before                                        
                exceptional  Exceptional                          Year to
                       item         item     Total    30.6.02    31.12.02
                       £000         £000      £000       £000        £000

Interest
receivable
from loans,
advances and
investments           6,362            -     6,362      5,816      12,104

Less: interest       (2,344)           -    (2,344)    (1,729)     (3,733)
payable            ----------    ---------  --------  ---------     -------

Net interest          4,018            -     4,018      4,087       8,371
income

Fees and
commissions
receivable           17,566            -    17,566     13,973      28,026
                   ----------    ---------  --------  ---------     -------

Less: fees and
commissions
payable                (169)           -      (169)      (333)       (554)
                   ----------    ---------  --------  ---------     -------

Operating            21,415            -    21,415     17,727      35,843
income             ----------    ---------  --------  ---------     -------

Administrative       16,280            -    16,280     12,482      25,036
expenses

Exceptional
administrative
expenses                  -          838       838          -         545

Depreciation            699            -       699        696       1,421

Amortisation            109            -       109         84         170
of goodwill        ----------    ---------  --------  ---------     -------

Provisions for
bad and doubtful
debts                   408            -       408        364         875
                   ----------    ---------  --------  ---------     -------

Operating            17,496          838    18,334     13,626      28,047
expenses           ----------    ---------  --------  ---------     -------

Profit on
ordinary
activities
before tax            3,919         (838)    3,081      4,101       7,796
                   ----------    ---------  --------  ---------     -------

Tax on profit
on ordinary
activities           (1,212)         251      (961)    (1,270)     (2,442)
                   ----------    ---------  --------  ---------     -------

Profit on
ordinary
activities
after tax             2,707         (587)    2,120      2,831       5,354

Minority                 (3)           -        (3)        (5)         (9)
interests          ----------    ---------  --------  ---------     -------

Profit
attributable
to shareholders
of Secure Trust 
Banking Group PLC     2,704         (587)    2,117      2,826       5,345

Dividends            (1,360)           -    (1,360)    (1,356)     (3,946)
                   ----------    ---------  --------  ---------     -------

Retained              1,344         (587)      757      1,470       1,399
profit             ----------    ---------  --------  ---------     -------

Earnings per
ordinary share
(note 2)
Basic and              20.6p                  16.1p      20.6p       39.2p
fully
diluted


The profit on ordinary activities before tax and retained profit on a historical
cost basis are not different from the profit on ordinary activities before tax
and retained profit for the periods above.




CONSOLIDATED BALANCE SHEET
                                       30.6.03     30.6.02    31.12.02
                                          £000        £000        £000
Assets
Cash and balances at central               328         283         281
banks
Loans and advances to banks and
building societies                      65,334      48,143      79,702
Loans and advances to customers        109,055     100,651     104,849
Debt securities                         24,500      17,500      17,000
Intangible fixed assets                  3,300       2,831       2,759
Tangible fixed assets                    8,872       8,522       8,327
Other assets                            12,589       7,441       5,187
Prepayments and accrued income           4,554       3,225       2,759
                                     -----------  ----------   ---------

Total assets                           228,532     188,596     220,864
                                     -----------  ----------   ---------

Liabilities
Deposits by banks                        1,200       5,134       2,494
Customer accounts                      170,084     136,699     170,195
Insurance reserves                         330       2,449         392
Other liabilities                       21,190      16,536      16,940
Accruals and deferred income             4,125       2,105       2,030
Subordinated loan notes                  7,817           -       3,817
Equity minority interests                   71          84          72
                                     -----------  ----------   ---------
                                       204,817     163,007     195,940
                                     -----------  ----------   ---------

Called up share capital                    130         136         134
Share premium account                   13,370      13,370      13,370
Capital redemption reserve                  20          14          16
Revaluation reserve                        511         511         511
Profit and loss account (note 3)         9,684      11,558      10,893
                                     -----------  ----------   ---------
Equity shareholders' funds              23,715      25,589      24,924
                                     -----------  ----------   ---------
Total liabilities                      228,532     188,596     220,864
                                     -----------  ----------   ---------



NOTES TO THE FINANCIAL STATEMENTS

 1. Segmental analysis of profits

                                         6 months to 30.06.03
                                  
                      Personal    Private and
                     financial       merchant    Subordinated 
                      services        banking      loan stock    Total
                          £000           £000            £000     £000

Segment profit
                         3,411            868            (251)   4,028
Amortisation of
goodwill                     -           (109)              -     (109)
                       ---------      ---------      ----------  -------
Profit before
exceptional item         3,411            759            (251)   3,919
                       ---------      ---------      ----------

Exceptional item                                                  (838)
                                                                 -------
Profit on ordinary
activities before
tax                                                              3,081
                                                                 -------

                                         6 months to 30.06.02

                         Personal Private and
                        financial    merchant    Subordinated 
                         services     banking      loan stock    Total
                             £000        £000            £000     £000

Segment profit
                            3,586         599               -    4,185
Amortisation of
goodwill                        -         (84)              -      (84)
                          ---------   ---------      ----------  -------
Profit before
exceptional item            3,586         515               -    4,101
                          ---------   ---------      ----------

Exceptional item                                                     -
                                                                 -------
Profit on ordinary
activities before tax                                            4,101
                                                                 -------


                                             Year to 31.12.02

                         Personal Private and
                        financial    merchant    Subordinated 
                         services     banking      loan stock    Total
                             £000        £000            £000     £000

Segment profit
                            7,460       1,065             (14)   8,511
Amortisation of
goodwill                        -        (170)              -     (170)
                          ---------   ---------      ----------  -------
Profit before
exceptional item            7,460         895             (14)   8,341
                          ---------   ---------      ----------

Exceptional item                                                  (545)
                                                                 -------
Profit on ordinary
activities before tax                                            7,796
                                                                 -------

 2. Earnings per ordinary share

    Basic and fully diluted

    Earnings per ordinary share are calculated on the net basis by dividing the
    profit attributable to shareholders of £2,117,000 (30.6.02: £2,826,000;
    31.12.02: £5,345,000) by the weighted average number of ordinary shares
    13,103,852 (30.6.02: 13,706,067; 31.12.02: 13,624,862) in issue during the
    period.

    Adjusted

    The exceptional items included in administrative expenses do not relate to
    the profitability of the Group on an ongoing basis. Therefore, an adjusted
    basic and fully diluted earnings per share is presented as follows:

                       6 months to       6 months to           Year to
                           30.6.03           30.6.02          31.12.02
                     £000    pence     £000    pence     £000    Pence

    Basic and       2,117     16.1    2,826     20.6    5,345     39.2
    fully
    diluted

    Exceptional       587      4.5        -        -      381      2.8
    item            -------   ------   ------   ------   ------  -------

    Earnings
    excluding
    exceptional
    item

    and adjusted    2,704     20.6    2,826     20.6    5,726     42.0
    earnings per    -------   ------   ------   ------   ------  -------
    share


 3. Profit and loss account

                                    6 months to  6 months to     Year to
                                      30.6.03      30.6.02    31.12.02
                                         £000         £000        £000

    Opening balance                    32,823       33,275      33,275
    Cost of shares repurchased         (1,966)      (1,257)     (1,851)
    Profit for the period                 757        1,470       1,399
                                     ----------   ----------   ---------
    Closing balance                    31,614       33,488      32,823
                                     ----------   ----------   ---------
    Premiums on acquisitions          (21,930)     (21,930)    (21,930)
    written off                      ----------   ----------   ---------
                                        9,684       11,558      10,893
                                     ----------   ----------   ---------


 4. Acquisition of Arbuthnot Securities Limited

    On 14 January 2003 the Group acquired Arbuthnot Securities Limited, formerly
    Old Mutual Securities Limited, for a consideration including expenses of
    £4,650,000. The consideration was satisfied by the issue of £4,000,000 of
    subordinated unsecured loan notes and the balance in cash. Resultant
    goodwill of £650,000 is being amortised over 20 years.


 5. Basis of reporting

    The interim financial statements have been prepared on the basis of the
    accounting policies set out in the Group's 2002 statutory accounts. The
    statements were approved by the Board of Directors on 22 September 2003 and
    are unaudited. The auditors have not carried out a review of the interim
    financial statements.


 6. Results for the year ended 31 December 2002

    The figures for the year ended 31 December 2002 are derived from the Group
    Accounts for the year. A copy of the Group Accounts for that year, on which
    the auditors gave an unqualified opinion, has been delivered to the
    Registrar of Companies.

 7. Copies of this interim report will be posted to all shareholders and
    further copies are available from the company's registered offices: Secure
    Trust Banking Group PLC, One Arleston Way, Solihull B90 4LH.


                      This information is provided by RNS
            The company news service from the London Stock Exchange