Secure Trust Bank Share Discussion Threads

[cfro] 08/11/2022 12:00

With regards to some of the previous posts above, indeed why has the share price of this stock been hammered so much? You have to ask that question. Its been an almighty fall from its highs back in the summer.

Its not that they have warned on profits. Ok, so, the banking sector is down in general, the company is tightening and restricting lending (you can always argue whether that is shrewd or too little too late), bad debts are highly likely to rise (perhaps significantly), we are most likely about to enter a serious recession, yada yada yada...

But, hang on a minute, we know all that and hence STB is now priced on a forward PE of less than three so all the bad news should be more than priced in.

Its seems everyone has it in for the banks and banking sector but putting Credit Suisse aside, some major banks are in reality now reporting better results. Look at Deutsche bank with their Q3 results adding 1bn Euros to make 1.6bn Euros in profits and also Italy's Uni Credit reporting profits up 20%. So all is not no where near as bad as some are making out...

[brucie5] 07/11/2022 20:00

Thanks, very helpful in building a further picture.

[brucie5] 07/11/2022 12:42

Thanks Pinkfish. I guess at these levels and assuming there's nothing nasty that we're not seeing, patience is only likely to be rewarded.
Can you tell me more about the app?

[p1nkfish] 07/11/2022 11:13

Yes. Have been buying too on and off.
They have a track record of coping with less than ideal economic backdrops.
Interesting to see if the app gains traction too as a new string to the bow.

[brucie5] 07/11/2022 09:43

So Edison's most recent update refers us back to their August report in which fair value see as 2,407. In the meantime Stocko giving a div of c. 7.5% to be getting on with. What am I missing that the market is seeing. I thought rising interest rates were good for banks, so long as a diligent around their loan books... It's an income/recovery buy, surely?

[brucie5] 03/11/2022 09:08

Yes, I'm hoping STB will do well from this level, having bought a full position. Scores three value screens on Stocko, as well as a stonking 98 for value. Dividend looks to be about 9% - though perhaps someone can confirm? Small, challenger bank, should do well in rising interest rate environment, so long as their loan book is carefully managed.
But DYOR, obviously.

[retsius] 01/11/2022 11:00

At last, some action!

[jeff h] 29/10/2022 14:14

Edison leave their forecasts unchanged after the Q3 update:-

[p1nkfish] 29/10/2022 08:33

Find out soon but I would be surprised if STB have been excessively loose in lending criteria over the past couple of years. Peel Hunt should have a decent handle on it else they also look like right chumps.

[retsius] 29/10/2022 02:48

Apple53
Thanks for enlarging the discussion.
You sound as if you are very knowledgeable about banking.
We don’t know detailed figures yet, but I am pleased with Update, and it sounds as if Peel Hunt does too.(see above)

[apple53] 28/10/2022 19:27

I don't completely agree, retsuis. Bad lending decisions are mostly made during good times, made worse by banks competing for clients, whether on price or covenant.
The best time to lend is when others won't and you can name your price and terms. Good management was tightening lending conditions in 2019, not 2020. One interpretation is that STB missed good business in 2020, and then tried to catch up since, and may have pushed too hard. My.hope is that the 21-22 hasn't been too loose a period, and they have a small enough market share that they can cherry pick.

[jeff h] 28/10/2022 11:16

Secure Trust Bank is undervalued, says Peel Hunt
The valuation of Secure Trust Bank (STB) is ‘fundamentally too low’, according to Peel Hunt.

Analyst Robert Sage retained his ‘buy’ recommendation and target price of £14.70 on the stock, which closed 0.6% higher at 628p on Thursday.

Shares in the challenger bank are down more than 50% year-to-date, which Sage said is ‘overdone’.

‘Although demand remains buoyant, management has slowed lending growth in the third quarter in response to the deteriorating UK economic outlook,’ he said.

‘This had been previously flagged and we leave full year 2022 estimates unchanged.’

He said the group is trading at less than 0.4x tangible net asset value ‘in spite of its strong intrinsic profitability’, pointing to 12.5% annualised return on equity in the first half.

‘We expect the group will remain robustly profitable in future periods,’ said Sage. ‘Low single-digit price/earnings ratios – 3.4x for full year 2022 reducing to 2.9x for full year 2023 – appear to be anticipating significant earnings downgrades which are not materialising. We view the share price as fundamentally undervalued.’

[retsius] 28/10/2022 08:27

The word `prudent` and the phrase `please to announce` should bolster sentiment for the stock.

As I said, after the Half year Results:`what is the point of lending more if provisions for bad debt rise sharply?`

Looks as if they have tightened their criteria for lending quite considerably,and are reaping the benefits.
Excellent management.

NatWest Results : please learn a serious lesson from your smaller cousin.

[riverman77] 24/10/2022 16:41

Bought back in here at 640p. Ridiculously cheap for quality lender. Bought at a similar level post Covid and roughly doubled my money - expect to do the same again, although might need to wait a bit longer this time.

[retsius] 24/10/2022 14:53

Jeff H

I am corrected.

[jeff h] 24/10/2022 13:43

Next update is this week (Friday):-

[retsius] 24/10/2022 12:15

digger18

Update 15.11.22

[apple53] 24/10/2022 07:28

Buyers still sitting on sidelines. This has to be a Covid-sized opportunity.

Yes the bad debt charge normalised, but please note that some of this charge is volume based anticipation rather than actual bad outcomes. I would always value banks on normalised charges not on periods of exceptionally low charges.
I haven't time (or perhaps data) to do a full analysis of the impact of rising rates on the NIM, but would suggest that it should be more up than down.
I also agree that the timing of the volume growth could look poor, but for such a specialist lender they may have been relatively smart, and now is a great time to take market share and gain loyal customers.

Overall, I would have preferred buybacks to faster volume growth, but have to admit that if they had been repurchasing at £11 it would look a bit daft with a price below £7 (though maybe the buybacks would have put a floor under the stock).

Now clearly a fantastic time to buy back stock, and indeed for directors to buy.

[digger18] 19/10/2022 13:22

Trading statement due imminently.
Last update was positive and unemployment low, so I am still confident at present.
They will also be careful with lending criteria.

[brad_k] 14/10/2022 08:22

Well the timing was 13:30 which was when the US inflation report was released with the subsequent spike in the dollar. All the trades taking the price from 710 to 650 were AT automated trades. Are these triggered stop losses? hedge funds?
Unfortunately sentiment around STB and banking stocks in general is such that there was no rebound in price when the US market and the dollar recovered later in the afternoon, although there were a few retail buys.
Could do with some more director buying to bolster some confidence here, been a miserable time since the interims.

[podgyted] 13/10/2022 17:49

Anyone know any reason for the fall today?