Secure Trust Bank Plc saw its shares rally on Thursday, after it posted a solid set of numbers and upped the dividend, despite difficult market conditions.
The challenger bank said lending balances grew 8.8% to £3.6bn, primarily driven by its consumer finance business, which reported growth of 13.4%. Business finance grew by 4.2%.
Customer deposits reached a record £3.2bn, up on last year's £2.9bn.
Total pre-tax profits fell 12.6% to £29.2m, after it was hit by a £61.9m impairment charge. Once that was stripped out, adjusted pre-tax profits improved 18% to £100.9m.
The impairment charge related to a pause in collections in its vehicle finance unit, while the Financial Conduct Authority carried out a Borrowers in Financial Difficulty review.
The group has also put aside £6.9m to cover costs associated with the watchdog's probe into discretionary commission arrangements in car finance.
The FCA is waiting until after a Supreme Court hearing in April to make its final decision on claims of potential mis-selling, but has already flagged it will likely implement a redress scheme to compensate customers.
The proposed total ordinary dividend per share, meanwhile, was hiked by 5% to 33.8p.
David McCreadie, chief executive, said: "Secure Trust Bank has remained focused on its medium-term targets and strategic priorities, delivering on balance sheet growth, stabilising net interest margin and delivering cost efficiencies.
"We remain confident in achieving our medium-term targets, which we will have largely delivered by the end of 2025."
As at 1300 GMT, shares in the bank had surged 20% at 506p.
Gary Greenwood, analyst at Shore Capital, said: "STB's results showed a robust financial performance in face of challenging market conditions. Underlying profitability was better than we expected.
"With near-term financial targets reiterated, including a 14% to 16% return on equity, we leave our forecasts broadly unchanged. We see the shares as hugely undervalued."
Shore Capital acts as joint broker to Secure Trust Bank.