Secure Trust Bank Share Discussion Threads

[p1nkfish] 24/2/2023 18:35

Yes, an old term from tape days. To influence price perception at the end of a session. Used to happen, not sure it still doesn't.

[retsius] 24/2/2023 17:51

Painting the tape… lol

Does that mean, jargon ,for artificial drop on little volume?

[p1nkfish] 24/2/2023 17:17

A weird looking late low volume sell at the end of the week. Always makes me suspicious.

Money is tightening and Secure Trust Bank will have some liquidity.

Happy to have been adding, dyor etc.

[p1nkfish] 22/2/2023 22:44

Nothing says they won't call it early if conditions ease and/or good performance warrants a lower rate.

[catabrit] 22/2/2023 22:37

According to a fixed income guy, the yield is about right considering the size of the deal and that STB isn’t well known. He did comment about the back end of the deal though that kicks in at over 900bps above the 5yr.

[p1nkfish] 22/2/2023 22:09

Too easy to convince myself I know what this means when I don't.

Something tells me it indicates growth and reduction in uncertainty going forward but I might be looking solely on the bright side.

Related to AppToPay growth funding needs?

May 2022 -

[apple53] 22/2/2023 22:09

Thank you Catabrit - I had none of the background on the old note. My career ended before tier II got so complicated. A key piece of the puzzle then. So an extra £1.1m p.a. on the 75 plus an extra £2m on the extra capacity. And callable.

[catabrit] 22/2/2023 22:04

I could be wrong but my hunch is that the upsizing will be viewed quite positively by the analysts tomorrow. They were expecting the old bonds to be called. They were expecting a double digit coupon on new bonds of £75m so £90m will be a positive surprise I reckon. I guess we will find out tomorrow!

[catabrit] 22/2/2023 21:56

The other notes are due to expire this year, would re-set at higher coupons post expiry (fixed going to floating) and wouldn’t be capital eligible. At least it negates the need to do a capital raise. I think that was the big concern which caused the shares to drop.

[catabrit] 22/2/2023 21:54

Yeah it seems on the high side. The analysts were modelling 11.5% which seemed rich to me so I wonder how they will react tomorrow. The extra capacity is a good sign so perhaps the additional firepower it provides offsets the higher costs. If you read the Canaccord note, the old notes were restricting their ability to lend because they weren’t capital eligible (not sure I 100% understand how the financing of banks works to be honest).

[apple53] 22/2/2023 21:51

Ouch Catabrit. I don't have a reference from other banks, but sounds rich, and used to buy back the 6.75%. I genuinely don't understand.
One positive spin is a suggestion of rapid top line growth I guess, though this in turn means IFRS 19 provisions, T1 capital requirement increase and thus less cash for dividends or buybacks. Back on the positive better top line should mean operating leverage - ie STB decreasingly sub-scale.

[topvest] 22/2/2023 21:43

Blimey, that's expensive. Why are they buying back the £25m 6.75% notes with the proceeds. Seems a bit stupid - better to borrow at half the rate for another 5 years I would have thought!

[catabrit] 22/2/2023 18:47

Interesting. So Canaccord was assuming the Tier II notes would be 11.5% and upsized to £75m. Instead, it’s 13% and £90m. Hmmm.

[catabrit] 22/2/2023 13:12

Hi Apple. Re the discount - is that on a TBV basis?

I bought Metro in the early 70s and sold it at 125/130 ish to buy this as I felt it offered a better r/r at 700p.

[apple53] 22/2/2023 13:09

Results 30th March a potential catalyst for eps upgrades.

2024 forecasts literally halved in a year and have only stabilised since end January. I hasten to add I don't think they will return to their previous level, when some analysts seemed to forget about bad debts altogether, but one analyst has 55p for 2023 and so presumably is also very cautious for 2024 (market screener doesn't show me the spread for 2024). This analyst will be forced to upgrade a lot, but I'm guessing will need to first be convinced there will be no housing crisis . With only 4 analysts in the stats for 2023 just this one adjustment will cause a step change to the P/E eventually.

Banks and PE trusts remain the top sectors with asymmetric risk. Yes there can be surprise bad debts for a year or two, wiping out most of the earnings for 2 years, but on 5x earnings this is already priced in. Compare PEs with US banks, with the market (ex oils), with history etc. Historically 10-12x PE was more common, and even market multiples for high growth banks. You can see this with how out of step the yields are.

I'm avoiding price to book multiples as the PE short circuits this by building in the ROE. Yes the 'excess' returns are lower today than pre-financial crisis(due to capital levels doubling), but equally the 'risks' are much lower.

[apple53] 22/2/2023 12:48

Agree that we are at crunch time along the lines of your remarkable 9th Feb prediction, Pink.
Could call this resistance. We don't want it to be come a double top. Next stop maybe 900 very ish.

On 'fundamentals', the call is if/when we get eps upgrades. Forecasts have been hammered so much that stb trades at a 10-15% discount to OSB/Virgin/Barc based on 2024 eps, and for OSB that's despite a 10% cut in 2024 forecasts recently. Yes they are probably all buys here (though I sold all my Virgin between 170 and 190 to switch to STB and PSDL).

One interesting question is what is your league table for the banks as of today. In Europe I pretty much only own STB (lots) and OSB (a bit less as was selling though again only to play the waves and try to buy EVEN cheaper stuff). I bought a bit of Barclays after the post figures plunge and flipped half. EPS forecasts for Barclays have started falling and would like to see them stabilise. And I would like to buy Virgin closer to 160p. Then there's Lloyds, NWB, and a few other specialists. I sold all my SocGen and Unicredit too early.

[p1nkfish] 22/2/2023 09:41

Could do.with some volume to offer momentum but the breakout appears to be happening. Volume would seal it nicely.

[catabrit] 21/2/2023 11:37

When I started buying in the 6’s, it rose really fast. I don’t think there’s a lot of stock around. I am pretty happy with the bet at this sort of discount to TBV. If we inch closer to 1x, I will think about selling. For now, I am happy to sit tight.

[p1nkfish] 21/2/2023 11:14

It's in an interesting price compression period and fascinated to see how this plays out. Looks like a possible burst upwards to me in weeks, not months. However, I'm often wrong. Dyor etc.

[catabrit] 20/2/2023 16:08

Yeah ticking along nicely. Fingers crossed. It’s one of my largest holdings. Feels very asymmetric at these prices.

[p1nkfish] 20/2/2023 15:44

Yes, not far off a proper trend change too. About 768+ close needed.