money-2696219

Secure Trust Bank

LN: STB

£267.9m market cap

1450p last close

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.

Investment summary

STB reported FY18 results modestly ahead of our expectations with adjusted PBT and EPS up 36% and 39% to £36.7m and 161.8p, respectively. FY adjusted ROE was 13.1%, a significant increase from 2017 (8.9%). The bank has successfully reduced risk in its balance sheet while still delivering strong asset growth (loans rose 26.9% y-o-y to over £2bn). The balance sheet retains good liquidity and a solid capital base (CET 1 13.8%). STB is investing in a new motor finance platform addressing the near-prime and prime market with benefits expected to flow over a number of years following initial investment. The full year dividend is 83p, up 5% y-o-y.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 129.5 N/A 27.0 116.4 12.5 N/A
2018A 151.6 N/A 36.7 162.0 9.0 N/A
2019E 167.8 N/A 42.0 183.7 7.9 N/A
2020E 185.0 N/A 52.2 225.1 6.4 N/A
Last updated on 17/05/2019
Industry outlook

Management indicates that 2019 has started with strong momentum and continued benefit from lower asset impairments. The balance sheet de-risking demonstrates a willingness to act flexibly in allocating capital and leaves STB well positioned to respond to either positive or adverse changes in the macro environment. Management remains open to M&A opportunities should they arise. Changes to our EPS estimates were small (-4.2% FY19 and +0.2% FY20).

Last updated on 17/05/2019
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (7.9) 7.8 (26.3)
Relative* (6.4) 5.9 (21.7)
52-week high/low 1960.0p/1157.5p
*% relative to local index
Key management
Paul Lynam CEO
Neeraj Kapur FD

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