Secure Trust Bank Share Discussion Threads

[rimau1] 07/1/2022 15:49

Time Finance is a much smaller peer to STB that i have also recently invested in. Low rating, significant discount to TBV and like STB should benefit from any form of post covid bounce with a rising interest rate environment providing a helpful tailwind. Niche loan origination is a nice sector play for 2022 IMO.

[rabiddog] 16/12/2021 15:28

Yep good time to buy I think. Going to be a good period for well run finance houses -STB one of the best.

[rimau1] 16/12/2021 13:42

Well with interest rates finally rising STB have timed their growth phase well. Margins will have a nice tailwind. I added on the dip below £1300 yesterday, probably picked up RCturners stock!

[rcturner2] 10/12/2021 10:05

I sold my shares in STB yesterday. Good luck to all who remain.

[tole] 06/12/2021 19:08

https://masterinvestor.co.uk/equities/small-cap-comment-featuring-mrl-town-mtc-and-crc/Secure Trust Bank (LON:STB) – almost half 'fair value'This Solihull-based consumer and commercial banking specialist is expecting to see the next year slashing its pre-tax profits from an estimated £52.7m for the year to the end of this month, to just £36.3m.That is due to loan impairments and provisioning.Earnings are expected to be around 226.5p this year and falling back to 156.6p per share next year, while the dividend could fall severely from 56.6p to 39.1p per share.Even so, analysts Pedro Fonseca and Andrew Mitchell at Edison Investment Research estimate that the group's shares have a fair value is 2234p against the current 1330p.The shares touched 1420p in early August this year, so we may not have to wait too long for my price objective to be scored.The Q4 Trading Update is due next month.

[tole] 26/11/2021 06:25

Tempus buy recommendation.Secure Trust BankBank stocks had become synonymous with beefy dividends until they were forced by the regulator to hold back cash during last year's turmoil. Shareholder returns are back on the table but the premium ratings that had accompanied shares in small banks are not, which translates into some juicy dividend yields in the sector.Take Secure Trust Bank, for example. Its shares trade at about a 20 per cent discount to forecast tangible net asset value at the end of December, despite it announcing that pre-tax profits this year will be at the top end of analysts' forecasts.However, the Solihull-based bank is tempering dividend payments with holding more capital to fuel an acceleration in its loan book growth to a compound annual rate of 15 per cent over the medium term against last year's level. In August it set out a new dividend target to pay 25 per cent of earnings, replacing a previously progressive policy, under which dividends have in some years exceeded the new threshold.That doesn't have to be a bad thing for income investors. Hitting its new lending target could have a benevolent effect on earnings if it can keep impairments in check. Growth will come mainly from its existing lending lines: retail point of sale and motor finance to consumers and residential development and invoice lending to businesses.Like its small banking peers, Secure has been pushing to expand the number of its retail banking customers, amassing more deposits that provide a lower cost of funding for the bank., helping to fuel a rise in the retail finance loan book.There's natural risk associated with customers defaulting on repayments, but Secure's record on that is sound. Impairments this year will be lower than the market consensus of £12.9 million and analysts at Peel Hunt, the broker, estimate such charges for this year at £1.2 million, or a cost of risk of 0.05 per cent, compared with 2.1 per cent last year.After dividends were reinstated at the half-year point, this year's total payment is forecast by analysts to be 50.9p a share, equivalent to a potential yield of 3.9 per cent. That's an income that looks more secure.Advice BuyWhy The shares look good value and there is a generous dividend on offer

[rcturner2] 17/11/2021 14:35

Not my sort of thing. Far too much political risk.

[brucie5] 17/11/2021 12:29

RC have you taken a look at IDHC? Or are you put off by its geography?

[rcturner2] 16/11/2021 10:08

This is a good and well run business that has navigated the pandemic very sensibly.

[brucie5] 16/11/2021 09:54

The two year gap goes up to 1600.

[rimau1] 16/11/2021 08:30

Unemployment now back at pre pandemic levels and base rates to gradually rise, its perfect market conditions to grow a profitable loan book.

[rimau1] 11/11/2021 07:45

Arbuthnott have sold their remaining 2% in STB yesterday. I wonder who snapped them up, i have placed a cheeky limit order for any short term price volatility

[johnhemming] 06/11/2021 18:51

I thought the presentations were quite good. (at the CMD)

[miti 1000] 03/11/2021 10:00

Capital markets day started for those who want to listen in via. zoom link in RNS.

[rcturner2] 03/11/2021 07:14

It certainly looks that way, a great statement. They have to hit that target and make sure that it leads to a corresponding growth in the bottom line.

[rimau1] 03/11/2021 07:13

A new medium term loan book growth target of 15% CAGR has been announced. This confirms to me that STB having offloaded non core loan books is ready to enter a significant growth phase. For me it also confirms that provisioning will be further reduced at the year end results. I see a clear road ahead and a highly profitable agile operation!

[rimau1] 27/10/2021 15:36

In the budget today improving UK economic outlook and unemployment forecasts are now 5.5% for 2022 versus original assumption of 11%, this will help banks lower the prudent covid impairment provisioning and we’ll see further releases in the full year results.

[tole] 22/10/2021 07:02

Secure Trust Bank one of the 'most undervalued' stocksChallenger lender Secure Trust Bank (STB) is one of the 'most undervalued' stocks covered by Shore Capital.Analyst Gary Greenwood retained his 'buy' recommendation and 'fair value' target price of £19.20 on the stock, which was up 1.3%, or 15p, at £11.65 on Thursday, after results for the latest quarter showed 'acceleration in new business lending activity and loan book growth'.Overall, new business was up 20% quarter-on-quarter, with particularly strong growth in business finance, which was up 121% quarter-to-quarter. Vehicle finance had a record month following a period of heavy investment in systems, and consumer finance volumes were maintained.Greenwood said that 'risk is skewed modestly to the upside'. He continues to view the bank 'as one of the most undervalued stocks in our coverage universe with the shares currently trading on the full year 2021 price/net asset value of just 0.7x despite management targeting a 14-16% return on equity over the medium term'.

[rcturner2] 21/10/2021 07:59

Thanks rimau

[rimau1] 21/10/2021 07:56

Contrast this with Arbuthnots update where they blamed the current chip shortage for a slow down in vehicle finance! STB continues to deliver and i agree share price action is underwhelming.
RCTurner - banks hold excess (internal) capital on their balance sheets to fund growth and can also tap the capita markets for liquidity as part of treasury management functions.

[rcturner2] 21/10/2021 07:40

Yes great update. I have a (probably) idiot question though. Since the loan book is much larger than the deposits how is STB plugging that gap? Where is the rest of the cash to loan out coming from?

[this_is_me] 21/10/2021 07:32

Everything is looking good and the share price performance remains a mystery.

David McCreadie, Chief Executive Officer:

"I am delighted with both our operational and financial performance during this period. The Group experienced improved trading activity during the third quarter and new business lending grew very strongly as a result. We have delivered growth in both consumer and business finance and are well positioned to continue to build on this momentum. The Group continues to trade in line with the revised guidance provided in the 12 July 2021 trading update. Our proven agility to navigate economic uncertainties while targeting attractive niche lending sectors provides further confidence in the future . "

[rimau1] 07/10/2021 12:37

Trading update this month should be a welcome catalyst here. I would also add to the Shore note that tangible book value should be anywhere between £1400-£1600 so significantly undervalued across all metrics with the prospect of both dividend and capital growth.

[tole] 07/10/2021 05:30

Market undervaluing Secure Trust Bank, says Shore CapitalShares in Secure Trust Bank (STB) are 'materially undervalued' and ignore the challenger bank's capital strength, says Shore Capital.Analyst Gary Greenwood retained his 'buy' recommendation on the stock and said the 'recent pull back [in the shares] created an attractive buying opportunity'. The shares closed down 5.5%, or 65p, at £11.20 yesterday.He noted better-than-expected half year performance but said the group 'remains cautious in its provision modelling with an assumed weighted average peak unemployment rate of 7.2% and a peak to trough fall in house prices of 5.1%.Consequently, the group ha a 'robust balance sheet' and a new dividend policy that will pay out 25% of earnings on an ongoing basis.'From a valuation perspective, the shares look materially undervalued to us,' he said. 'At [Tuesday's] closing price of £11.85 they were trading on a full year 2021 price/earnings ratio of less than 6x,' said Greenwood.'In our view, this is totally out of line with the group's medium-term return on equity target of 14-16% and also appears to be ignoring the group's robust provisioning and capital strength.'