Secure Trust Bank — Good news as flagged

Secure Trust Bank (LSE: STB)

Last close As at 20/04/2024

GBP6.82

−2.00 (−0.29%)

Market capitalisation

GBP130m

More on this equity

Research: Financials

Secure Trust Bank — Good news as flagged

Secure Trust Bank (STB) reported H121 PBT of £30.7m, boosted by a net impairments reversion of £1.1m (vs a net charge of £19.8m in H220). The good news on provisions had been previously flagged by management. Loan arrears have remained lower than expected and most borrowers have returned from payment holidays. Loan demand is picking up and loans grew 1.3% (core division loan growth of 2.6%) in the six months to 30 June 2021. STB also announced a new 25% payout dividend policy along with a surprise 20p interim dividend. This policy better matches the bank’s growth strategy of organic and opportunistic acquisitions. We have raised our FY21 earnings forecasts to reflect lower impairments while trimming FY22 EPS by 11% (ROE forecast 9.5%) to reflect higher costs as the bank expands. Our fair value has edged to 2,234p from 2,163p per share.

Analyst avatar placeholder

Written by

Financials

Secure Trust Bank

Good news as flagged

2021 interims

Banks

11 August 2021

Price

1,375p

Market cap

£256m

Net debt/cash (£m)

N/M

Shares in issue

18.6m

Free float

84.5%

Code

STB

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

32.2

15.6

105.2

Rel (local)

30.9

14.2

68.7

52-week high/low

1,385p

604p

Business description

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

Next events

Q3 trading update

October 2021

Analysts

Pedro Fonseca

+44 (0)20 3077 5700

Andrew Mitchell

+44 (0)20 3681 2500

Secure Trust Bank is a research client of Edison Investment Research Limited

Secure Trust Bank (STB) reported H121 PBT of £30.7m, boosted by a net impairments reversion of £1.1m (vs a net charge of £19.8m in H220). The good news on provisions had been previously flagged by management. Loan arrears have remained lower than expected and most borrowers have returned from payment holidays. Loan demand is picking up and loans grew 1.3% (core division loan growth of 2.6%) in the six months to 30 June 2021. STB also announced a new 25% payout dividend policy along with a surprise 20p interim dividend. This policy better matches the bank’s growth strategy of organic and opportunistic acquisitions. We have raised our FY21 earnings forecasts to reflect lower impairments while trimming FY22 EPS by 11% (ROE forecast 9.5%) to reflect higher costs as the bank expands. Our fair value has edged to 2,234p from 2,163p per share.

Year end

Operating income (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/19

165.5

38.7

180.2

87.2

7.6

6.3

12/20

166.1

20.1

85.2

44.0

16.1

3.2

12/21e

164.6

47.9

211.9

53.0

6.5

3.9

12/22e

191.3

36.3

156.6

39.1

8.8

2.8

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

H121: Significant impairment reversions

The impairment reversions were centred in the motor finance and retail finance segments, which are STB’s higher-margin businesses. The impact was most significant in motor finance, which had a 7.1% charge as a percentage of average loans in FY20 and there was a net reversion of 3.4% of loans in motor finance in H121. We are forecasting a 3% charge in FY21 (as UK government economic support measures are tapered) followed by 4% in FY22.

Optimism leads to a new dividend policy

Despite some words of caution by management in its statement regarding pandemic economic risks, the bank is optimistic about growing its balance sheet. STB is well capitalised with a CET1 ratio of 14.2% in H121, but the new dividend policy seems well balanced by allowing for a good dividend stream while giving management comfortable flexibility to expand. We forecast 24% growth in loans for FY22 after a more modest 2% this year.

Valuation: Fair value of 2,234p per share

We obtain a fair value (FV) of 2,234p per share using a net asset value (NAV) approach. We continue to assume a sustainable return on equity (ROE) of 13.5%, a 10% cost of equity (COE) and 2% annual growth. The FV is the present value (PV) of the (ROE-g)/(COE-g) formula at end 2022 discounted to FY21. The 2,234p value implies an FY21e P/BV of 1.4x; STB is currently trading on a 0.8x P/BV ratio. A slightly higher forecast book value (dividends and slightly higher FY21–22 combined earnings) led to the small upgrade in fair value.

H121: Turning the corner

Impairments reversal

The highlight of the H121 numbers was the significant reversion of provisions that led to a net provisions release of £1.1m (0.1% of average loans). The impairment charge had been 1.7% of average loans in H220 and we were estimating a 1.6% charge for FY21 (£38m). We note that the significant release of provisions in the first half of 2021 is not unique to STB, as other British and European banks have also done so as asset quality has remained better than envisaged when making impairments under the IFRS 9 forward looking provision rules.

Loan arrears have remained low during the first half of 2021 and most of the borrowers that had not already returned from payment holiday at the end of FY20 did so during H121. The extension of the furlough system into H221 by the government along with other support measures have been very helpful.

As a result, the reported PBT of £30.7m in H121 is significantly boosted by this unusual impairment level. The pre-provision profit line was down -28% to £28.9m y-o-y and down 16% on the previous six months. The decline in pre-provision profitability has been due to still depressed activity levels (less fees) but also due to higher expenses. Operating costs have been affected by STB investing to start growing again and because some costs that had been postponed from the peak of the crisis in FY20. The reported cost to income ratio of 64% in H121 was above the average level for STB. We estimate it to decline to 59% in FY22 as the bank expands and revenue picks up. STB’s interest margins have remained resilient with the bank able to further reduce its cost of borrowing in H121.

STB’s capital position remains quite comfortable with a CET1 of 14.2% at the end of H121.

Exhibit 1: STB semester progression

Year end 31 December (£m unless stated)

H119

H219

H120

H220

H121

H121 y-o-y %

Net interest income

70.5

74.9

77.9

73.0

73.5

-6%

Net fees & commissions

10.9

9.2

7.0

8.2

6.7

-4%

Total operating income

81.4

84.1

84.9

81.2

80.2

-6%

Operating expenses

(45.5)

(48.7)

(44.7)

(46.9)

(51.3)

15%

Pre-provision profit

35.9

35.4

40.2

34.3

28.9

-28%

Impairment charges on loans

(17.9)

(14.7)

(31.5)

(19.8)

1.1

N/A

Losses on modification of financial assets

0.0

0.0

(3.6)

0.5

0.7

N/A

Profit before tax

18.0

20.7

5.1

15.0

30.7

502%

Tax

(3.5)

(4.1)

(1.2)

(2.7)

(4.7)

292%

Tax rate

19.4%

19.8%

23.5%

18.0%

15.3%

Net attributable income

14.3

15.9

3.9

12.3

26.0

567%

Underlying EPS (p)

80.8

95.8

20.8

65.6

138.6

566%

Selected ratios

Cost income ratio

55.9%

57.9%

52.7%

57.8%

64.0%

NIM (NII/average loans)

6.5%

6.3%

6.5%

6.3%

6.3%

Impairment charge % average loans

1.7%

1.2%

2.6%

1.7%

-0.1%

Impairments (incl loan modifications losses) % avg loans

1.7%

1.2%

2.9%

1.6%

-0.2%

CET1 ratio

12.8%

12.7%

13.5%

14.0%

14.2%

ROE%

12.5%

14.3%

3.0%

9.2%

18.5%

Source: Secure Trust Bank

Loans demand picking up

Exhibit 2 shows the STB’s loan book progression in recent periods. The H121 loan book grew 0.5% y-o-y and 1.3% on the previous semester. Business is picking up, although there are also significant loan repayments in some segments, such as business real estate. We note that while motor loans are down 15% y-o-y, they are flat over the last six months and now showing signs of recovery. Retail finance grew 5.5% in the six months to 30 June 2021, while commercial finance grew 3.8%.

Exhibit 2: STB: Loan book progression

Loan balances (£m)

H119

H219

H120

H220

H121

Real estate finance

879

962

1,037

1,052

1,057

Asset finance

43

28

19

10

6

Commercial finance

221

252

192

231

239

Business finance

1,142

1,242

1,248

1,293

1,302

Motor loans

300

324

289

244

244

Retail finance

672

689

648

658

694

Debt management

42

82

93

82

90

Consumer mortgages

113

106

95

78

57

Consumer finance

1,127

1,201

1,124

1,062

1,086

Other

9

8

5

4

3

Total

2,278

2,450

2,378

2,359

2,390

Year-on-year %

Real estate finance

24.7%

25.0%

18.0%

9.3%

1.9%

Commercial finance

17.7%

29.3%

-13.2%

-8.3%

24.9%

Motor loans

10.2%

17.1%

-3.6%

-24.7%

-15.5%

Retail finance

32.2%

15.4%

-3.6%

-4.4%

7.2%

Total loans

23.9%

20.8%

4.4%

-3.7%

0.5%

Six months to date %

Real estate finance

14.2%

9.5%

7.8%

1.5%

0.4%

Commercial finance

13.4%

14.0%

-23.9%

20.4%

3.8%

Motor loans

8.5%

8.0%

-10.7%

-15.6%

0.2%

Retail finance

12.5%

2.6%

-6.0%

1.7%

5.5%

Total loans

12.3%

7.5%

-3.0%

-0.8%

1.3%

Impairments % average loans

Real estate finance

0.0%

0.0%

-0.4%

-0.6%

-0.2%

Commercial finance

-0.2%

0.1%

-1.0%

0.0%

0.0%

Motor loans

-5.6%

-3.7%

-9.7%

-4.4%

3.4%

Retail finance

-2.9%

-3.1%

-4.0%

-0.5%

-0.7%

Total loans

-1.7%

-1.2%

-2.6%

-1.7%

0.1%

Source: Secure Trust Bank

Dividend policy optimism

Although management repeated its words of caution given that the coronavirus pandemic is not over, it expects loan growth to accelerate during the second half of the year. Management remains interested in taking advantage of acquisition opportunities that may come as the economy emerges out of the pandemic doldrums. The decision to start a dividend payout policy of 25% confirms this expansion optimism and therefore the dividend policy makes senses as a practical approach to capital management. This means a lower dividend forecast for FY22 (39.1p vs 70p previously). However, gains from the provisions reversion means that we now estimate that the FY21 dividend will be higher at 53.0p (including the surprise announced 20p interim dividend) than our previous forecast of 46.1p.

The medium-terms goals remain in place as announced in March 2021. These are a net interest margin of more than 6.0%, a cost to income ratio of 50–55%, a ROE of 14–16% and a CET1 above 12%.

Finetuning loan forecasts

We have made some adjustments to our loan forecasts, including the sale of the retail mortgage business (about 2% of the loan book) that was announced in July 2021.

We are forecasting loan growth of 2% (our previous forecast of 5% was before the news of the retail mortgage loan book sale) for FY21 and 24% for FY22 (previously 15%). We have made some upward adjustments in retail finance and debt management loan forecasts, which have had offsetting adjustments in real estate, commercial finance and motor finance. In general, lending conditions remain good in all the key segments and STB management remains keen to grow in all of them.

Exhibit 3: Loan book balance estimates

£m unless stated

2018

2019

2020

2021e

2022e

Real estate finance

770

962

1,052

1,070

1,230

Asset finance

63

28

10

0

0

Commercial finance

195

252

231

255

340

Business finance

1,027

1,242

1,293

1,325

1,570

Motor finance

276

324

244

255

340

Retail finance

597

689

658

720

960

Debt management

32

82

82

95

110

Retail mortgages

85

106

78

0

0

Consumer finance

990

1,201

1,062

1,070

1,410

Other

11

8

4

5

5

Total lending

2,029

2,450

2,359

2,400

2,985

Y-o-y %

Real estate finance

33

25

9

2

15

Commercial finance

54

29

-8

11

33

Motor finance

1

17

-25

5

33

Retail finance

32

15

-4

9

33

Total lending growth (y-o-y%)

27

21

-4

2

24

Source: Secure Trust Bank accounts, Edison Investment Research

Valuation

We continue to value STB on an NAV approach using the (ROE-g)/(COE-g) formula. The assumptions are the same: a 13.5% sustainable ROE, 10% COE and a 2% increase in long-term earnings. We have assumed that this valuation is for end FY22 when the earnings will have started to normalise. We then discount this value back to end FY21 using the COE as the discounting factor. The FV has moved slightly from 2,163p to 2,234 per share to reflect a small increase in book value from higher earnings in H121 and lower dividend forecasts. This new target price is equivalent to an FY21 P/BV of 1.4x, the same as before. This compares to the current trading value of 0.8x, suggesting significant upside to the share price.

STB is still trading below its book value despite its track record of value-creating ROEs. This year’s forecast ROE of 13.7% is inflated with provisions writebacks. We are forecasting an ROE of 9.5% for FY22 and expect this to climb further in FY23 as the balance sheet further increases.

Exhibit 4: STB valuation (net asset value approach*)

ROE (%)

13.5%

COE (%)

10.0%

Long-term growth (%)

2.0%

Book value/share in FY21e (p)

1,605

Book value/share in FY22e (p)

1,709

Indicated fair value for FY22 per share (p)

2,457

PV of FY22 fair value per share (p)

2,234

Fair value of P/BV FY21 (x)

1.4

P/BV FY21 (x)

0.8

Source: Edison Investment Research. Note: *(ROE-g)/(COE-g).

Exhibit 5 compares STB to selected challenger and specialist lender UK peers. Its FY22 P/E ratio is similar to the average of these peers. STB’s ROE is about 9% lower in FY22; however, its FY22 P/BV is significantly (38%) lower than its peers, a discount that seems to suggest space for a rerating versus its peers if the bank delivers on forecast earnings and growth. STB also has the highest dividend yield in the comparison even after the dividend reduction following the introduction of the new 25% payout policy.

Exhibit 5: Challenger/specialist lender comparative table

Price
(p)

Market cap
(£m)

P/E (x)
FY21e

P/E (x)
FY22e

Dividend yield (%)

ROE (%)
FY21e

ROE (%)
FY22e

P/BV (x) last reported

Secure Trust Bank

1,313

257.3

6.2

8.4

4.0

13.7

9.5

0.8

Close Brothers

1,587

2,393.2

16.8

12.1

2.5

7.8

13.0

1.7

CYBG

202

2,925.1

16.0

6.7

0.0

1.4

8.6

0.6

Metrobank

100

173.1

N/A

-1.0

0.0

-18.3

-15.1

0.1

OneSavings Bank

490

2,196.4

9.3

7.5

0.0

0.0

18.0

1.4

Paragon

559

1,413.7

14.5

10.5

2.6

10.3

0.0

1.2

S&U

2,800

341.5

8.2

6.2

3.2

10.5

13.2

1.8

Average ex-Metrobank

13.0

8.6

1.7

6.0

10.6

1.3

STB versus average ex-Metrobank

-52%

-2%

142%

128%

-10%

-38%

Source: Refinitiv, Edison Investment Research. Note: Priced at 9 August 2021.

Exhibit 6 compares the share price performance of the companies shown in the previous table. Over the last few months STB has been the strongest performer. Its performance is also above average on a year-to-date basis. However, it has lagged the peers over a 12-month period.

Exhibit 6: Recent share price performance in a peer group context, %

1 month

3 months

1 year

YTD

From 12m high

Secure Trust Bank

17.5

32.9

26.0

38.1

-3.4

Close Brothers

3.2

-2.3

44.3

14.8

-6.8

CYBG

4.3

1.4

132.8

50.4

-5.9

Metrobank

-3.4

-8.8

-3.4

-28.6

-38.7

OneSavings Bank

5.1

1.5

98.5

15.6

-1.9

Paragon

5.1

15.2

68.1

14.3

-3.0

S&U

5.3

0.0

73.9

23.9

0.0

Average

3.3

1.2

69.0

15.1

-9.4

STB versus average

14

32

-43

23

6

Source: Refinitiv, Edison Investment Research. Note: Priced at 9 August 2021.

Forecasts

The key changes in our FY21 forecasts come from the much lower impairments, but we have also made an increase in operating cost estimates. We are now forecasting PBT of £47.9m for FY21, 75% higher than the previous forecast. EPS has been moved up by 84% to 211.9p per share.

Our PBT and EPS forecasts for FY22 have been trimmed by 13% and 11% to £36.3m and 156.6p, respectively. Impairment charges remains similar at 1.6% of average loans, but operating expenses have been raised from £108.8m to £113.8m. We are forecasting an FY21 ROE of 9.6% as profitability starts to return to normal with balance sheet expansion and rebounding business levels.

Our view remains that there will be no cliff-edge economic scenario and that government and central bank support will continue to be pragmatic during this crisis.

We expect STB’s balance sheet to remain well capitalised; we are forecasting a CET1 of 12.2% (previously 12.8%) at the end of FY22. This will help give it greater flexibility in its two-pronged growth strategy of organic expansion and value creating acquisitions.

Exhibit 7: FY21 and FY22 forecasts changes

Operating income (£m)

Normalised PBT (£m)

Normalised EPS (p)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2021e

165.7

164.6

(0.7)

27.4

47.9

75.0

115.2

211.9

83.9

2022e

190.8

191.3

0.3

41.5

36.3

(12.7)

175.0

156.6

(10.5)

Source: Secure Trust Bank, Edison Investment Research

Exhibit 8: Impairment charge forecasts as % of average loans*

Source: Secure Trust Bank, Edison Investment Research. Note: *Negative numbers signify net provisions reversions.

Exhibit 9: Financial summary

Year end 31 December

2018

2019

2020

2021e

2022e

£m except where stated

PROFIT & LOSS

Net interest income

133.7

145.4

150.9

149.0

169.8

Net commission income

17.9

20.1

15.2

15.6

21.5

Total operating income

151.6

165.5

166.1

164.6

191.3

Total G&A expenses (exc non-recurring items below)

(84.5)

(94.2)

(91.6)

(105.3)

(113.8)

Operating profit pre impairments & exceptionals

67.1

71.3

74.5

59.3

77.5

Impairment charges on loans

(32.4)

(32.6)

(51.3)

(12.7)

(42.2)

Losses on modification of financial assets

0.0

0.0

(3.1)

1.3

1.0

Other income

0.0

0.0

0.0

0.0

0.0

Profit before tax

34.7

38.7

20.1

47.9

36.3

Corporation Tax

(6.4)

(7.6)

(3.9)

(8.1)

(6.9)

Tax rate

18.4%

19.6%

19.4%

17.0%

19.0%

Profit after tax

28.3

31.1

16.2

39.7

29.4

Minority interests

0.0

0.0

0.0

0.0

0.0

Net income attributable to equity shareholders

28.3

31.1

16.2

39.7

29.4

Company reported pre-tax earnings adjustments

2.0

2.4

0.0

0.0

0.0

Reported underlying earnings after tax

29.9

33.5

16.2

39.7

29.4

Average basic number of shares in issue (m)

18.5

18.5

18.6

18.6

18.6

Average diluted number of shares in issue (m)

18.6

18.6

18.8

18.8

18.8

Reported diluted EPS (p)

152.2

167.3

85.2

211.9

156.6

Underlying diluted EPS (p)

161.0

180.2

85.2

211.9

156.6

Ordinary DPS (p)

83.0

87.2

44.0

53.0

39.1

Special DPS (p)

0.0

0.0

0.0

0.0

0.0

Net interest/average loans

7.32%

6.44%

6.32%

6.26%

6.28%

Impairments incl losses on loan modifications /average loans

1.79%

1.46%

2.26%

0.48%

1.53%

Cost income ratio

55.7%

56.9%

55.1%

64.0%

59.5%

BALANCE SHEET

Net customer loans

2,028.9

2,450.1

2,358.9

2,400.0

2,985.0

Other assets

415.4

232.7

305.2

327.3

331.7

Total assets

2,444.3

2,682.8

2,664.1

2,727.3

3,316.7

Total customer deposits

1,847.7

2,020.3

1,992.5

2,000.0

2,487.5

Other liabilities

359.5

408.4

401.1

428.6

510.9

Total liabilities

2,207.2

2,428.7

2,393.6

2,428.6

2,998.4

Net assets

237.1

254.1

270.5

298.7

318.2

Minorities

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

237.1

254.1

270.5

298.7

318.2

Reconciliation of movement in equity

Opening shareholders' equity

249.1

237.1

254.1

270.5

298.7

Profit in period

28.1

31.1

16.2

39.7

29.4

Other comprehensive income

(25.8)

0.0

(0.2)

(0.1)

0.0

Ordinary dividends

(14.8)

(15.5)

0.0

(11.9)

(9.9)

Special dividend

0.0

1.2

0.0

0.0

0.0

Share based payments

0.5

0.3

(0.7)

0.5

0.0

Issue of shares

0.0

0.0

1.1

0.0

0.0

Share issuance costs

0.0

0.0

0.0

0.0

0.0

Closing shareholders' equity

237.1

254.1

270.5

298.7

318.2

OTHER SELECTED DATA AND RATIOS

Period end shares in issue (m)

18.5

18.5

18.6

18.6

18.6

NAV per share (p)

1,283

1,375

1,453

1,605

1,709

Tangible NAV per share (p)

1,230

1,326

1,412

1,571

1,680

Return on average equity

11.6%

12.7%

6.2%

14.0%

9.5%

Return on average TNAV

13.3%

14.8%

6.7%

16.1%

11.5%

Average loans

1,826.4

2,258.9

2,389.0

2,379.5

2,692.5

Average deposits

1,655.4

1,967.8

2,010.3

2,002.8

2,243.8

Loans/deposits

109.8%

121.3%

118.4%

120.0%

120.0%

Risk exposure

1,824.6

2,118.1

2,001.5

2,101.3

2,565.3

Common equity tier 1 ratio

13.8%

12.7%

14.2%

14.3%

12.2%

Source: Secure Trust Bank, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Secure Trust Bank and prepared and issued by Edison, in consideration of a fee payable by Secure Trust Bank. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Secure Trust Bank and prepared and issued by Edison, in consideration of a fee payable by Secure Trust Bank. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on Secure Trust Bank

View All

Latest from the Financials sector

View All Financials content

Research: Financials

S&U — Reduced impairments underpin increased profit

S&U reports that growth in lending at Advantage and Aspen has been somewhat constrained by the supply of used vehicles and houses for sale, but collections have been strong. At Advantage the level of impairment has been lower than expected, more than offsetting lower loan growth and prompting increases in our earnings estimates.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free