Secure Trust Bank


£243.9m market cap

1320p last close

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

Investment summary

Secure Trust Bank (STB) reported H119 adjusted pre-tax earnings up 14% y-o-y driven by volume growth and lower impairment rates. With a diversified lending model it has shown the ability to shift asset allocation significantly, de-risking and avoiding price pressures prevailing in some lending asset classes. By putting the brakes on early, STB is now reaping the rewards, with good profitability and the flexibility to adjust to macro and political changes. We have not made changes to our forecasts or our DDM-derived fair value (2,428p per share). We forecast STB to continue to deliver returns considerably above its 10% COE. We see ROE reaching 18.7% by 2021. As such, a significant premium to the current trading P/BV of 1.0x seems justified in our opinion. Our DDM fair value is equivalent to a 2019 P/NAV of 1.8x.

Y/E Dec
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 129.5 N/A 27.0 116.4 11.3 N/A
2018A 151.6 N/A 36.7 162.0 8.1 N/A
2019E 167.8 N/A 42.0 183.7 7.2 N/A
2020E 185.0 N/A 52.2 225.1 5.9 N/A
Last updated on 16/09/2019
Industry outlook

STB is targeting further strong growth in 2019 and is investing in areas such as a new motor finance platform, treasury and risk management to underpin this. The benefits of this are expected to flow through over a number of years. The bank’s proven flexibility should help it adapt to opportunities and challenges that may occur in the macro and political environment. Management remains open to M&A opportunities should they arise.

Last updated on 16/09/2019
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
Actual 0.0 (13.4) (24.0)
Relative* (3.4) (13.8) (23.9)
52-week high/low 1752.5p/1157.5p
*% relative to local index
Key management
Paul Lynam CEO
Neeraj Kapur FD

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