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Secure Trust Bank (STB)

Business description

Secure Trust Bank is a well-established specialist bank, addressing niche markets within consumer and commercial banking. It has launched a non-standard mortgage business.

Stock data

Market cap.£269.3m
Last close1,457.50p
High / Low (52 weeks)2085.0p / 1397.5p
Stock market listingLN
Forecast net debt (m)N/A
Forecast gearing ratio (%)N/A
TeamFinancials
SectorFinancials

Price performance

%1m3m12m
Actual4.3(15.8)(17)
Relative *5.4(9)(12.4)

* % Relative to local index

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Company news

Y/E Dec Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2016A 107.0 N/A 27.3 113.0 12.9 N/A
2017A 129.5 N/A 27.0 116.4 12.5 N/A
2018E 152.9 N/A 34.9 154.8 9.4 N/A
2019E 174.0 N/A 44.4 191.7 7.6 N/A

Last updated on 22/10/2018

Investment summary

In its October trading update STB indicated that Q3 trading was strong, in line with trends reported in H118 and that it was comfortable with full-year guidance, despite economic and Brexit concerns. We expect earnings and loans to grow by 32% and 28% in 2018, respectively. Repositioning has left STB with a lower risk book, focused on areas where the risk-reward pricing is currently better. STB notes that investments it made in collections in 2017 are having a positive impact on results this year. In Q318, STB raised £50m in fixed rate callable 10-year subordinated debt at 6.75%, adding 268bp of Tier 2 capital at a reasonable price.

Last updated on 26/10/2018

Industry outlook

STB sees significant opportunities in both its repositioned motor finance and its business segments. Management appears keen to avoid being drawn into competition where the risk/reward is unattractive. Our numbers reflect this, but we still see scope for the bank to roughly double its assets and earnings between 2017 and 2020, while keeping CET1 above 10% and maintaining a generous dividend policy. Management will look at M&A opportunities (particularly in asset finance, mortgages and consumer finance) should they arise.

Last updated on 26/10/2018

Key management

Paul Lynam, CEO
Neeraj Kapur, FD

Company address

One Arleston Way
Shirley
Solihull, West Midlands
B90 4LH
United Kingdom
0121 693 9100
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