Final Results

Secure Trust Banking Group PLC
23 March 2004


                         SECURE TRUST BANKING GROUP PLC

              Preliminary results for the year to 31 December 2003

                                   Key Points


  • Profit before tax and exceptional items of £5.8 million (2002: £8.3
    million).

  • Earnings per share before exceptional items of 31.9 pence (2002: 42.0
    pence).

  • Proposed final dividend of 20.5 pence, making an increase for the year of
    3% to 31 pence (2002: 30 pence).

  • The results incorporate trading from Arbuthnot Securities, acquired in
    January 2003.

  • The Group acquired freehold offices in London for £15.7 million in August
    2003.


Chairman, Henry Angest, commented:

'Secure Trust's results for the year to 31 December 2003 were achieved against a
background that remained challenging. Sentiment in investment markets was
adversely affected in the early part of the year by international events, whilst
generally weak economic conditions led the Bank of England to cut base rates to
a 48 year low, which reduced our interest earnings on free cash and our deposit
margins. The results also reflect further investment in the business. This will
continue in the future but spending will be tightly focussed.

Whilst the Board welcomes the more positive tone to equity markets, our
generally optimistic view of the short term future must be tempered with some
caution given the highly competitive nature of our markets.

Looking further ahead, I believe that our diversified earnings base, healthy
balance sheet and strong cash flow put us in a strong position to reap the
benefits of our investment in the business over the medium term. The Board
therefore views the Group's prospects with confidence.'



Press enquiries for Secure Trust Banking Group PLC:

Secure Trust Banking Group PLC
Henry Angest, Chairman and Chief Executive                    Tel: [phone]

Stephen Lockley, Finance Director                             Tel: [phone]


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




CHAIRMAN'S STATEMENT

Secure Trust Banking Group's results for 2003 were achieved against a background
that remained challenging. Sentiment in investment markets was adversely
affected in the early part of the year by international events, whilst generally
weak economic conditions led the Bank of England to cut base rates to a 48 year
low. The average base rate during 2003 was 3.68%, compared with an average of
4.0% in 2002, reducing the Group's interest earnings on free cash and at the
same time depressing deposit margins.

Despite these factors total operating income for the year to 31 December 2003
rose to £42.7 million (2002: £35.8 million), reflecting in large part the
acquisition of Arbuthnot Securities (formerly Old Mutual Securities) in January
2003. However, the difficult trading conditions which prevailed in the
securities markets for much of the period meant that the Group's operating
profit (before charging interest on the subordinated loan stock issued in late
2002) fell to £6.3 million (2002: £8.3 million). Profit before tax and
exceptional items amounted to £5.8 million and, after exceptional charges of
£1.3 million relating to reorganisation and redundancy costs in Arbuthnot Latham
and Arbuthnot Securities, together with the write-off of £0.6 million of
goodwill arising from the professional expenses of the acquisition, profit
before tax was £3.9 million (2002: £7.8 million).

During the first half of the year, part of the proceeds of the issue of
subordinated loan stock was used to continue the share buy-back programme.
Including the effects of these buy-backs, earnings per share before exceptional
items were 31.9p (2002: 42.0p).

I am pleased to report that the proposed final dividend, which will be paid on
28 May 2004 to shareholders on the register at 30 April 2004 is 20.5p, bringing
the total dividend for the year to 31p (2002: 30p).

Secure Trust Bank

Operating income at Secure Trust Bank rose by 2% over the period, despite the
negative impact of lower base rates. Total costs of the division, excluding bad
debts, rose by 4.5%, reflecting continued investment in the business and the
ever growing costs of regulatory compliance. Operating profit of the division
therefore fell by 4.5% to £7.1 million.

Net interest income grew by 2%, with the impact of lower base rates being more
than offset by strong performances in some of the higher margin lending products
offered by the bank. At the same time, fees and commissions also grew by 2%,
driven by improved earnings from insurance products, notably the sickness,
accident and redundancy scheme offered to the bank's customers. The SecureDirect
business recorded a 2% growth in motor policies sold despite facing a tough
competitive environment.

Arbuthnot Latham

The subdued state of equity markets in the early part of the year held back
development of the Group's private banking activities and operating profits at
Arbuthnot Latham fell by 14% to £0.9 million. Income from fund management,
pensions and investments declined from the previous year but this was offset by
improvements in the banking business, such that overall fees and commissions
receivable were maintained at a similar level to 2002. The strength of the
banking business was reflected in a growth of 9% in the loan book and 12% in
customer deposits. Despite some pressure on deposit margins resulting from the
lower base rates, the division's net interest income rose by 2%.

Following a cost cutting programme in the first half of the year, we began to
invest in the business again in the second half, as a result of which costs rose
by 2% over the year as a whole.

We will be significantly developing the private banking business during 2004 by
broadening the product offer and enhancing the team with a recruitment
programme. We expect that this investment will start to show returns during
2004.

Arbuthnot Securities

Following the acquisition of Old Mutual Securities in January 2003 and its
rebranding as Arbuthnot Securities, a significant amount of resource has been
devoted to integrating the business into the Group and building a team of high
quality people to take it forward as markets begin to recover. This has
inevitably resulted in a growth in the cost base, which we firmly believe is the
right stance to be taking at this point in the market cycle. Investment in
personnel will continue in 2004. Whilst trading volumes and corporate deal flow
were both subdued for much of last year, I am pleased to report that 2004 has
started positively. Arbuthnot Securities sponsored the first IPO to start
trading this year and acted on the first reverse takeover to complete in January
and the first main market public takeover announced in 2004.

Under the terms of the acquisition agreement, the vendor of Old Mutual
Securities agreed to contribute £1 million in respect of the operating losses
(excluding exceptional items) of the securities business in 2003 and this is
reflected in the Group's results.

Property

Following the purchase in August 2003 of freehold offices in Ropemaker Street,
London, EC2, I am pleased to report that our London businesses have moved into
this building successfully. We anticipate achieving operational benefits from
this move as it brings all of our London businesses together into one location.
We acquired the building for £15.7 million and have subsequently had it
revalued, producing an uplift in value (on a vacant possession basis) of £1.9
million. After spending some £2 million on refurbishment, the directors estimate
the value of the building with the benefit of our occupation to be approximately
£24.5 million. These new offices provide good quality accommodation for our
London operations on an extremely cost effective basis.

Outlook

Although interest rates now seem to be on a modestly upward trend and equity
markets are stronger than they were during much of last year, both of which
should benefit the Group, the overall environment remains extremely competitive.
Consumer credit volumes are expected to slow during the next twelve months and
gaining new customers for Secure Trust Bank will be a challenge. Whilst the
Board welcomes the more positive tone to equity markets, our generally
optimistic view of the short-term future must be tempered with some caution. At
the same time, we will continue to invest in the development of each of the
Group's businesses and, despite spending being tightly focussed, costs are
expected to rise in the short-term.

Looking further ahead, I believe that the composition of the Group puts us in a
strong position to develop successfully, based on the three pillars of a
diversified earnings base, a healthy balance sheet and strong cash flow. The
Board therefore views our medium term prospects with confidence.

Henry Angest



CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the year ended 31 December 2003

                                                                                                                      
                                   Profit Before Exceptional   Exceptional Items   2003 (Unaudited)   2002 (Audited)
                                                      Items                                                         
                                                       £000                 £000               £000             £000

Interest receivable from                             
loans, advances and investments                         

Continuing activities                                12,761                    -             12,761           12,104    
                                                        
Acquisitions                                            138                                     138                -    
                                                       
                                                     12,899                    -             12,899           12,104


Less: interest payable                              (4,739)                    -            (4,739)          (3,733)
Net interest income                                   8,160                    -              8,160            8,371
Fees and commissions receivable                                                -                                    
Continuing activities                                28,253                                  28,253           28,026
Acquisitions                                          6,678                                   6,678                -

Less: fees and commissions                                                                                          
payable                                                                                                             
Continuing activities                                 (405)                    -              (405)            (554)
Operating income                                     42,686                    -             42,686           35,843
Administrative expenses                              34,331                    -             34,331           25,036
Exceptional administrative                                -                1,256              1,256              545
expenses                                                                                                            
Depreciation                                          1,467                    -              1,467            1,421
Amortisation of goodwill                                199                    -                199              170
Exceptional goodwill write-off                            -                  655                655                -
Provisions for bad and                                  900                    -                900              875
doubtful debts                                                                                                      

Operating expenses                                   36,897                1,911             38,808           28,047

Profit on ordinary activities                                                                                       
before tax                                                                                                          
Continuing activities                                 7,317                (496)              6,821            7,796
Acquisitions                                        (1,528)              (1,415)            (2,943)                -
                                                      5,789              (1,911)              3,878            7,796
Tax on profit on ordinary                           (1,627)                  377            (1,250)          (2,442)
activities                                                                                                          
Profit on ordinary activities                         4,162              (1,534)              2,628            5,354
after tax (note 1)                                                                                                  
Minority interests                                     (10)                    -               (10)              (9)
Profit attributable to                                                   (1,534)              2,618            5,345
shareholders of Secure Trust                          4,152                                                         
Banking Group PLC                                                                                                   
Dividends                                           (4,015)                    -            (4,015)          (3,946)
Retained (loss)/profit for the                          137              (1,534)            (1,397)            1,399
year                                                                                                                
Earnings per ordinary share                                                                                         
(note 2)                                                                                                            
Basic and fully diluted                               31.9p                                   20.1p            39.2p


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.




STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

For the year ended 31 December 2003
                                                                                                         
                                                                        2003         2002
                                                                 (Unaudited)    (Audited)
                                                                        £000         £000

(Loss)/retained profit for the financial year                        (1,397)        1,399
Unrealised gain arising on revaluation of freehold properties          1,931            -
Total recognised gains for the year                                      534        1,399




CONSOLIDATED BALANCE SHEET 
At 31 December 2003 
                                                                                                   
                                                            2003        2002
                                                     (Unaudited)   (Audited)
                                                            £000         £000
Assets                                                                       
Cash                                                         235          281
Loans and advances to banks and building societies        74,346       79,702
Loans and advances to customers                          110,268      104,849
Debt securities                                           28,500       17,000
Intangible fixed assets                                    2,560        2,759
Tangible fixed assets                                     28,542        8,327
Other assets                                               9,302        5,187
Prepayments and accrued income                             3,069        2,759

Total assets                                             256,822      220,864


Liabilities                                                                  
Deposits by banks                                         15,154        2,494
Customer accounts                                        187,295      170,195
Other liabilities                                         18,874       17,332
Accruals and deferred income                               4,113        2,030
Subordinated loan notes                                    7,817        3,817
Equity minority interests                                     77           72
                                                         233,330      195,940

Called up share capital                                      130          134
Share premium account                                     13,370       13,370
Capital redemption reserve                                    20           16
Revaluation reserve                                        2,442          511
Profit and loss account (note 3)                           7,530       10,893

Equity shareholders' funds                                23,492       24,924

Total liabilities                                        256,822      220,864



NOTES

1.  Segmental Analysis of Profits
                                                                                                                      
                                                                           Year to 31.12.03                        

                                          Personal             Private     Investment   Subordinated          Group
                                financial services             banking        banking     loan stock          total
                                       (Unaudited)         (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited) 
                                              £000                £000           £000           £000           £000 

Segment profit                               7,110                 921        (1,528)              -          6,503 
Subordinated loan note                           -                   -              -          (515)          (515) 
interest                                                                                                            
Amortisation of goodwill                         -               (199)              -              -          (199) 
Profit before exceptional                    7,110                 722        (1,528)          (515)          5,789 
items                                                                                                               
Exceptional items                                -               (496)        (1,415)              -        (1,911) 
Profit before tax                            7,110                 226        (2,943)          (515)          3,878 
 

                                                                                                                     
                                                                           Year to 31.12.02                      

                                            Personal             Private   Investment   Subordinated        Group
                                  financial services             banking      banking     loan stock        total
                                           (Audited)           (Audited)    (Audited)      (Audited)    (Audited) 
                                                £000                £000         £000           £000         £000 

Segment profit                                 7,460               1,065            -              -        8,525 
Subordinated loan note interest                    -                   -            -           (14)         (14) 
Amortisation of goodwill                           -               (170)            -              -        (170) 
Profit before exceptional items                7,460                 895            -           (14)        8,341 
Exceptional items                              (515)                (30)            -              -        (545) 
Profit before tax                              6,945                 865            -           (14)        7,796 


The loss before exceptional items for investment banking is stated net of a
contribution from Old Mutual plc of £1 million in respect of operating losses.


2.  Earnings per Ordinary Share

    Earnings per ordinary share are calculated on the net basis by dividing the
    profit attributable to shareholders of £2,618,000 (31.12.2002: £5,345,000)
    by the weighted average number of ordinary shares 13,027,289 (31.12.2002:
    13,624,862) in issue during the year. There is no difference between basic
    and fully diluted earnings per ordinary share.

    Adjusted earnings per share are calculated by dividing the profit
    attributable to shareholders before exceptional items of £4,152,000
    (31.12.2002: £5,726,000) by the weighted average number of ordinary shares
    13,027,289 (31.12.2002: 13,624,862) in issue during the year.


3.  Profit and Loss Account
                                                                     
                                                2003        2002
                                         (Unaudited)    (Audited)
                                                £000         £000
Retained profit:                                                
Opening balance                               32,823      33,275
Cost of shares repurchased                   (1,966)     (1,851)
(Loss)/profit for the period                 (1,397)       1,399
Closing balance                               29,460      32,823
Premiums on acquisitions written off        (21,930)    (21,930)
                                               7,530      10,893

4.  Basis of reporting

    The figures for the year ended 31 December 2003 have been prepared in all
    material respects on the basis of the accounting policies set out in the
    Group's 2002 statutory accounts. The preliminary results were approved by
    the Board of Directors on 22 March 2004 and are unaudited.


5. 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.



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