Secure Trust Bank


£214.3m market cap

1150p last close

Secure Trust Bank is a well-established specialist bank addressing niche markets within consumer and commercial banking.

Investment summary

STB reported FY20 PBT of £20.1m versus our estimate of £13m, mostly due to lower than expected impairments (2.3% vs 2.7%). PBT was about 50% down on FY19, but the ROE of 6.2% shows resilience given the pandemic. The latest lockdown is affecting H121, but we estimate loan growth of 5% and 15% for FY21 and FY22. We see impairment dropping to 1.5% by 2022, which should help drive ROE to 11.1%. Its solid good capital base (CET1 14.2) supports management’s strategy of seeking growth opportunities both organically and through possible M&A. We have increased our fair value to 2,163p/share (from 1,756p) mainly due to rolling forward one year.

Y/E Dec
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2019A 165.5 N/A 41.1 180.2 6.4 N/A
2020A 166.1 N/A 20.1 85.2 13.5 N/A
2021E 165.7 N/A 27.4 115.2 10.0 N/A
2022E 190.8 N/A 41.5 175.0 6.6 N/A
Industry outlook

STB’s relatively short loan book duration allows it to de-risk quicker and protect capital and maintain liquidity. But impairments will inevitably rise and loan book shrinkage also adversely affects results. The bank is focused now on managing the risks and supporting clients. Management believes M&A opportunities may exist as the economy emerges from the crisis. Operationally, the bank can increase lending fairly quickly as the economy improves. The key challenge will be assessing the new lending conditions and risk parameters in the recovery phase.

Last updated on 05/05/2021
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Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
Actual (4.2) 30.7 43.4
Relative* (8.0) 20.9 15.3
52-week high/low 1240.0p/562.0p
*% relative to local index
Key management
David McCreadie CEO
Rachel Lawrence CFO

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