STB continues to deliver excellent growth, as promised. In H115, 40% growth in statutory pre-tax profits was driven by a 42% revenue increase and smaller cost growth. Loans grew 90% on H114 and deposits by 75%. Impairments remain below management expectations. Strategically, H115 saw the initial payback for investment in the SME business lines. The real estate potential is being realised and is the key driver to SME lending now at c £25m per month (ie + 2% per month growth on H1 closing balance).
The key feature for H115 was the delivery of loan and franchise growth from the SME initiative. In particular we note real estate lending increased from £134m at end 2014 to £266m at end June 2015. Asset Finance grew from £5m to £30m and commercial finance from £5m to £16m. The core personal business has continued to show excellent growth with motor finance up from £138m at end 2014 to £152m and retail finance from £116m to £163m. Impairments continue below management expectations and the level built into the loan pricing. Modest deteriorations in motor and retail are due to mix effects and offset by greater yield. The business finance impairment is due to collective provisions. No specific real estate losses have been incurred. While fee income was lower than expected, it is due to a change in product pricing and compensated for in interest income. The group continues to be deposit financed with the loan to deposit ratio at 102%. Capital remains robust with a leverage ratio of 11.9% (regulatory minimum 4%).
Management indicates the SME business drawdown of lending is running at c £25m per month and we have increased our year-end SME loan forecast by nearly 10%. We have offset the consequent upgrade in interest income with modest increases in interest expense and impairments, a small cut in fees and a more significant increase in costs. We believe that the group will continue to invest heavily including exploring potential new business lines, including mortgages and cash ISAs, while profitability and growth are so strong.
We continue to see material upside (to £33.91) on metrics which do not fully capture the payback for investments. Our valuation has been cut modestly from our last report. Our pre-tax numbers are unchanged but there is the effect of the bank surcharge tax on both equity and earnings models.