We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| SECURE TRUST BANK PLC | AQSE:STB.GB | Aquis Stock Exchange | Ordinary Share | GB00B6TKHP66 | Common Stock 40p |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 695.00 | 670.00 | 720.00 | 695.00 | 695.00 | 695.00 | 0.00 | 07:01:06 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSTB
RNS Number : 5250E
Secure Trust Bank PLC
19 July 2016
SECURE TRUST BANK PLC
Unaudited interim results for the six months to 30 June 2016
Record level of profit and repositioning for the future
In its sixty fourth year of trading Secure Trust Bank PLC ("STB", the "Bank" or the "Group") is pleased to announce total Group profit after tax of GBP129.1m for the six months to 30 June 2016 including the profit on disposal of the Everyday Loans Group ("ELG"). The Bank has traded strongly during H1 2016, despite taking a defensive stance as highlighted in our annual results, to mitigate any potential impacts arising as a result of the EU referendum vote. The post-tax profits of GBP129.1m substantially increased the group's capital and liquidity reserves. Underlying profits before tax, which primarily allow for the effect of the sale of Everyday Loans, are GBP17.4m which are 54% higher than the adjusted profit before tax for the first half of 2015 of GBP11.3m. The bank is well positioned to navigate the uncertainties created by the EU referendum outcome and to seek to take advantage of the opportunities that may arise.
FINANCIAL HIGHLIGHTS
-- Equity per share GBP12.55p representing 658% increase following significant value creation since IPO (2 Nov 2011 : GBP1.66p) excluding GBP4.28p dividends per share paid in the period since IPO
-- Total profit after tax GBP129.1m (H1 2015 : GBP12.9m) -- Underlying profit before tax* GBP17.4m (H1 2015 : GBP11.3m) up 54.0% -- Statutory profit before tax* GBP12.5m (H1 2015: GBP10.4m) up 20.2% -- Operating income* GBP57.3m (H1 2015: GBP42.8m) up 33.9% -- Gain on disposal of ELG confirmed at GBP116.8m
-- Underlying annualised return on average equity 20.4% (H1 2015: 23.6%) reflecting the increase in equity from the sale of ELG
-- Earnings per share 709.9p (H1 2015: 70.8p) -- Underlying earnings per share* 78.5p (H1 2015: 50.1p)
-- Interim dividend per share of 17p in addition to special interim dividend of 165p per share already declared, (H1 2015: 17p)
OPERATIONAL HIGHLIGHTS
-- Business model repositioned with sale of ELG sub-prime unsecured personal loan business and the closure of the basic current account product
-- Customer deposits increased to GBP1,042.6m; a 24.8% increase on H1 2015: GBP835.1m -- Total customer numbers increased to 608,891; a 35.3% increase on H1 2015: 449,949*
Overall loan book increased to GBP1,128.3m; a 51.0% increase on H1 2015: GBP747.0m*. Within the current loan book there is minimal commercial property lending, no regulated BTL mortgage lending and the average life of the total portfolio is less than 30 months.
*excluding ELG.
-- Loan exposure in unsecured personal loan sector reduced -- Lending to house builders closely managed with overall LTGDV of portfolio 56% -- High levels of customer satisfaction as measured by FEEFO -- Invoice Finance business trading profitably within 2 years of commencement.
Sir Henry Angest, Chairman, said:
"For many decades Secure Trust Bank has adopted a prudent approach to risk management. The results announced today demonstrate the value of this long term thinking. The post-tax profits of GBP129.1 million are a record level of profit which has substantially increased the bank's capital and liquidity reserves and provides a firm foundation for the next phase of the Group's development as a Main Market listed business."
Paul Lynam, Chief Executive, said:
"I am pleased with the outstanding progress Secure Trust Bank has made in the first six months of 2016. We have continued to achieve high levels of customer satisfaction and attracted more than a net 6,000 new customers per week. We reshaped the business model and took a more defensive position ahead of the EU referendum via the sale of the Everyday Loans business and by very closely managing our lending exposures to house builders. The Group having achieved a record level of total profit before tax of GBP131.8 million and a very healthy 54% year on year increase in adjusted interim profits before tax is now well positioned to carefully navigate the evolving post Brexit economic environment and to pursue our strategic priorities."
This announcement together with the associated investors' presentation are available on https://www.securetrustbank.com/investor-relations/results-presentations.
Hot Features
Premium
Enquiries:
Secure Trust Bank PLC
Paul Lynam, Chief Executive
Officer
Neeraj Kapur, Chief Financial
Officer 0121 693 9100
Canaccord Genuity Limited
(Nominated Adviser) Sunil
Duggal 020 7665 4500
Canaccord Genuity Limited
(Joint Broker)
Roger Lambert 020 7523 8000
Stifel Nicolaus Europe Limited
(Joint Broker) Robin Mann
Gareth Hunt
Stewart Wallace 020 7710 7600
Bell Pottinger
Dan de Belder
Aarti Iyer 0203 772 2561
Chairman's statement
Secure Trust Bank PLC has traded successfully for over 64 years. Our history shows we take a long term perspective and do not prioritise short term profits over longer term sustainability. To be clear, we are prepared to take risks if justified by the associated reward as demonstrated by our recent results, but faced with highly unpredictable outcomes we will always take a prudent approach. This philosophy is a key factor in our longevity.
During the second half of 2015 the Board identified the EU referendum as a pivotal moment for the UK economy. We set a strategy to mitigate any potential shocks arising from a 'Brexit' vote and to position ourselves to continue to grow in a post EU environment. The diligent execution of this strategy has resulted in today's announcement of a total profit after tax for the first half of 2016 of GBP129.1 million. These profits have further increased our strong capital and liquidity positions which provide a firm foundation for the Group's next phase of development.
The project to seek to move from the Alternative Investment Market to a Premium Listing on the Main Market of the London Stock Exchange is progressing well. Stifel are acting as our Sponsor and Clifford Chance LLP have been appointed as our legal advisers. We expect to complete this before the end of 2016 and will provide further updates as appropriate.
Associated with the move to the Main Market, I announced that I would retire as Chairman once a new Chair had been identified. I am delighted to advise that the Board has nominated Lord Forsyth of Drumlean as my successor. He has been a director of the Company since 2014. The Board consider Michael has the right mix of skills and experience to steer the group through the coming years. His appointment has been discussed with a number of the larger institutional shareholders who are also supportive. The appointment is subject to regulatory approval and I will remain as Chairman until this is forthcoming. Thereafter I will move to a non-executive role and look forward to continuing to contribute in that capacity as the group grows and develops.
The Board proposes to pay an interim dividend of 17p per share (Interim 2015: 17p) in respect of the six months ending 30 June 2016. This will be paid on 23 September 2016 to shareholders on the register as at 26 August 2016. This interim dividend is in addition to the special dividend of 165 pence per share payable on 27 July 2016. (The Group's shares trade ex-dividend in respect of this special dividend).
I would like to take this opportunity, on behalf of my Board, to thank all of our employees for their professionalism, commitment and hard work that are helping us to achieve strong growth and consistently high levels of customer satisfaction.
STB will, as ever, continue to exercise prudence in the management of its business. Given the resources at our disposal, the flexibility of our business model and the potential for HM Government, free of interference from the EU, to create a more proportionate approach to the regulation of small banks, we face the long term future with optimism.
Chief Executive's statement
The first half of 2016 has been a transformational period for the Secure Trust Bank Group. We are very pleased with the announcement of a record level of profit after tax of GBP129.1 million. I commend my colleagues and fellow directors for all their hard work over this very demanding period. We could not have grown the portfolio, repositioned the business model and delivered excellent customer service levels without their continuing commitment and professionalism.
As the interim period ended, the EU referendum result created significant uncertainty. It is pertinent to note that over the last 64 years, STB has successfully traded through previous periods of economic turbulence. The profits announced today have generated significant increases in our capital and liquidity positions. This provides the confidence and resources to continue supporting our customers and business partners through our lending activities as matters evolve.
Longer term sustainability not short term profits
In my equivalent statement last year I noted that the proposed EU referendum had the potential to create uncertainty. We kept this matter under continual review and in the second half of last year we resolved to adopt a defensive stance. Specific actions included:
-- Conclusion of the sale of our Everyday Loans subprime unsecured personal loans business. This generated a very substantial one off profit whilst also removing the bulk of our exposure to the unsecured personal loan sector.
-- Curtailment of net lending growth to residential housing developers, especially in Central London.
-- Increase in the proportion of funding held in the form of unbreakable fixed term fixed rate deposits.
-- Deferral of launch of UK residential mortgage proposition.
-- Ensuring the average life of the bank's total loan book remained very short at less than 30 months.
Earlier this month the Financial Policy Committee (FPC) of the Bank of England (BoE) published their latest quarterly stability report. This is the first report published since the EU referendum. It flags a wide range of uncertainties and risks facing the UK economy. These include the commercial property market becoming stretched and the risk that buy to let (BTL) landlords could act in a way to amplify the pro-cyclical housing market by selling properties in a falling market.
Investors will be well aware of STB's cautious approach to Commercial Property Lending. Our lending appetite and policies are very restrictive. Overall our exposure to the commercial property market amounts to GBP31 million. This is spread across a number of counterparties and properties. The majority of this lending is in fact secured and risk assessed against residential property. However as the properties incorporate small elements of commercial activity, the overall loan exposure is classified as commercial lending, an example being the construction of apartments above a ground floor shop in a town centre location.
We have been very clear that we had deferred our planned entry into the UK residential mortgage market until after the EU referendum and in any event had no plans to enter the regulated BTL mortgage market. Our stance was the polar opposite of many lenders who rapidly grew their regulated BTL mortgage lending in Q1 2016 as landlords rushed to complete transactions before the stamp duty changes in April 2016.
The latest stability report, not for the first time, noted the FPC's unease with high levels of unsecured personal loan (UPL) lending. Investors will recall that on a number of occasions I have expressed concerns about what I considered to be unsustainable trends in this sector with some lenders offering medium term UPL at lower margins than those charged for secured mortgage lending. Taking these observations into account we substantially reduced our exposure to the unsecured personal loan market via the sale of Everyday Loans.
Overall we consider our balance sheet to be well positioned to deal with the challenges ahead and potential opportunities that may arise.
Robust Capital and Liquidity positions
The Bank's capital and funding positions remain robust.
Our Common Equity Tier one ratio was 20.1% as at 30 June 2016 compared to 15.0% at the same point last year. Our overall leverage ratio was 15.8% (2015: 11.9%).
Secure Trust Bank has continued to fund its lending activities primarily from customers' deposits. Our loan to deposit ratio was 108% at 30 June 2016, which compares to 102% at 30 June 2015. The higher ratio is a product of the bank utilising the surplus liquidity arising from the Everyday Loans sale in preference to raising additional interest bearing deposits during the second quarter of 2016. Usage of the Funding for Lending Scheme has increased modestly from GBP26 million to GBP36 million, albeit this remains a nominal 3% of total lending balances. We have no reliance for funding from wholesale or interbank markets. The Bank has continued broadly to match fund its customer lending with customer deposits. This strategy seeks to mitigate maturity transformation and interest basis risks. During the last six months we increased the proportion of fixed term fixed rate funding lest a 'Brexit' vote triggered a liquidity squeeze. Customer demand for our deposit products remains very strong and we are very pleased to note that the majority of customers with maturing medium term savings bonds chose to reinvest their funds into deposit products with us.
Lending activities
Consistent with the statements above, our focus over the last six months has been to position the loan book more defensively ahead of the EU referendum. The successful conclusion of the Everyday Loans sale in April resulted in receiving repayment in full of our funding of GBP117.9 million of unsecured personal loans. We have also curtailed net lending to UK house builders during this period whilst continuing to support our proven customers. Overall therefore net customer lending as at 30 June 2016 of GBP1,128.3 million represents 32% growth over the same period in 2015. Adjusting for the divestment of Everyday Loans, customer lending balances are 17% higher than as at 31 December 2015 and 51% higher than at 30 June 2015.
The total volume of new loans, excluding EverydayLoans group, written in H1 2016 was GBP462.5 million representing a 22% increase on the GBP379.4 million for the same period last year. This overall growth rate is a function of our pre-referendum appetite in certain lending markets.
Motor Finance balances have grown to GBP205.6 million from GBP152.3 million a year ago and GBP165.7 million as at 31 December 2015 representing 35% and 24% growth respectively.
Personal unsecured lending balances, excluding EverydayLoans group, have contracted to GBP64.6 million from GBP83.6 million a year ago and GBP74.3 million as at 31 December 2015 representing a change of -23% and -13% respectively. This reflects our cautious stance towards this particular market at this time.
Retail Point of Sale balances have grown to GBP271.7 million from GBP163.4 million a year ago and GBP220.4 million as at 31 December 2015 representing 66% and 23% growth respectively.
As at 30 June 2016 Real Estate Finance lending balances have grown to GBP361.7 million from GBP266.3 million a year ago and GBP368.0 million as at 31 December 2015 representing 36% growth and a fall of 2% respectively.
As at 30 June 2016 Asset Finance lending balances have grown to GBP112.3 million from GBP30.4 million a year ago and GBP70.7 million as at 31 December 2015 representing 59% growth since the year end.
As at 30 June 2016 Invoice Finance lending balances have grown to GBP54.5 million from GBP15.7 million a year ago and GBP29.3 million as at 31 December 2015 representing 86% growth since the year end.
We have not compromised our acceptance criteria or lending standards to achieve net growth and have actively managed the composition of the book to manage risk. As expected, impairments as a percentage of lending balances in Motor and Retail Finance have increased reflecting the increased levels of higher risk lending in Motor and interest bearing lending in Retail Finance. Impairments as a percentage of lending balances in Unsecured Personal Lending (excluding Everyday Loans) are broadly unchanged reflecting the absence of a change in the make-up of this book. In SME Lending impairment performance has been in line with management expectations. We continue to target a 30% return on equity in our lending operations.
Fee based services
The OneBill service remains closed for new business. Customer numbers continue to reduce in line with management expectations and ended the period at 20,494.
We have taken the decision to close our basic bank account offering. This has been heavily influenced by an agreement between HM Government and the large High St banks whereby these banks will provide a fee free basic bank account to all customers. It is not equitable or right for us to continue to charge customers for a product they can now get for free elsewhere. The closure of this product line will be concluded by the year end. The nature of the product requires constant IT investment and consumes considerable management time and focus. Operational benefits will therefore arise following the closure but these are not expected to have a material impact on the bank's balance sheet or profit and loss account.
Our debt collection business, Debt Managers (Services) Limited, has traded profitably throughout the first half of 2016.
Strong customer relationships and ethics
We remain committed to providing straightforward transparent banking solutions to customers in a friendly and personal manner. Customer satisfaction levels, as measured by the independent FEEFO customer feedback forum, are consistently in the 95(th) centile. Customer numbers continue to grow and are over 35% higher than at 30 June last year at 608,891 (2015: 449,949, excluding EverydayLoans group).
During the period we once again received reaffirmation of the Customer Service Excellence Award (an award introduced in 2010 by the Cabinet Office to replace the Kite Mark). We are the only bank to hold this award.
Navigating current markets
With the benefit of hindsight the cautious stance adopted over recent periods has proved to be appropriate. As a result we have virtually no exposure to the sorts of property lending the FPC has expressed reservations about and are one of the most well capitalised banks in the UK. In line with our strategy a greater proportion of the Bank's balance sheet lending is now in secured lending assets. As at 30 June 2016 47% of the lending portfolio is secured by UK assets (2015: 37%).
STB does have exposure to the UK property market which is almost exclusively residential property lending. During the last cycle average residential property prices experienced a 24% peak to trough swing. By contrast average commercial property prices saw a 44% swing. STB's credit policy is clearly informed by such data hence our stance to limit commercial property lending other than in exceptional circumstance and restricting residential property lending to sensible leverage ratios.
Our current policy is not to offer loans exceeding 60% loan to gross development value (LTGDV) to residential house builders. We will look to support residential developers and may continue to offer support up to these policy levels. This will however be the preserve of those customers with an excellent track record. Policy will be continually reviewed in light of the changing market and we will continue to exercise prudence. We have limited appetite to fund developments in Central London and are not looking to write loans in respect of properties in Central London exceeding 50% LTGDV. We will continue to provide residential investment lending to corporates and expect this will be at LTV levels comparable to those already on the book.
As at 30 June 2016, STB's property exposures were as follows:
Category Lending balances LTV / LTGDV*
GBPmillions %
------------------------- ----------------- -------------
Residential Development 161.4 56
------------------------- ----------------- -------------
Residential Investment 169.1 58
------------------------- ----------------- -------------
Commercial Investment 31.2 50
------------------------- ----------------- -------------
* Data assumes lending lines are drawn to maximum of available limits and therefore overstate the actual portfolio LTVs / LTGDVs as many customers have not fully drawn their lines.
The rest of the business is relatively short term consumer and asset finance lending. As a matter of course, we regularly refine our credit criteria and pricing to take into account the current and likely future economic conditions. We have done this as a result of the EU referendum outcome and will keep our credit appetite and associated risk based pricing under review going forward.
We intend to fine tune our residential mortgage proposition in light of developments and will progress the launch of this product cautiously once the outlook for the UK owner occupied mortgage market becomes clearer.
Evolving competitive landscape
Markets are likely to be volatile and lacking in confidence until greater clarity and certainty is available. In the meantime the current UK economic fundamentals are not bad. The market is absolutely awash with liquidity and banks are holding dramatically more capital than they were ahead of the last downturn. I do not envisage a liquidity or solvency crisis which could develop into a deep prolonged credit crunch and the negative consequences that would bring. There is record employment and unemployment is less than 5%. There remains a high job vacancy rate. Net take home pay has been rising as employers compete for staff in a low inflation environment. Interest rates are likely to be low for longer. If base rates fall, this will help to counteract the upward pressure on fuel costs arising from the depreciation of sterling. There remains a chronic shortage of housing and an urgent need for much more house building to address this.
My view is that the competitive landscape is likely to undergo a significant adjustment. If base rates fall, this will further depress the net interest margins of the systemic banks which continue to control over 80% of the UK lending market. In turn their profitability and thus capital generation will reduce. I expect they will respond by cutting costs by reducing staff numbers which will impact on customer service, especially in SME markets. The Competition and Markets Authority noted that residential mortgage lending is the most profitable activity of the systemic banks. Faced with the option of doing (sub 50%) mortgage lending which generates an average 3% risk weighted asset or SME lending which generates an average 77% risk weighted asset, I expect the systemic banks will repeat their behaviour last time around and retrench from higher risk weighted asset lending.
I believe this will impact non-bank lenders who rely on wholesale funding from larger banks in order to on lend to their customers. This sector has been growing in recent years and competing increasingly aggressively on credit standards and price. I expect these trends to possibly reverse as newer non-bank lenders will find it increasingly difficult to access wholesale markets and when they can they are likely to have to pay more.
It would not surprise me to see some non-systemic banks and building societies curtail their lending activities. The latter are exposed to net interest margin compression risks in a falling base rate environment.
Taking all of this into account, I envisage the competitive landscape resembling that during 2010-2014 when despite a weak and at times shrinking economy, STB was able to cherry pick the lending assets it wanted to write and generate strong profitability. My current assessment is that the evolving market dynamics will allow us to continue to focus in specialist areas in our targeted way by providing customers with excellent service, suitably priced for our assessment of risk.
Obviously a period of heightened uncertainty will inform our M&A thinking. We are interested in opportunities which we believe are compelling and recent valuation adjustments are noted. Investors will be aware that when non-bank lenders last became funding constrained, this provided acquisition opportunities for STB.
Longer term, being outside of EU should be to the benefit of the smaller banks and building societies. HM Government and the Bank of England should be able to create the more proportionate approach to the regulation of small banks they have been calling for as they will not need to abide by directives from the European Banking Authority (EBA). As matters stand smaller lenders cannot compete effectively or sustainably in the lower risk, lower loan to value end of the market because of their funding and capital disadvantages. The disclosures by the FPC earlier this month show that they understand that these dynamics serve to force the smaller players into the higher end of the LTV spectrum. The good news is that shorn of the shackles of the EBA, HM Government will be able to create a truly level competitive playing field in UK banking. This will help smaller banks and building societies to compete more effectively across the whole market with the 6 biggest firms which continue to control 80% of all lending. This will allow the smaller lenders to write lower LTV lending and ultimately benefit consumer and SME customers via creating competition and choice.
Outlook
In the shorter term, we remain fully committed to supporting our customers during this current period of economic uncertainty, just as we have supported customers for over six decades. Our approach to the market will reflect evolving economic conditions and our credit appetite will be kept under review. I expect market dynamics to favour a well-funded bank with strong capital resources and a short duration loan book. As such we expect to continue to write business in a targeted manner with due respect to risk and pricing, while we progress our strategic priorities.
In the longer term I can see more opportunities than threats arising from Brexit. I expect the EU exit negotiations to have a much greater impact on the large banks than the challenger banks exclusively focussed in the UK. I also expect the UK Government to act consistently with their recent calls and adopt a more proportionate approach to the regulation of smaller, non-systemic banks like Secure Trust Bank. Such an outcome would further increase our addressable market and with it the strategic opportunities available to us.
Consolidated statement of comprehensive income
Six months ended 30 June
Note 2016 2016 2016 2015 2015 2015
Continuing Discontinued Total Continuing Discontinued Total
GBPmillion GBPmillion GBPmillion GBPmillion GBPmillion GBPmillion
----------------------------- ----- ----------- ------------- ----------- ----------- ------------- -----------
Interest receivable
and similar income 60.6 13.2 73.8 44.2 20.0 64.2
Interest expense and
similar charges (11.1) (2.1) (13.2) (8.3) (1.5) (9.8)
----------------------------- ----- ----------- ------------- ----------- ----------- ------------- -----------
Net interest income 49.5 11.1 60.6 35.9 18.5 54.4
----------------------------- ----- ----------- ------------- ----------- ----------- ------------- -----------
Fee and commission
income 8.7 0.1 8.8 8.3 1.1 9.4
Fee and commission
expense (0.9) (0.1) (1.0) (1.4) (0.2) (1.6)
----------------------------- ----- ----------- ------------- ----------- ----------- ------------- -----------
Net fee and commission
income 7.8 - 7.8 6.9 0.9 7.8
----------------------------- ----- ----------- ------------- ----------- ----------- ------------- -----------
Operating income 57.3 11.1 68.4 42.8 19.4 62.2
----------------------------- ----- ----------- ------------- ----------- ----------- ------------- -----------
Net impairment losses
on loans and advances
to customers (13.3) (2.6) (15.9) (8.0) (3.2) (11.2)
Operating expenses (31.5) (6.0) (37.5) (24.4) (10.6) (35.0) ----------------------------- ----- ----------- ------------- ----------- ----------- ------------- ----------- Profit before income tax 2 12.5 2.5 15.0 10.4 5.6 16.0 Income tax expense (2.2) (0.5) (2.7) (2.0) (1.1) (3.1) ----------------------------- ----- ----------- ------------- ----------- ----------- ------------- ----------- Profit after income tax 10.3 2.0 12.3 8.4 4.5 12.9 Gain recognised on disposal - 116.8 116.8 - - - ----------------------------- ----- ----------- ------------- ----------- ----------- ------------- ----------- Profit after income tax and total comprehensive income for the period 10.3 118.8 129.1 8.4 4.5 12.9 ----------------------------- ----- ----------- ------------- ----------- ----------- ------------- ----------- Profit and total comprehensive income attributable to equity holders of the Company 10.3 118.8 129.1 8.4 4.5 12.9 ----------------------------- ----- ----------- ------------- ----------- ----------- ------------- ----------- Earnings per share for profit attributable to the equity holders of the Company during the period (expressed in pence per share) Basic earnings per share 3 57.0 652.9 709.9 46.3 24.5 70.8 ----------------------------- ----- ----------- ------------- ----------- ----------- ------------- ----------- Diluted earnings per share 3 55.9 640.8 696.7 45.5 24.0 69.5 ----------------------------- ----- ----------- ------------- ----------- ----------- ------------- -----------
Consolidated statement of financial position
At 30 June
2016 2015
Note GBPmillion GBPmillion
------------------------------------------ ----- ----------- -----------
Assets
Cash and balances at central banks 141.8 100.4
Loans and advances to banks 4 19.1 21.2
Loans and advances to customers 5 1,128.3 852.3
Debt securities held-to-maturity 19.8 7.0
Investment securities available-for-sale 13.7 -
Property, plant and equipment 8.5 8.7
Intangible assets 7.0 7.5
Deferred tax assets 0.9 0.2
Other assets 6.2 5.5
------------------------------------------ ----- ----------- -----------
Total assets 1,345.3 1,002.8
------------------------------------------ ----- ----------- -----------
Liabilities and equity
Liabilities
Due to banks 15.0 -
Deposits from customers 1,042.6 835.1
Current tax liabilities 0.2 5.6
Dividend payable 30.0 -
Other liabilities 29.1 33.7
------------------------------------------ ----- ----------- -----------
Total liabilities 1,116.9 874.4
------------------------------------------ ----- ----------- -----------
Equity attributable to owners of the
Company
Share capital 7.3 7.3
Share premium 79.3 79.3
Retained earnings 143.7 41.6
Available-for-sale reserve (2.1) -
Revaluation reserve 0.2 0.2
------------------------------------------ ----- ----------- -----------
Total equity 228.4 128.4
------------------------------------------ ----- ----------- -----------
Total liabilities and equity 1,345.3 1,002.8
------------------------------------------ ----- ----------- -----------
Consolidated statement of changes in equity
Share Share Revaluation Available-for-sale Retained
capital premium reserve reserve earnings Total
GBPmillion GBPmillion GBPmillion GBPmillion GBPmillion GBPmillion
------------------------------- ----------- ----------- ------------ ------------------- ----------- -----------
Balance at 1 January 2016 7.3 79.3 0.2 - 54.4 141.2
Total comprehensive income
for the period
Profit for the six months
ended 30 June 2016 - - - - 129.1 129.1
Movement in available-for-sale
reserve - - - (2.1) - (2.1)
Total comprehensive income
for the period - - - (2.1) 129.1 127.0
------------------------------- ----------- ----------- ------------ ------------------- ----------- -----------
Transactions with owners,
recorded directly in equity
Contributions by and
distributions
to owners
Final dividend relating
to 2015 - - - (10.0) (10.0)
Special dividend relating
to 2016 - - - (30.0) (30.0)
Charge for share based
payments - - - 0.2 0.2
------------------------------- ----------- ----------- ------------ ------------------- ----------- -----------
Total contributions by
and distributions to owners - - - (39.8) (39.8)
------------------------------- ----------- ----------- ------------ ------------------- ----------- -----------
Balance at 30 June 2016 7.3 79.3 0.2 (2.1) 143.7 228.4
------------------------------- ----------- ----------- ------------ ------------------- ----------- -----------
Share Share Revaluation Available-for-sale Retained
capital premium reserve reserve earnings Total
GBPmillion GBPmillion GBPmillion GBPmillion GBPmillion GBPmillion
------------------------------- ----------- ----------- ------------ ------------------- ----------- -----------
Balance at 1 January 2015 7.3 79.3 0.2 - 38.1 124.9
Total comprehensive income
for the period
Profit for the six months
ended 30 June 2015 - - - - 12.9 12.9
Total comprehensive income
for the period - - - - 12.9 12.9
------------------------------- ----------- ----------- ------------ ------------------- ----------- -----------
Transactions with owners,
recorded directly in equity
Contributions by and
distributions
to owners
Final dividend relating
to 2014 - - - - (9.5) (9.5)
Charge for share based
payments - - - - 0.1 0.1
------------------------------- ----------- ----------- ------------ ------------------- ----------- -----------
Total contributions by
and distributions to owners - - - - (9.4) (9.4)
------------------------------- ----------- ----------- ------------ ------------------- ----------- -----------
Balance at 30 June 2015 7.3 79.3 0.2 - 41.6 128.4
------------------------------- ----------- ----------- ------------ ------------------- ----------- -----------
Consolidated statement of cash flows
Six months
ended
30 June
2016 2015
Note GBPmillion GBPmillion
-------------------------------------------------- ------ ----------- -----------
Cash flows from operating activities
Profit for the six months 10.3 8.4
Adjustments for:
Income tax expense 2.2 2.0
Depreciation of property, plant and equipment 0.3 0.2
Amortisation of intangible assets 0.7 0.8
Impairment losses on loans and advances 13.3 8.0
Equity settled share based payment transactions 0.2 0.1
--------------------------------------------------- ----- ----------- -----------
Cash flows from operating profits before
changes in operating assets and liabilities 27.0 19.5
Changes in operating assets and liabilities:
- net increase in debt securities held
to maturity (16.0) -
- net (increase)/decrease in loans and
advances to banks (5.0) 24.3
- net increase in loans and advances
to customers (181.0) (226.4)
- net decrease in other assets 0.9 -
- net decrease in amounts due to banks (20.0) (15.9)
- net increase in deposits from customers 9.5 226.7
- net increase in other liabilities 2.9 0.4
Income tax paid (5.3) (0.5)
--------------------------------------------------- ----- ----------- -----------
Net cash (outflow)/inflow from operating
activities (187.0) 28.1
--------------------------------------------------- ----- ----------- -----------
Cash flows from investing activities
Net cash realised from the sale of EverydayLoans
group (net of selling costs and cash disposed) 209.9 -
Purchase of property, plant and equipment (0.3) (0.7)
Purchase of computer software (0.7) (0.6)
Net cash inflow/(outflow) from investing
activities 208.9 (1.3)
--------------------------------------------------- ----- ----------- -----------
Cash flows from financing activities
Dividends paid (10.0) (9.5)
--------------------------------------------------- ----- ----------- -----------
Net cash outflow from financing activities (10.0) (9.5)
--------------------------------------------------- ----- ----------- -----------
Net increase in cash and cash equivalents
- Continuing operations 11.9 17.3
Net increase/(decrease) in cash and cash
equivalents - Discontinued operations 6 0.7 (1.7)
Cash and cash equivalents at 1 January 143.3 106.0
--------------------------------------------------- ----- ----------- -----------
Cash and cash equivalents at 30 June 155.9 121.6
--------------------------------------------------- ----- ----------- -----------
Notes to the consolidated financial statements
1. Operating segments
The Group is organised into six main operating segments, which consist of the different products available, disclosed below:
Business finance
1) Real Estate Finance: investment and development loans secured by UK real estate.
2) Asset Finance: loans to small and medium sized enterprises to acquire commercial assets.
3) Commercial Finance: invoice discounting and invoice financing.
Consumer finance
4) Personal Lending: Unsecured consumer loans sold to customers via brokers and affinity partners.
5) Motor Finance: Hire purchase agreements secured against the vehicle being financed.
6) Retail Finance: Point of sale unsecured finance for in-store and online retailers.
Other
Other includes Current Account, OneBill, RentSmart, debt collection and a GBP30 million loan to Non Standard Finance PLC as part of their purchase of ELG (see note 6).
Management review these segments by looking at the income, size and growth rate of the loan books, impairments and customer numbers. Except for these items no costs or balance sheet items are allocated to the segments.
Net
impairment
Interest losses
receivable Fee Revenue on loans Loans
and and from and and
similar commission external advances advances
income income customers to customers to customers
Six months ended 30 GBPmillion GBPmillion GBPmillion GBPmillion GBPmillion
June 2016
------------------------- ------------ ------------ ----------- -------------- --------------
Business finance
Real Estate Finance 13.9 0.1 14.0 - 361.7
Asset Finance 3.5 - 3.5 0.2 112.3
Commercial Finance 0.6 1.1 1.7 - 54.5
Consumer finance
Personal Lending 5.9 - 5.9 2.2 64.6
Motor Finance 18.4 0.4 18.8 6.1 205.6
Retail Finance 15.4 1.2 16.6 4.8 271.7
Other 2.9 5.9 8.8 - 57.9
-------------------------- ------------ ------------ ----------- -------------- --------------
60.6 8.7 69.3 13.3 1,128.3
Discontinued operations
and assets held for
sale:
Personal Lending 13.2 0.1 13.3 2.6 -
-------------------------- ------------ ------------ ----------- -------------- --------------
73.8 8.8 82.6 15.9 1,128.3
------------------------- ------------ ------------ ----------- -------------- --------------
Net
impairment
Interest losses
receivable Fee Revenue on loans Loans
and and from and and
similar commission external advances advances
income income customers to customers to customers
Six months ended 30 GBPmillion GBPmillion GBPmillion GBPmillion GBPmillion
June 2015
------------------------- ------------ ------------ ----------- -------------- --------------
Business finance
Real Estate Finance 8.1 - 8.1 0.3 266.3
Asset Finance 0.6 - 0.6 - 30.4
Commercial Finance 0.1 0.4 0.5 - 15.7
Consumer finance
Personal Lending 7.0 - 7.0 2.3 83.6
Motor Finance 15.8 - 15.8 3.1 152.3
Retail Finance 9.6 0.7 10.3 2.3 163.4
Other 3.0 7.2 10.2 - 35.3
-------------------------- ------------ ------------ ----------- -------------- --------------
44.2 8.3 52.5 8.0 747.0
Discontinued operations
and assets held for
sale:
Personal Lending 20.0 1.1 21.1 3.2 105.3
-------------------------- ------------ ------------ ----------- -------------- --------------
64.2 9.4 73.6 11.2 852.3
------------------------- ------------ ------------ ----------- -------------- --------------
The 'other' segment above includes other products which are individually below the quantitative threshold for separate disclosure and fulfils the requirement of IFRS 8.28 by reconciling operating segments to the amounts reported in the financial statements.
The June 2016 impairment charge of GBP13.3 million relating to continuing operations includes an additional collective impairment charge of GBP1.2 million. This charge is not driven by the current performance of the loan book and relates to additional provision introduced due to the current unprecedented uncertainty in European and Global markets.
As interest expense, fee and commission expense and operating expenses are not aligned to operating segments for day to day management of the business and cannot be allocated on a reliable basis, profit by operating segment has not been disclosed.
All of the Group's operations are conducted wholly within the United Kingdom and geographical information is therefore not presented.
2. Underlying profit reconciliation
The profit before tax as reported in the Consolidated Statement of Comprehensive Income can be reconciled to the underlying profit for the year as follows:
Six months
ended 30
June
2016 2015
GBPmillion GBPmillion
------------------------------------------- ----------- -----------
Total profit before tax 15.0 16.0
Less: Profit before tax - Discontinued
operations (2.5) (5.6)
-------------------------------------------- ----------- -----------
Profit before tax - Continuing operations 12.5 10.4
Fair value amortisation 0.4 0.5
Share based incentive schemes 0.3 0.3
Net ABG management recharges 0.2 0.1
Current Account closure costs 0.1 -
Bonus payments made in respect of ELG 3.5 -
sale
Other items relating to ELG sale (0.8) -
Additional collective impairment charge 1.2 -
------------------------------------------- ----------- -----------
Underlying profit before tax - Continuing
operations 17.4 11.3
Underlying tax (3.1) (2.2)
-------------------------------------------- ----------- -----------
Underlying profit after tax - Continuing
operations 14.3 9.1
============================================ =========== ===========
Underlying basic earnings per share
(pence) 78.5 50.1
============================================ =========== ===========
3. Earnings per ordinary share
Earnings Earnings
per per
Profit Shares share Profit Shares share
2016 2016 2016 2015 2015 2015
GBPmillion Number Pence GBPmillion Number Pence
------------------------- ----------- ----------- --------- ----------- ----------- ---------
Basic
Continuing operations 10.3 18,191,894 57.0 8.4 18,191,894 46.3
Discontinued operations 118.8 18,191,894 652.9 4.5 18,191,894 24.5
Total 129.1 18,191,894 709.9 12.9 18,191,894 70.8
------------------------- ----------- ----------- --------- ----------- ----------- ---------
Diluted
Continuing operations 10.3 18,535,617 55.9 8.4 18,537,699 45.5
Discontinued operations 118.8 18,535,617 640.8 4.5 18,537,699 24.0
------------------------- ----------- ----------- --------- ----------- ----------- ---------
Total 129.1 18,535,617 696.7 12.9 18,537,699 69.5
------------------------- ----------- ----------- --------- ----------- ----------- ---------
Basic
Basic earnings per ordinary share are calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of Ordinary Shares in issue during the period.
Diluted
Diluted earnings per ordinary share are calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of Ordinary Shares in issue during the period, as noted above, as well as the number of dilutive share options in issue during the period.
The number of dilutive shares in issue at the period-end was 343,723, being based on the number of options granted of 460,419, the exercise price of GBP7.20 per option and the average share price during the period from 1 January to 30 June 2016 of GBP28.41. (2015: 345,805 dilutive shares in issue).
4. Loans and advances to banks
Included within loans and advances to banks are amounts placed with Arbuthnot Latham & Co., Limited, prior to 15 June 2016 a related company, of GBP5.0 million (31 December 2015: GBP5.3 million; 30 June 2015: GBP10.0 million). The current period amount of GBP5.0 million is not included in cash and cash equivalents.
5. Loans and advances to customers
At 30 June
2016 2015
GBPmillion GBPmillion
------------------------------------------ ----------- -----------
Gross loans and advances 1,172.4 893.0
Less: allowances for impairment on loans
and advances (44.1) (40.7)
-------------------------------------------- ----------- -----------
1,128.3 852.3
------------------------------------------ ----------- -----------
6. Discontinued operations
On 4 December 2015, the Bank agreed to the conditional sale of its non-standard consumer lending business, ELG, which comprises Everyday Loans Holdings Limited and subsidiary companies Everyday Lending Limited and Everyday Loans Limited, to Non Standard Finance PLC (NSF). Consideration received on completion comprised GBP106.9 million in cash and GBP16.3 million in NSF ordinary shares. The Disposal completed on 13 April 2016 and, on completion, NSF repaid intercompany debt of GBP108.1 million to STB. After selling costs of GBP2.7 million, this resulted in a gain recognised on disposal of GBP116.8 million. In addition, staff costs of GBP3.5 million were incurred in respect of the sale, which are included in operating expenses.
Under the Bank's ownership, ELG has achieved impressive growth, within the constraints imposed upon it as part of a highly regulated banking group. An unsolicited approach revealed that NSF was prepared to pay an attractive valuation for ELG.
The net effect of the Disposal was therefore to significantly increase the equity base of Group to GBP228 million, after declaring the special dividend of GBP30 million. This substantially improved STB's capital resources and broadened the range of strategic options available to it.
The Disposal improved the Group's CET1 ratio and Leverage ratios to 20.1% and 15.8% respectively, at 30 June 2016 (from 15.0% and 11.9% on an unadjusted basis as at 30 June 2015). This has generated a substantial capital surplus and significant headroom over PRA minimum leverage requirements, which supports the strong growth in lending of the Group.
While in the short term the Disposal is expected to reduce earnings, given the disposal of ELG's profit streams, the Board is confident that the proceeds can be reinvested to accelerate the Group's growth prospects and secure new income streams.
Details of the net assets disposed of and consequential gain recognised on disposal and cash flow of discontinued operations is set out below.
Assets and liabilities sold on 13 April
2016 GBPmillion
----------------------------------------- -----------
Assets
Loans and advances to banks 2.4
Loans and advances to customers 117.9
Property, plant and equipment 0.5
Intangible assets 1.2
Deferred tax assets 0.4
Other assets 0.8
-------------------------------------------- -----------
Total assets 123.2
-------------------------------------------- -----------
Liabilities
Current tax liabilities 4.0
Other liabilities 7.4
-------------------------------------------- -----------
Total liabilities 11.4
-------------------------------------------- -----------
Net assets disposed of 111.8
-------------------------------------------- -----------
Consideration
Cash 215.0
NSF shares 16.3
-------------------------------------------- -----------
231.3
----------------------------------------- -----------
Selling costs (2.7)
-------------------------------------------- -----------
Gain recognised on disposal 116.8
-------------------------------------------- -----------
Six months
ended
30 June
2016 2015
Cash flow statement GBPmillion GBPmillion
----------------------------------------------- ----------- -----------
Cash flows from operating activities
Profit for the six months 2.0 4.5
Adjustments for:
Income tax expense 0.5 1.1
Depreciation of property, plant and equipment - 0.1
Amortisation of intangible assets - 0.5
Impairment losses on loans and advances 2.6 3.2
Cash flows from operating profits before
changes in operating assets and liabilities 5.1 9.4
Changes in operating assets and liabilities:
- net increase in loans and advances
to customers (6.2) (14.7)
- net increase in other assets (0.3) (0.2)
- net increase in other liabilities 2.1 4.1
Income tax paid - (0.1)
------------------------------------------------- ----------- -----------
Net cash inflow/(outflow) from operating
activities 0.7 (1.5)
------------------------------------------------- ----------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment - (0.2)
Net cash outflow from investing activities - (0.2)
------------------------------------------------- ----------- -----------
Net increase/(decrease) in cash and cash
equivalents 0.7 (1.7)
Cash and cash equivalents at 1 January 1.7 1.7
------------------------------------------------- ----------- -----------
Cash and cash equivalents at 13 April 2.4 -
------------------------------------------------- ----------- -----------
7. Basis of reporting
The interim financial statements have been prepared on the basis of accounting policies set out in the Group's 2015 Annual Report and Accounts as amended by standards and interpretations effective during 2016 and in accordance with IAS34 'Interim Financial Reporting'. The Directors of the Company do not consider the fair values of the assets and liabilities presented in these interim financial statements to be materially different from their carrying values.
The statements were approved by the Board of Directors on 18 July 2016 and are unaudited. The interim financial statements will be posted to shareholders and copies may be obtained from The Company Secretary, Secure Trust Bank PLC, One Arleston Way, Solihull, West Midlands, B90 4LH.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KMGMNVRLGVZM
(END) Dow Jones Newswires
July 19, 2016 02:00 ET (06:00 GMT)
1 Year SECURE TRUST BANK Chart |
1 Month SECURE TRUST BANK Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
